CONVEYANCE, TERMINATION AND RELEASE AGREEMENT
 
This CONVEYANCE, TERMINATION AND RELEASE AGREEMENT (this “Agreement”) is dated
as of November 30, 2007, by and among Titan Nexus, Inc., a Delaware
corporation (the “Creditor”), Nexus Custom Electronics Corp., a Florida
corporation (f/k/a NECI Acquisition, Inc. and hereinafter, “NCEC”) and Nexus
Nano Electronics, Inc., a Nevada corporation (f/k/a Sagamore Holdings, Inc. and
hereinafter, “Nexus Nano”, and collectively with NCEC, the “Debtor”).
 
 
RECITALS:
 
WHEREAS, Debtor is indebted to Creditor in the aggregate sum of $11,245,178.38,
plus accrued interest from November 1, 2007 through the date hereof (the
“Debt”), in accordance with Schedule A, annexed hereto;

WHEREAS, pursuant to the terms of (i) certain security agreements, dated as of
September 20, 2004, granted by NCEC in favor of Comerica Bank, and assigned by
Comerica Bank to YA Global Investments, L.P. (“YA Global”) pursuant to that
certain Amended and Restated Security Agreement, dated August 8, 2007, as
further assigned by YA Global to the Creditor on November 2, 2007; (ii) certain
security agreements, dated as of November 10, 2005, granted by Nexus Nano to CSI
Business Finance, Inc., a Texas corporation, and assigned to YA Global on March
10, 2006, as amended by that certain Amended and Restated Security Agreement,
dated as of June 1, 2006 entered into by and between Nexus Nano and YA Global,
as further assigned by YA Global to the Creditor on November 2, 2007; and (iii)
certain parent security agreements, dated as of July 30, 2007, granted by Nexus
Nano to YA Global, as further assigned by YA Global to the Creditor on
November 2, 2007 (collectively, the “Security Agreements”), Creditor has
obtained a security interest in its favor of all of Debtor’s assets, including,
but not limited to, Debtor’s accounts, inventory, machinery, equipment,
intellectual property, receivables, contractual rights and general intangibles;
 
WHEREAS, the Creditor’s security interest have been perfected through the filing
of the following UCC-1 Financing Statements: (i) UCC Financing Statement naming
NCEC as debtor, in favor of Comerica Bank as secured party, and filed with the
Secretary of State of Florida on September 22, 2004 as document number
200407923665, as further assigned to the Creditor; (ii) UCC Financing Statement
naming Nexus Nano as debtor, in favor of YA Global as secured party, and filed
with the Secretary of State of Nevada on March 21, 2007 as document
number 2007008715-9, as further assigned to the Creditor; and (iii) UCC
Financing Statement naming Nexus Nano as debtor, in favor of YA Global as
secured party, and filed with the Secretary of State of Nevada on August 1, 2007
as document number 2007024948-2, as further assigned to the Creditor
(collectively, the “UCC-1s”);
 
WHEREAS, subject to the terms and conditions hereof, Debtor desire to convey,
transfer and assign to Creditor, and Creditor desires to acquire and assume from
Debtor, the Collateral (as such term is defined in the Security Agreements) in
accordance with this Agreement;

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WHEREAS, immediately upon the acquisition of the Collateral, it is intended that
the Creditor’s security interest in the Debtor shall be released; and
 
WHEREAS, immediately upon the acquisition of the Collateral, it is intended that
the Creditor shall release Debtor from any liability in connection with the
Security Agreements or otherwise and that the Security Agreements shall be
terminated and be of no further force or effect.
 
 
AGREEMENT:
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements hereinafter contained, the parties hereby agree as follows:
 
ARTICLE I.
ACQUISITION OF COLLATERAL
 
1.1. Acquisition of Collateral. Because of the inability of the Debtor to pay
the Debt, Debtor hereby transfer, convey and assign to the Creditor all right,
title and interest of possession in and to the Collateral, including, without
limitation, the following assets of the Debtor:
 
(a) all equipment, computer hardware, machinery, furniture, fixtures, dies,
tools, vehicles, trucks, cars, tractors, trailers, fork lifts, cranes, hoists
and tangible personal property of Debtor, and all accessions and attachments to
or relating to any of the foregoing;
 
(b) all books, records, computer software and other property relating to or
referring to any of the foregoing;
 
(c) all patents, trade names, trade styles, service marks, all rights associated
with the foregoing, and goodwill;
 
(d) all present and future accounts, contract rights, general intangibles,
chattel paper, documents and instruments, as such terms are defined in the
Uniform Commercial Code, including without limitation, all accounts receivable
and other receivables of any kind, and all obligations for the payment of money
arising out of the sale of goods, rendition of services or the lease by the
Debtor of their property;
 
(e) all other property of the Debtor, including, without limitation, all of the
issued and outstanding capital stock of NCEC;
 
(f) all guaranties or other agreements securing or relating to any of the items
referred to in subparagraphs (a)-(e) above, or acquired for the purpose of
securing and enforcing any such items; and
 
(g) all proceeds of any of the foregoing in whatever form, including, without
limitation, any claims against third parties for loss or damage to or
destruction of any or all of the foregoing and cash, negotiable instruments and
other instruments for the payment of money, chattel paper, Security Agreements
or other documents.
 
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The assets, properties and business of Debtor being acquired by the Creditor
under this Section 1.1 are referred to herein collectively as the “Collateral”.
 
