iScience Interventional is a medical device company focused on the development and commercialization of innovative imaging systems and microsurgical instruments for the minimally invasive treatment of glaucoma. Through the use of high resolution imaging technology and novel microsurgical instruments, the company will enable surgeons to locate, access and treat the blocked ocular drainage passages responsible for glaucoma. Glaucoma currently affects more than 4.2 million Americans and 69 million people worldwide.

Koronis Pharmaceuticals, Inc.

Koronis is developing drugs for the treatment of chronic viral diseases, initially targeting HIV and the Hepatitis C Virus. The company's "Viral Decay Acceleration" mechanism developed at the University of Washington and MIT presents a completely novel antiviral therapeutic designed to alter genetic foundation of virus and avoid drug resistance.

Novocell, Inc. is engaged in the development of novel therapies for the treatment of insulin-dependent diabetes. A cell expansion program promises to increase the available supply of transplantable human pancreatic islets and a cell encapsulation program will permit transplants without immunosuppression.

Rasiris, Inc

Rasiris, Inc. is developing a revolutionary approach to the use of photodynamic therapy (PDT) and the treatments of breast cancer and age-related macular degeneration. Rasiris was spun out of Montana State University in May 2003 and received financial support from Pacific Horizon Ventures to validate the proof of concept in an animal model.

SleepMed was formed by the 1999 merger of Digitrace Care Services and Sleep Disorder Centers of America. The company is the nation's leading provider of diagnostic and treatment services for sleep disorders and epilepsy. SleepMed has developed sleep disorder diagnostic systems - tests which can be administered in the lab or on an outpatient basis using the company's proven ambulatory technology.

Transmolecular is a biotechnology company targeting disorders of the central nervous system. The company is committed to discovering, developing, and commercializing novel, targeted therapies for glioma, metastatic brain tumors, and aggressive cancers with limited treatment options. Transmolecular is based in Cambridge, MA.

Distributed Life Science Companies

Argos Therapeutics is a private biotechnology company headquartered in Research Triangle Park, NC, that is developing breakthrough immunotherapies that target the unique features of a patient’s disease. This new generation of personalized cancer and infectious disease therapeutics trains the immune system to recognize and attack the disease. Argos’ scientific leadership in RNA-loaded dendritic cells and advanced manufacturing processes provide a platform to tackle virtually all forms of cancers and infectious diseases. The company has clinical trial programs in cancer and human immunodeficiency virus (HIV) and has an ongoing co-development and commercialization alliance with the Pharmaceutical Division of Kirin Brewery Company, Limited.

AtheroGenics, Inc. is an emerging pharmaceutical company, focused on the discovery, development and commercialization of novel drugs for the treatment of chronic inflammatory diseases, such as heart disease (atherosclerosis), asthma and arthritis. Based on a proprietary drug discovery technology platform called vascular protectant technology, the company designed its lead product candidate, AGI-1067, to benefit patients with coronary artery disease, which is atherosclerosis of the blood vessels of the heart. In addition to AGI-1067, which is in Phase III clinical trials for the prevention and treatment of restenosis, the company has identified other potential v-protectant products to treat asthma, cystic fibrosis, rheumatoid arthritis and solid organ transplant rejection. (NASDAQ: AGIX).

CareWise, Inc.

Carewise operates The CareWise System, a nurse referral service that delivers specific information about various medical conditions and concerns directly to healthcare consumers through sponsoring client relationships that include United Airlines, HMO Blue/Blue Cross Blue Shield of New Jersey, the American Postal Workers' Union Health Plan, and others. The company was acquired by PhyCor in June 1998 in a pooling-of-interests, tax-free exchange. (NASDAQ: PHYC).

Cell Pathways, Inc., headquartered in Horsham, Pa., is a development-stage pharmaceutical company focused on the research, development and commercialization of novel and unique compounds to prevent and treat cancer. (NASDAQ: CLPA).

Diametrics Medical, Inc. is a leader in critical care technology. The company is dedicated to creating solutions that improve the quality of healthcare delivery through products and services that provide immediate, accurate and cost-effective time critical blood and tissue diagnostics. (NASDAQ: DMED).

Focal, Inc.

Focal, Inc. develops, manufactures and commercializes synthetic, absorbable, liquid surgical sealants based on the Company's proprietary polymer technology. The company's FocalSeal-L™ and FocalSeal-S™ surgical sealant products are currently being developed for use inside the body to seal leaks resulting from lung, neurological, cardiovascular and gastrointestinal surgery. Focal has entered into an exclusive distribution agreement for its surgical sealant products for lung, cardiovascular and gastrointestinal surgery in North America with Genzyme Surgical Products and has exclusively licensed the marketing rights to these products outside North America to Ethicon, a Johnson & Johnson company. (NASDAQ: FOCL).

Health Systems Technologies

Health Systems Technologies developed software systems for managed care organizations to provide integrated information exchange member eligibility, contract administration, system utilization, and financial performance. The company failed to achieve sales objectives and was liquidated in May 1999.