1.2. Waiver. Debtor acknowledge that they have defaulted in the payment of the
Debt to Creditor and hereby waives and renounces all rights to notification
under Section 9-611 of the Uniform Commercial Code as adopted in the State of
Nevada (“UCC”) as to the sale or other disposition by the Creditor of the
Collateral and under Sections 9-620 and 9-623 of the UCC regarding acceptance of
the Collateral as discharge of the Debt of the Debtor and waiver of the Debtor’s
right to redeem the Collateral, respectively. The Debtor knowingly and
voluntarily waive any rights they may have to notice and a hearing before a
court of competent jurisdiction and consent to Creditor’s entry on the premises
where the aforesaid Collateral is located for the purposes set forth herein.
 
1.3. Cancellation of Debt; Release of Claims Against Debtor and Affiliates. In
consideration of the assumption of the Collateral, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Creditor hereby agrees to release Debtor from any and all
obligations to pay the Debt and agrees to file UCC-3 termination statements in
order to effectively and fully release the UCC-1s (the “UCC-3s”).
 
1.4. Debt Allocation. Creditor and Debtor shall mutually agree on the allocation
of the Debt. Such allocation shall be binding upon Creditor and Debtor for all
purposes (including financial accounting purposes, financial and regulatory
reporting purposes and tax purposes). Creditor and Debtor each further agrees to
file its Federal income tax returns and its other tax returns reflecting such
allocation, Form 8594 and any other reports required by Section 1060 of the
Internal Revenue Code of 1986, as amended.
 
1.5. Further Assurances. Debtor shall, from time to time after the consummation
of the transactions contemplated herein, at the request of Creditor and without
further consideration, execute and deliver further instruments of transfer and
assignment and take such other action as Creditor may reasonably require to more
effectively transfer and assign to, and vest in, Creditor the Collateral.
 
1.6. Sales and Transfer Taxes. All sales, transfer, use, recordation,
documentary, stamp, excise taxes, personal property taxes, fees and duties
(including any real estate transfer taxes) under applicable law incurred in
connection with this Agreement or the transactions contemplated hereby will be
borne and paid by Creditor.
 
1.7. Transfer of Subject Collateral. Debtor shall deliver or cause to be
delivered to Creditor good and sufficient instruments of transfer transferring
to Creditor title to all of the Collateral, together with all required consents.
Such instruments of transfer (a) shall contain appropriate warranties and
covenants which are usual and customary for transferring the type of property
involved under the laws of the jurisdictions applicable to such transfers, (b)
shall be in form and substance reasonably satisfactory to Creditor and its
counsel and (c) shall effectively vest in Creditor good and marketable title to
all of the Collateral subject to those limitations set forth in Section 2.8
hereof.
 
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1.8. Releases.
 
(a) Release by Creditor. In consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Creditor, on behalf of itself and
its successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably releases, remises and forever discharges Debtor
and their respective successors and assigns, former and current stockholders,
Debtor’s affiliates, subsidiaries, divisions, predecessors, former and current
directors and officers, attorneys, employees, agents and other representatives
(Debtor and all such other persons being hereinafter referred to collectively in
this Section 1.8(a) as the “Releasees” and individually as a “Releasee”), of and
from all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims, defenses, rights of
set-off, demands and liabilities whatsoever (individually, a “Claim” and
collectively, “Claims”) of every name and nature, known or unknown, suspected or
unsuspected, both at law and in equity, which Creditor or any of its successors,
assigns, or other legal representatives may now or hereafter own, hold, have or
claim to have against the Releasees or any of them for, upon, or by reason of
any circumstance, action, cause or thing whatsoever which arises at any time on
or prior to the day and date of this Agreement, including, without limitation,
for or on account of, or in relation to, or in any way in connection with any of
the Security Agreements, or any of the loan documents related thereto or
transactions thereunder or related thereto; provided, however, that this release
does not release, waive, impair or diminish Creditor’s rights under this
Agreement. The Creditor understands, acknowledges and agrees that the release
set forth above may be pleaded as a full and complete defense and may be used as
a basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such
release. The Creditor agrees that no fact, event, circumstance, evidence or
transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final, absolute and unconditional nature of the
release set forth above.
 
(b) Release by Debtor. In consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Debtor, on behalf of themselves and
their successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably releases, remises and forever discharges
Creditor and its successors and assigns, former and current stockholders,
affiliates, subsidiaries, divisions, predecessors, former and current directors
and officers, attorneys, employees, agents and other representatives (Creditor
and all such other persons being hereinafter referred to collectively in this
Section 1.8(b) as the “Releasees” and individually as a “Releasee”), of and from
all demands, actions, causes of action, suits, covenants, contracts,
controversies, agreements, promises, sums of money, accounts, bills, reckonings,
damages and any and all other claims, counterclaims, defenses, rights of
set-off, demands and liabilities whatsoever (individually, a “Claim” and
collectively, “Claims”) of every name and nature, known or unknown, suspected or
unsuspected, both at law and in equity, which Debtor or any of their successors,
assigns, or other legal representatives may now or hereafter own, hold, have or
claim to have against the Releasees or any of them for, upon, or by reason of
any circumstance, action, cause or thing whatsoever which arises at any time on
or prior to the day and date of this Agreement, including, without limitation,
for or on account of, or in relation to, or in any way in connection with any of
the Security Agreements, or any of the loan documents related thereto or
transactions thereunder or related thereto; provided, however, that this release
does not release, waive, impair or diminish Debtor’s rights under this
Agreement. The Debtor understand, acknowledge and agree that the release set
forth above may be pleaded as a full and complete defense and may be used as a
basis for an injunction against any action, suit or other proceeding which may
be instituted, prosecuted or attempted in breach of the provisions of such
release. The Debtor agree that no fact, event, circumstance, evidence or
transaction which could now be asserted or which may hereafter be discovered
shall affect in any manner the final, absolute and unconditional nature of the
release set forth above.
 
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ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE DEBTOR
 
The Debtor hereby represent and warrant to the Creditor that:
 
2.1. Organization and Good Standing. The Debtor are corporations duly organized,
validly existing and in good standing under the laws of the jurisdictions of
their incorporation as set forth above and have all requisite power and
authority to own, lease and operate their properties and to carry on their
business as now conducted.
 
2.2. Authorization of Agreement. The Debtor have all requisite power, authority
and legal capacity to execute and deliver this Agreement, and each other
agreement, document, or instrument or certificate contemplated by this Agreement
or to be executed by the Debtor in connection with the consummation of the
transactions contemplated by this Agreement (together with this Agreement, the
“Debtor Documents”), and to consummate the transactions contemplated hereby and
thereby. This Agreement has been, and each of the Debtor Documents will be duly
and validly executed and delivered by the Debtor and (assuming the due
authorization, execution and delivery by the other parties hereto and thereto)
this Agreement constitutes, and each of the Debtor Documents when so executed
and delivered will constitute, legal, valid and binding obligations of the
Debtor, enforceable against the Debtor, as applicable, in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
 
2.3. Ownership and Transfer of Collateral. Debtor have good and marketable title
to all of the Collateral free and clear of all mortgages, pledges, security
interests, charges, liens, restrictions and encumbrances of any kind
(collectively, “Liens”), except those in favor of the Creditor or as otherwise
set forth on Schedule A attached hereto. Upon the assignment, transfer and
delivery of the Collateral to the Creditor hereunder and under the Debtor
Documents, there will be vested in the Creditor good, marketable and
indefeasible title to the Collateral, free and clear of all Liens subject to
those exceptions set forth on Schedule A attached hereto. The Collateral
includes all of the assets and properties (i) held for use by Debtor to conduct
their business as presently conducted and (ii) necessary for Creditor to operate
the Business in the same manner as such business is currently operated by
Debtor.
 
2.4. Stockholder Approval. On November 27, 2007, Nexus Nano obtained majority
stockholder approval of this Agreement and the transactions contemplated hereby.

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2.5. No Misrepresentations. No representation or warranty of the Debtor
contained in this Agreement or in any schedule hereto or in any certificate or
other instrument furnished by the Debtor to the Creditor pursuant to the terms
hereof, taken as a whole, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading.
 
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE CREDITOR
 
The Creditor represents and warrants that:
 
3.1. Organization and Good Standing. The Creditor is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
 
3.2. Authorization of Agreement. The Creditor has full corporate power and
authority to execute and deliver this Agreement, and each other agreement,
document, instrument or certificate contemplated by this Agreement or to be
executed by the Creditor in connection with the consummation of the transactions
contemplated hereby and thereby (together the “Creditor Documents”), and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Creditor of this Agreement and each Creditor
Document has been duly authorized by all necessary corporate action on behalf of
the Creditor. This Agreement has been, and each Creditor Document will be duly
executed and delivered by the Creditor and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each Creditor Document when so executed and delivered will
constitute, legal, valid and binding obligations of the Creditor, enforceable
against the Creditor in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors’ rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
 
3.3. No Misrepresentations. No representation or warranty of the Creditor
contained in this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements contained herein
or therein not misleading.
 
ARTICLE IV.
COVENANTS; OTHER AGREEMENTS
 
4.1 Cancellation of UCC-1s. Creditor shall file, within five (5) business days
following its receipt of the Collateral, UCC-3s in order to effectively and
fully release all of the UCC-1s.
 
4.2 Termination of Security Agreements. Upon the receipt of the Collateral by
the Creditor, the Security Agreements shall immediately terminate and be of no
further force of effect.

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4.3. Other Actions. Each of the Debtor and Creditor shall use its best efforts
to (i) take all actions necessary or appropriate to consummate the transactions
contemplated by this Agreement and (ii) cause the fulfillment at the earliest
practicable date of all of the conditions to their respective obligations to
consummate the transactions contemplated by this Agreement.
 
4.4 Valuation Acknowledgment. The parties hereto hereby acknowledge and agree
that Creditor engaged Lehrer Financial Economic Advisory Services (the
“Economist”) to determine the Fair Market Forced Liquidation Value of Debtor and
that Economist did determine the total assets (excluding cash) of Debtor to be
Four Million One Hundred Thousand Dollars ($4,100,000) as set forth in that
certain Forced Liquidation Valuation, dated as of October 31, 2007, issued on
November 15, 2007 and attached hereto as Exhibit A.
 
4.5 Defense of Actions. Creditor hereby agrees to defend, indemnify and hold
harmless each of Debtor’s former and current directors and officers, attorneys,
employees, agents and other representatives (collectively, the “Indemnitees”)
from any and all defense costs incurred by any Indemnitee by reason of or
arising out of any and all demands, actions, causes of action, suits,
controversies, damages and any and all other claims, counterclaims, defenses,
rights of set-off, demands and liabilities whatsoever of every name and nature
both at law and in equity, which anyone may now or hereafter assert, own, hold,
have or claim to have against the Indemnitees or any of them for, upon, or by
reason of any circumstance, action, cause or thing whatsoever arising under this
Agreement or the transactions contemplated hereby up to a maximum of One Hundred
Thousand Dollars ($100,000).
 