Illumigen Biosciences, Inc. is the market leader in the use of proprietary genetic technologies to identify naturally occurring health-inducing mutations. These beneficial mutations provide a rapid method for developing novel drugs with improved efficacy and fewer side effects. Illumigen is using its technologies to develop drugs to treat hepatitis C infection, obesity, and other diseases. In December 2007, Illumigen was acquired by Cubist Pharmaceuticals (NASDAQ: CBST).

Inhibitex is a biopharmaceutical company that is pursuing the development and commercialization of products for the infectious disease market. Inhibitex has a proprietary technology platform that utilizes antibodies to fight bacterial infections.

NeoPath, Inc.

NeoPath developed the AutoPap Primary Screening System to distinguish between normal Pap smears and those that have the highest likelihood of abnormality. NeoPath merged with Burlington, North Carolina based AutoCyte, Inc. on September 30, 1999 to form TriPath Imaging, Inc. (NASDAQ: TPTH).

Norian Corporation was formed in 1987 to develop skeletal repair systems. Norian's first product, Norian SRS, is an injectable bone cement used for fixation and replacement of cancellous bone in fractures of the wrist, hip, knee, ankle, shoulder, face, skull and spine. Norian was acquired by Synthes-Stratec, Inc on June 17, 1999.

Orquest, Inc.

Orquest focuses on orthobiologics, a technology approach that seeks to transform the clinical practice of orthopedics by moving away from traditional metal implants to biologically based products. Orquest combines expertise in tissue biology and biomaterial science and is focused on orthopedic problems including spine surgery, fractures, and cartilage repair. The company has two proprietary core technologies. Healos® Bone Graft Substitute is designed to reduce the time and pain associated with spinal fusion surgery, and Ossigel® is an injectable product designed to improve fracture healing. Orquest was purchased by Depuy Acromed, a subsidiary of Johnson & Johnson in January, 2003.

Sapient Health Network Inc., is now part of WebMD. (NASDAQ: HLTH).

Selective Genetics, Inc.

Selective Genetics is developing site-specific gene therapy products addressing tissue repair and regeneration. Products under developement are based on two proprietary technology platforms. The first, Gene Activated Matrix or GAM, is a delivery vehicle that transports genes to the site of tissue injury. The second platform is Molecular Targeting, a method of targeting cells so that they are more likely to absorb the gene being delivered by the GAM matrix.

Tandem is a medical device company located in San Diego. The company manufactures and sells an automated drug delivery system primarily for use in home-administered IV's. The device is a relatively simple mechanical pump that is simpler and safer to use than standard IV therapy.

Therion Biologics Corporation is engaged in the development of therapeutic vaccines for cancer and preventive vaccines for AIDS. The company has three lead programs involving multiple clinical studies for the treatment of major cancers, including prostate, colorectal, breast cancer and melanoma. The company also has a major corporate alliance with Aventis Pasteur for the development of therapeutic vaccines for colorectal and lung cancers and melanoma. Therion is headquartered in Cambridge, Massachusetts. Therion failed to attract additional funding and was liquidated in December 2006.

Trimeris is a development stage, biopharmaceutical company engaged in the discovery and development of novel therapeutic agents that block viral infection by inhibiting viral fusion with host cells. Trimeris' lead product candidate, T-20, is now entering Phase III clinical trials. Trimeris' second fusion inhibitor product candidate, T-1249, which also inhibits HIV fusion, has received fast-track designation from the FDA and is undergoing Phase I/II clinical testing. (NASDAQ: TRMS).

VitaGen, Inc.

VitaGen Incorporated, a biotechnology and medical products company, developed one of the world's first external artificial human livers. The ELAD™ (Extracorporeal Liver Assist Device) Artificial Liver is a two-chambered hollow-fiber cartridge containing a cultured human liver cell line (C3A). The ELAD™ intends either to provide short term hepatic replacement therapy for patients with acute liver failure until their own liver can regenerate or to sustain patients until a transplant organ is available and offer post-transplantation support until the grafted liver is functioning adequately. VitaGen failed to attract additional funding and was liquidated in April 2003.

Distributed Technology Companies

The following companies were mostly part of our initial fund, KLP's portfolio, which had a broader technology focus.

Coral Systems was acquired by Lightbridge Inc. in September 1997. Lightbridge provides customer relationship management solutions that enable communications service providers to initiate and maintain relationships with their subscribers. Lightbridge is headquartered in Burlington, Massachusetts. (NASDAQ: LTBG).

Creative Multimedia

CMC was founded in 1987 to publish The New England Journal of Medicine on CD-ROM format. CMC was acquired by IHSG in June 1995, in a cash transaction.

Edmark is a leading developer and publisher of quality consumer and education software for kindergarten through 12th grade. Edmark was acquired by IBM on November 13, 1996 in a cash transaction.