4.6. Assumption of Leases. Creditor hereby agrees to assume those leases
referenced in Schedule A hereto.
 
ARTICLE V.
MISCELLANEOUS
 
5.1. Expenses. Except as otherwise provided in this Agreement, the Debtor and
the Creditor shall each bear its own expenses incurred in connection with the
negotiation and execution of this Agreement and each other agreement, document
and instrument contemplated by this Agreement and the consummation of the
transactions contemplated hereby and thereby. Notwithstanding the foregoing, the
Creditor has agreed to pay up to Fifteen Thousand Dollars ($15,000) for legal
fees of the Debtor contemporaneously with the execution of this Agreement.
 
5.2. Specific Performance. The Debtor acknowledge and agree that the breach of
this Agreement would cause irreparable damage to the Creditor and that the
Creditor will not have an adequate remedy at law. Therefore, the Debtor’
obligation to transfer the Collateral to the Creditor, shall be enforceable by a
decree of specific performance issued by any court of competent jurisdiction,
and appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
 
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5.3. Submission to Jurisdiction; Consent to Service of Process.
 
(a) The parties hereto hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of Texas
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or any suit, action proceeding related
thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties hereto agrees that a judgment
in any such dispute may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law.
 
(b) Each of the parties hereto hereby consents to process being served by any
party to this Agreement in any suit, action or proceeding by the mailing of a
copy thereof in accordance with the provisions of Section 5.7.
 
5.4. Entire Agreement; Amendments and Waivers. This Agreement represents the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof and can be amended, supplemented or changed, and any
provision hereof can be waived, only by written instrument making specific
reference to this Agreement signed by the party against whom enforcement of any
such amendment, supplement, modification or waiver is sought. No action taken
pursuant to this Agreement, including, without limitation, any investigation by
or on behalf of any party, shall be deemed to constitute a waiver by the party
taking such action of compliance with any representation, warranty, covenant or
agreement contained herein. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a further or
continuing waiver of such breach or as a waiver of any other or subsequent
breach. No failure on the part of any party to exercise, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of such right, power or remedy
by such party preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. All remedies hereunder are cumulative and are
not exclusive of any other remedies provided by law.
 
5.5. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
 
5.6. Headings. The section headings of this Agreement are for reference purposes
only and are to be given no effect in the construction or interpretation of this
Agreement.
 
5.7. Notices. All notices and other communications under this Agreement shall be
in writing and shall be deemed given when delivered personally or mailed by
certified mail, return receipt requested, to the parties (and shall also be
transmitted by facsimile to the Persons receiving copies thereof) at the
following addresses (or to such other address as a party may have specified by
notice given to the other party pursuant to this provision):
 
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If to Creditor:
     
Titan Nexus, Inc.
 
1700 Jay Ell Drive Suite 200
 
Richardson, Texas 75081
 
Attention: Bryan M. Chance, President & CEO
 
Telephone: (972) 470-9100
 
Facsimile: (972) 767-3117
     
With a copy to:
     
Sichenzia Ross Friedman Ference LLP
 
61 Broadway
 
New York, New York 10006
 
Attention: Thomas A. Rose, Esq.
 
Telephone: (212) 930-9700
 
Facsimile: (212) 930-9725
     
If to Debtor:
     
Nexus Nano Electronics, Inc.
 
Nexus Custom Electronics Corp.
 
402 Prospect Street
 
Branson, Vermont 05733
 
Attention: Jerry Panos, President and CEO
 
Telephone: (802) 247-6811
 
Facsimile: (781) 938-6207
     
With a copy to:
     
Kirkpatrick & Lock Preston Gates Ellis LLP
 
Wachovia Financial Center
 
200 S. Biscayne Boulevard, Suite 2000
 
Miami, Florida 33131
 
Attention: Clayton E. Parker, Esq.
 
Telephone: (305) 539-3300
 
Facsimile: (305) 358-7095
   

 
5.8. Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
 
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5.9. Binding Effect; Assignment. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective successors and permitted
assigns. Nothing in this Agreement shall create or be deemed to create any third
party beneficiary rights in any person or entity not a party to this Agreement
except as provided below. No assignment of this Agreement or of any rights or
obligations hereunder may be made by either the Debtor or the Creditor (by
operation of law or otherwise) without the prior written consent of the other
parties hereto and any attempted assignment without the required consents shall
be void; provided, however, that the Creditor may assign this Agreement and any
or all rights or obligations hereunder (including, without limitation, the
Creditor’s rights to acquire the Collateral, the Creditor’s rights to foreclose
on the Collateral and the Creditor’s rights to rely on any of Debtor’s
representations and warranties made hereunder). Upon any such permitted
assignment, the references in this Agreement to the Creditor shall also apply to
any such assignee unless the context otherwise requires. 
 
5.10. Opportunity to Hire Counsel; Role of Kirkpatrick & Lockhart Preston Gates
Ellis LLP. Creditor hereby acknowledges that it has been advised and has been
given an opportunity to hire counsel and that its has hired counsel with respect
to this Agreement and the transactions contemplated hereby. Creditor further
acknowledges that the law firm of Kirkpatrick & Lockhart Preston Gates Ellis LLP
has solely represented Debtor in connection with this Agreement and the
transactions contemplated hereby and no other person.
 
[Intentionally Left Blank]

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IN WITNESS WHEREOF, the parties hereto have caused this Conveyance, Termination
and Release Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.

          TITAN NEXUS, INC.  
   
   
      By: /s/ Bryan M. Chance  

--------------------------------------------------------------------------------

Bryan M. Chance  
Title: President 
         
NEXUS NANO ELECTRONICS, INC.
      By: /s/ Jerry Panos                                
Name:    Jerry Panos                          
  Title:       President                                                       
     
NEXUS CUSTOM ELECTRONICS CORP.
      By: /s/ Jerry Panos                              Name: Jerry
Panos                              Title:   
President                              

 

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SCHEDULE A

1) Letter Agreement, dated June 22, 2007, with Cohn & Dussi (on behalf of GE
Capital Corporation and Lyon Financial Services, Inc.) pursuant to which Debtor
purchased Leased Equipment (Orbotech AOI Machine) which had previously been in
the possession of Mass Tech. Associates, Inc., d/b/a MassTech EMS.

2) Security Agreement, by and between Nexus Custom Electronics Corp. and UPS
Capital Business Credit, pursuant to which UPS received a first priority
security interest in the Collateral named therein.

3) Debtor pays a monthly fee for the leasing of a Juki 760 Placement Machine
(with feeders and conveyors) through Citicorp, this lease was never formally
assigned to Debtor (from MassTech EMS).

3) Those UCC-1s attached as hereto as Annex A.

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ANNEX A

UCC-1 FINANCING STATEMENTS TO FOLLOW EXHIBIT A HEREIN

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EXHIBIT A

As of - October 31, 2007
Issued - November 15, 2007

The Board of Directors
Nexus Nano Electronics, Inc.
402 Prospect Street
Brandon, Vermont 05733

ATTN: Mr. Chris Mathers, Chief Financial Officer and Member of the Board of
Directors

 
RE:
Forced Liquidation Valuation of Nexus Custom Electronics Corporation
   
(A Florida Corporation)

Dear Mr. Mathers and Gentlemen:

Per our agreement, you have requested the undersigned Economist to determine a
Fair Market Forced Liquidation Value of Nexus Custom Electronics Corporation (a
Florida Corporation) a wholly owned subsidiary of Nexus Nano Electronics, Inc.
(“NXNO”) (a Nevada Corporation) headquartered in Brandon, Vermont as of October
31, 2007.

In most similar circumstances, an Economist or Analyst seeking to determine the
Fair Market Forced Liquidation Value of an organization, only needs to look at
the local newswire service to determine the price of the stock on any given day
and simply multiply the number of shares issued by the then existing price in
order to compute a total Fair Market Value, if the company was a publicly traded
organization. From that Fair Market Valuation, the analyst would then determine
a discount or liquidation factor for the forced liquation and a Forced Liquation
Value would then have been determined. However, in the specific matter at hand,
the organization and its shares are not a publicly traded organization and need
to be independently valued.

The undersigned, in order to perform the desired valuation has been supplied
with a variety of accounting and financial data on the corporation for recent
periods. The data furnished and relied upon by the undersigned includes the
following:
 

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 2.
 
1) The corporate website of Nexus Custom Electronics, Inc. and the information
contained therein;
 
2) Term note in the amount of $1,200,000 between NECI Acquisition, Inc. and
Comerica Bank dated September 20, 2004;

3) Amended and Restated Secured Convertible Debenture issued by Sagamore
Holdings, Inc. to Cornell Capital Partners, LP, dated March 10, 2006 in the
amount of $743,284.72 and denoted as No. CCP-1;

4) Secured Convertible Debenture issued by Sagamore Holdings, Inc. to Cornell
Capital Partners, LP, dated June 1, 2006 in the amount of $850,000 and denoted
as No. CCP-2;

5) Secured Convertible Note in the amount of $660,000 between Nexus Nano
Electronics, Inc. and YA Global Investments, dated July 30, 2007, Numbered NXNO
4-1;

6) Secured Convertible Note in the amount of $6,723,087 between Nexus Nano
Electronics, Inc. and YA Global Investments dated July 30, 2007, Numbered NXNO
4-2

7) Limited recourse assignment between YA Global Investments, LP, f/k/a Cornell
Partners, LP and Titan-Nexus, Inc., a wholly-owned subsidiary of Titan PCB West,
Inc.;

8) Form 10-KSB of Sagamore Holdings, Inc., for the fiscal year ended June 30,
2005, as filed with the Securities and Exchange Commission on May 12, 2006;

9) Form 10-KSB of Titan Global Holdings, Inc. for the fiscal year ended August
31, 2006, as filed with the Securities and Exchange Commission on December 15,
2006;

10) Appraisal report and valuation analysis on real property located at 402
Prospect Street in the town of Brandon, Vermont, consisting of a one-story,
steel-framed building of approximately 30,418 square feet located upon a 5.7
acre parcel of land. This report was prepared by Scranton Appraisals, Inc. and
dated as of November 17, 2006;
 

 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 3.
 
11) Desktop orderly liquidation value appraisal on Nexus Custom Electronics,
Inc. machinery and equipment located in Brandon, Vermont and Woburn,
Massachusetts with an effective date of August 31, 2007. This report was
prepared by Joseph Finn Co., Inc. of Newton, Massachusetts;

12) A variety of financial statements and information on Nexus Custom
Electronics, Inc. as prepared by the Management and Staff of the organization;

13) Reviewed certain industry and financial information provided to the
undersigned by the Officers and Management of Nexus Custom Electronics, Inc. and
their respective representatives;

14) The undersigned has arranged to visit corporate facilities in both Brandon,
Vermont and Woburn, Massachusetts during the week of November 19, 2007. This
report is issued subject to that visitation addendum;

15) Reviewed certain limited publicly available financial data on organizations
in the same overall sectors as Nexus Custom Electronics, Inc.;

16) Reviewed and analyzed general Financial and Economic data, such as, but not
limited to, interest rates analysis that effect the overall ability of the
organization to function and reorganize in the United States; and

 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 4.
 