With headquarters in San Jose, Calif., DMC Stratex Networks, Inc., is one of the world's foremost solutions providers for broadband wireless access -- enabling the development of complex communications networks worldwide. Since its founding in 1984, the company has achieved international recognition for quality, innovation, and technical superiority in delivering data, voice, and video communication systems, including comprehensive service and support. Continuing its focus on the wireless broadband networking market, DMC Stratex Networks is strategically positioned to continue its solutions-based leadership in wireless high-capacity transmission technology. (NASDAQ: STXN).

Proxim, Inc. has over 15 years of experience designing and building wirefree broadband networking solutions. Proxim's Symphony(TM) is the world's leading wirefree networking products for the home and small office. Complementing these offerings are the Proxim line of Farallon NetLINE Ethernet, HomeLINE HPNA, and SkyLINE wireless solutions. The company's RangeLAN2(TM) leads in the enterprise, OEM and wireless service provider markets with nearly one million installed units. For building-to-building broadband networking, Proxim's Stratum(TM) is the fastest license-exempt wirefree Ethernet bridge, connecting buildings at distances up to seven miles. Proxim is also a founding member of the Wireless LAN Interoperability Forum (WLI Forum), and a core member of the Home Radio Frequency Working Group. The company is headquartered in Sunnyvale, California with offices globally. (NASDAQ: PROX).

RTIME provides networking software that enables real-time performance for multi-player, internet games. RTIME was acquired by Sony Computer Entertainment America, Inc. (NYSE: SNE) in August 2000 in a cash transaction.

The PHV investment portfolio and other assets will be valued periodically, including as of December 31 and June 30 of each year and as of any required Additional Closing Date. The valuations will be used to prepare the Fund’s semi-annual financial statements. Investments will be stated at fair value as determined by the General Partner and the Advisory Board, subject to the following guidelines (based on the March 2007 PEIGG Guidelines):

Publicly traded securities, with an active market, will be valued at the closing price on the date of valuation, subject to a possible discount based on Restrictions. (Volume ownership tests no longer apply.)

* A public security that is Restricted will be discounted between 1% & 2% per month; based on market related risks and knowledge of the Company; applied to the remaining months of the Restriction.

* Non-active public securities will need to be valued using methods suggested for Non-public entities.

R & D Phase Companies - Non-publicly traded securities, including credit instruments (convertible or not), will be valued at cost (plus accrued interest) unless circumstances support a different valuation or another valuation method. The following methods can be applied to each investment instrument separately or can be used to estimate a Firm value.

* Changes in valuation generally will be made when a subsequent financing is completed at a different valuation and such financing includes a significant investment from one or more previously uninvolved participants considered to be a sophisticated and professional investor. However, a lack of new investors does not preclude the transaction from providing an accurate valuation, if the transaction was based on an appropriate negotiation among the existing investors.

o Adjustments to the value of the round should be considered if: the transaction is between related parties; done under duress; done with a strategic buyer at an arbitrary price; or there has been a change in market conditions that do not support the new price.

* Consideration should also be given to transactions in process where the price is basically agreed to and the transaction is believed to be likely to occur.

* Consideration should also be given to Third Party Valuations.

* Changes in conditions with or without a new financing round require consideration in the valuation. These include:

o Changes in performance or the long-term financial prospects of the Company or of the individual class of security or credit instrument.

o Market changes affecting the Company, the industry, and/or financial markets.

* Another Firm valuation consideration is to estimate the Company value based on the inputs above or on market experience for companies of a similar nature. While it is difficult to obtain actual comparable transaction values, there may be some expected ranges of value that management anticipates will occur as similar companies reach various phases of development.

* An additional level of complexity exists in circumstances where an individual security’s cost no longer represents the value effectively; such as when a more recent round has effectively changed the distribution rights of previous investments through preference provisions, etc., or when a restructuring has occurred. The following alternative method of valuing should be considered:

o The Liquidation Value Method which takes into account the advantages that may accrue to various preferred shareholders over other shareholders when the liquidation proceeds are shared. This calculation is to be based on the current Firm post-money valuation that was inherent in such round, adjusted as needed for current conditions. This method determines whether value should be ascribed to warrants and options.

Revenue producing Companies - Non-publicly traded securities, including credit instruments (convertible or not), will be valued at cost (plus accrued interest) unless circumstances support a different valuation or another valuation method.

Changes in valuation will be considered for all the same circumstances noted above, plus, changes in valuation should consider market parameters such as:

o Performance Multiples.

o Comparable companies transaction values or Public valuations. (If Public company valuations are considered as the basis of the valuation, a discount may be applied for Private companies.)

o Industry Valuation Benchmarks.

Investments made by the Fund, by their nature, will generally be long-term investments that are not intended to be liquidated on a short-term basis. Accordingly, valuations by the General Partner and Advisory Board will not necessarily represent the amount that might be realized from sales or other dispositions of investments. Valuations will not be adjusted on account of taxes or other expenses that might be incurred upon disposition. Debt will be valued in combination with any equity investments in the same portfolio company.

The foregoing valuations may be modified by the General Partner if and to the extent that it shall determine that such modifications are advisable in order to reflect any other factors affecting the value of investments.

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