 
17) Analyzed and reviewed such other studies, analyses, inquiries and
investigations as we deemed appropriate for the purpose of this valuation
opinion.
 
In rendering our opinion, we have relied upon and assumed, without independent
verification, the accuracy and completeness of financial and other information
that was available to us from public and non public sources and all the
financial and other information provided to us by either / or Nexus Custom
Electronics, Inc. or their representatives. We have further relied upon the
assurances of the Senior Management of Nexus Custom Electronics, Inc. that they
are unaware of any facts that would make the information regarding either / or
Nexus Custom Electronics, Inc. or the general industry data, as provided,
inaccurate, incomplete or misleading.

In examining and valuing corporations that are basically service or “small”
semi-manufacturing organizations as opposed to “large” manufacturers or
distributors, entities / corporations such as Nexus Custom Electronics, Inc.
that are privately held and non-publicly traded corporate entities, and is owned
and / or operated by an individual or a small group or unit (or a family), such
corporations need to be valued according to standard methods and approaches.
This is especially true of applying the appropriate methods for a specific
entity in a specific type of business activity. While different Appraisers can
use and include their own favorite approaches to support their findings, one of
the basic and widely acceptable methods of valuing corporations such as the type
and size of Nexus Custom Electronics, Inc. is the Comparative Market Method,
utilizing a multiple of earnings, such as net earnings (“net income”).

In order to clearly rectify and denote the differences between organizations
that are publicly traded and operated on a daily basis by “hired” management,
whose goals can often conflict with the goals and desires of individual
shareholders, the Internal Revenue Service promulgated a method of its own for
valuing many small businesses. This method, which has been utilized since the
early 1920s, is commonly known as and referred to as the “Excess Earnings
Method”. This method, unlike other methods, removes a great deal of speculation
from the overall valuation process and has become widely relied upon to value
small businesses, especially professional practices. In other words, it values
organizations that do not possess a great deal of tangible assets and / or whose
assets are basically the talents, skill and input of an individual or a group of
a few individuals. This has commonly come to be referred to as “intellectual
property” valuations.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 5.

Valuation methods, such as and including the Capitalization of Net Cash Flow,
the Market Approach and Debt Capacity methods are all open to a variety of
projections, Appraiser bias and use and reliance upon data that often could be
suspect in accuracy, as in the case of the market approach. Instead of trying to
create a value by mixing and blending a number of approaches that require
interpretation, projections and use of data that is not open to the public and
can easily be skewed to reflect the desires of an Appraiser, a clear and obvious
answer is to utilize the method that was recommended by the United States
Treasury and the Internal Revenue Service for the valuation of small service
business, namely the Excess Earnings Method. This method is not open to
projections, a wide variety of assumptions and the reliance upon data that is
not public in nature and not subject to financial scrutiny of collection, and
analytical methods.

However, in the matter at hand, the Excess Earnings Method and the other methods
outlined and described above CANNOT be utilized in the liquidation valuation of
a small business such as and including Nexus Custom Electronics, Inc. The reason
said approach cannot be employed is that the Excess Earnings Method and all
other methods thus far described rely upon the fact that the business is and
will remain an ongoing entity, which is clearly not the circumstances based upon
the facts of a forced liquidation. In as much as there is no published or
standard norm for the liquidation or liquidation value of organizations such as
Nexus Custom Electronics, Inc. the methods outlined above will be discarded in
favor of the Liquidation Methods of Valuation, (described below, herein) that
can be applied via the utilization of proper economic and financial techniques
and well utilized and recognized in the economic / financial / securities
industry.
 
Before turning to the Fair Market Forced Liquidation Valuation of the
organization - Nexus Custom Electronics, Inc., an explanation of the
organization, namely a small contract manufacturer / supplier to industrial
original equipment manufacturers (OEM”) and the circumstances surrounding that
business explored and explained.
 
 
OVERALL OUTLINE OF NEXUS CUSTOM ELECTRONICS, INC.

Nexus Custom Electronics, Inc., a wholly owned subsidiary of Nexus Nano
Electronics, Inc., provides contract-manufacturing services to industrial
original equipment manufacturers ("OEMs") customers. The core customer base
consists primarily of small and medium-sized manufacturers that produce
electronic equipment used in a wide variety of industries. Sales from the
business is recognized at the time products are shipped to customers and may
vary depending on the time of customers' orders, product mix and availability of
component parts. Substantially all of the business is performed on a turnkey
basis that involves the procurement of specified components and raw materials
from its network of suppliers and other suppliers, assembly of components on
printed circuit boards and post-assembly testing. OEMs then incorporate the
printed circuit boards into their finished products. In assembling printed
circuit boards, Nexus is capable of employing both conventional pin-through-hole
interconnection technology, as well as advanced surface mount technology.
Pin-through-hole interconnection technology is a method of assembling printed
circuit boards in which component leads are inserted and soldered into plated
holes in the board. Surface mount technology is a method of assembling printed
circuit boards in which components are fixed directly to the surface of the
board, rather than being inserted into holes. The gross profit margin for such
materials is generally lower than the gross profit associated with the
manufacturing process and other value-added services.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 6.

The company does not typically enter into long-term purchase orders or
commitments from its customers. Instead, the company works with its customers to
develop forecasts for future orders that are not binding. Customers may cancel
their orders, change their orders, and change production quantities from
forecasted volumes or delay production for a number of reasons beyond the
company control. Cancellations, reductions or delays by a significant customer
or by a group of customers could have an adverse effect on the company. In
addition, as many of the costs and operating expenses are relatively fixed, a
reduction in customer demand can adversely affect the gross margins and
operating income.

Corporate Operations

Nexus conducts contract manufacturing operations through a wholly owned
subsidiary, Nexus, at two locations. The first location is an approximately
32,000 square foot facility located in Brandon, Vermont and offers full turnkey
contract manufacturing services. In November 2005, Nexus scaled back its second
facility located in Woburn, Massachusetts. The Woburn facility is a satellite of
Nexus specializing in prototype, new customer introduction, as well as operating
two (2) dedicated lines for a defense contractor and an automotive customer.
Nexus provides turnkey contract manufacturing services to OEM customers which
includes procurement of customer specified components and raw materials from a
network of suppliers and other suppliers, assembly of components on printed
circuit boards and post-assembly testing. OEMs then incorporate the printed
circuit boards into finished products. In assembling printed circuit boards,
Nexus is capable of employing both pin-through-hole and surface mount
technology.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 7.

Pin-through-hole interconnection technology is a method of assembling printed
circuit boards in which component leads are inserted and soldered into plated
holes in the board. Surface mount technology is a method of assembling printed
circuit boards in which components are fixed directly to the surface of the
board, rather than being inserted into holes. The surface mount technology
process allows for more miniaturization, cost savings and shorter lease paths
between components (which results in greater signal speed).

Nexus provides electronics manufacturing services to the communications,
aviation, defense, medical devices and instrumentation industries, and serves
the continental United States, with its concentrated market in the eastern
region of the United States. Both of Nexus' manufacturing facilities have earned
ISO 9001:2000 certification by the Geneva-based organization dedicated to the
development of worldwide standards for quality management guidelines and quality
assurance. Management believes sophisticated customers increasingly are
requiring their manufacturers to be ISO 9001 certified for purposes of quality
assurance.

Manufacturing Of Electronic Assemblies

Printed Circuit Board Assembly

Printed circuit boards are platforms on which integrated circuits and other
electronic components are mounted.

Semiconductor designs are complex and often require printed circuit boards with
many layers of narrow, densely spaced wiring. Rapid technological advances have
occurred in the electronics industry in recent years that have increased the
speed and performance of components while reducing their size. These
technological advances have caused printed circuit boards to become smaller with
components more densely attached to the board requiring increasingly advanced
surface mount manufacturing technologies, in addition to traditional surface
mount and pin through-hole technology.

In pin-through-hole production, components are attached by pins, also called
leads, inserted through and soldered to plated holes in the printed circuit
board. In traditional surface mount technology production, the leads on
integrated circuits, and other electronic components are soldered to the surface
of the printed circuit board rather than inserted into holes. Surface mount
technologies can accommodate a substantially higher number of leads in a given
area than pin-through-hole production. As a result, surface mount technologies
allow the printed circuit board to interconnect a greater density of integrated
circuits. This density permits tighter component spacing and a reduction in the
printed circuit board dimensions. Additionally, surface mount technologies allow
components to be placed on both sides of the printed circuit board to permit
even greater density. The substantially finer lead-to- lead spacing in surface
mount technologies requires a manufacturing process far more exacting than the
pin-through-hole interconnect products. An advanced surface mount technology
called micro ball grid array allows for even greater densities than traditional
surface mount technology. The ball grid array assembly process uses small balls
of solder, instead of leads that could bend and break, located directly
underneath the part, to interconnect the component and circuit board. Because of
their high number of leads, most complex or very large-scale integrated circuits
are configured for surface mount technologies production.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 8.
 

Nexus employs advanced surface mount technologies in its printed circuit board
assembly operations in addition to traditional surface mount technologies. The
company also continues to support pin-through-hole technology and related
semi-automated and manual placement processes for existing and new applications
that require these technologies.

Nexus focuses on low to moderate volume manufacturing of highly complex printed
circuit board assemblies. The company manufactures these complex assemblies on a
batch basis and has developed expertise in quickly changing equipment set-up and
manufacturing capabilities in order to respond to customers' changing needs. The
company believes this capability provides customers with optimal flexibility in
product design while allowing for rapid turnaround of new or highly complex, but
lower volume products.
 
Customers and Markets
 
Nexus serves a wide range of customers from emerging growth companies to
established multinational corporations in a variety of markets. The timing and
level of orders from its customers varies substantially from period to period.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 9.

The historic level of net sales Nexus Electronics has received from a specific
customer in one particular period is not necessarily indicative of net sales the
company may receive from that customer in any future period. While the company
focuses on maintaining long term relationships with its customers for various
reasons including consolidation in its customers' industries; Nexus Electronics
has in the past and will continue in the future to terminate or lose
relationships with customers. Customers may also significantly reduce the level
of business done with Nexus Electronics or delay the volume of manufacturing
services ordered from the company. Significant or numerous terminations,
reductions or delays in its customers' orders could negatively impact its
operating results in future quarters.

The company's three (3) largest customers, GSI Lumonics, Frequency Electronics,
and S-TEC, accounted for 70.0% of total sales in fiscal 2005 (lasted data
supplied), and as a result of its importance, Nexus Electronics is dependent
upon continuing its business with these customers. The company, nonetheless,
continues to focus on expanding and diversifying its customer base to reduce
dependence on any individual customer or market.

In many cases, the company's customers utilize more than one contract
manufacturing provider across product lines. The company's goal is to be the
primary contract manufacturing provider for its customers. Nexus Electronics
seeks to manufacture the high-value, leading-edge products of its customers and
target OEMs that require moderate volume production. The low-to-medium volume,
low cost facilities enable the company to offer its customers a broad range of
volume production and cost alternatives. The company believes that it is
advantageously positioned to be selected to provide manufacturing and
value-added services for its customers' new product offerings due to:

 
·
Close interaction with the design engineering personnel of its customers at the
product development stage;

 
·
Prototype production experience;

 
·
Advanced manufacturing and engineering capabilities, such as radio frequency
capabilities; and

 
·
Established and dependable materials pipeline.

 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 10.
 
 
Nexus generally warrants that its products will be free from defects in
workmanship for twelve months. Nexus also passes on to its customers any
warranties provided by component manufacturers and material suppliers to the
extent permitted under its arrangements with these parties. The company warranty
provides that during the warranty period, action will be taken to repair or
replace failed products. Nexus tests substantially all of our assemblies prior
to shipment. In addition, customers generally test or have tested final products
on a sample basis prior to deployment in the field. Warranty costs have not been
material to date.

Corporate Suppliers

Nexus OEM customers require:

 
·
Assurance that the short and long term supply of materials and components to
manufacture their products;

 
·
Negotiate low prices for these materials;

 
·
Secure high quality and reliable materials;

 
·
Assure the on-time delivery of these materials; and

 
·
Provide flexibility to change their production requirements on short notice.

To compete effectively in this business environment, Nexus Electronics has
developed a materials procurement strategy whereby it maintains strong,
long-term relationships with a limited number of suppliers who conform to its
highest standards. The company seeks to work with suppliers that consistently
deliver the best technology and quality materials at low total cost on short and
flexible lead times. Nexus Electronics consistently evaluates all of its
suppliers' performances and provides suggestions for improving its
relationships. When Nexus does business with a supplier at its customer's
direction, the company closely monitors the supplier's performance and work with
both the supplier and the customer to improve the supplier's performance when
necessary. The company believes this strategy enables it to provide optimal
flexibility to its OEM customers and enables it to better satisfy their EMS
needs.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 11.
 
 
The Nexus team of materials acquisition professionals is responsible for all
materials procurement and planning. The company has a strategic purchasing group
that develops its worldwide materials and commodity procurement strategy. This
strategic group is responsible for understanding the needs of its customers and
the commodity supply market, evaluating the overall quality of suppliers and
negotiating and executing low cost commodity supply contracts with preferred
suppliers. The company also has a group that focuses on the day-to-day tactical
execution of its materials procurement process to attempt to insure that
material or component costs or shortages do not prevent the company from
providing optimal services to its customers. This group is responsible for
proactively managing inventory programs, evaluating day-to-day supplier
performance, and coordinating customer plan production changes.

Nexus Electronics typically procures components when a purchase order or
forecast is received from a customer. Due to its utilization of just-in-time
inventory techniques, the timely availability of many components depends on its
ability to both develop accurate forecasts of customer requirements and manage
the materials supply chain. Given the company’s direct component procurement
strategy with quality suppliers, Nexus Electronics relies on a single or limited
number of suppliers for many proprietary and other components used in the
assembly process. Although Nexus Electronics has strong relationships with high
quality suppliers, the company does not have any long-term supply agreements,
except with Jaco, as described below. Shortages of materials and components have
occurred from time to time and will likely occur in the future despite the
development of select long-term supplier relationships. The company believes its
direct procurement strategy and the division of responsibility within its
materials procurement team enables them to better manage its supply chain in
order to reduce the occurrence and minimize the effect on its customers of
materials or component shortages.

Nexus entered into a five-year Supply Agreement with Jaco Electronics, Inc., on
September 20, 2004. Pursuant to the Supply Agreement, Jaco provides electronic
components to Nexus for use in its manufacturing operations. Under the Supply
Agreement, Nexus must purchase at least 15.0% of the dollar amount of its annual
purchases of electronic components that are included in Jaco's line card and are
compatible with Nexus' needs. However, Nexus may submit requests for proposals
to other suppliers as it may choose. If Jaco's proposal contains the lowest
price, then Nexus must purchase its components from Jaco.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 12.

Corporate Competition

The electronics contract manufacturing industry is highly fragmented and is
characterized by relatively high levels of volatility, competition and pricing
and margin pressure. Many large contract manufacturers operate high-volume
facilities and primarily focus on high-volume product runs. In contrast, certain
contract manufacturers, such as Nexus, focus on low-to-medium volume and
service-intensive products.

Nexus competes against numerous providers with global operations, including
Benchmark Electronics, Celestica, Flextronics, Jabil Circuit, Plexus,
Sanmina-SCI, Suntron and Solectron. Nexus also faces competition from a number
of EMS providers that operate on a local or regional basis. In addition, current
and prospective customers continually evaluate the merits of manufacturing
products internally.

Consolidation in the EMS industry results in a continually changing competitive
landscape. The consolidation trend in the industry also results in larger and
more geographically diverse competitors who have significant combined resources
with which to compete against Nexus. Nexus believes that the principal
competitive factors in the segments of the electronics contract manufacturing
industry in which it operates are:

   
Geographic location and coverage;

   
Flexibility in adapting to customers' needs;

   
Manufacturing capability;

   
Price;

   
Service;

   
Technology;

   
Quality;

   
Reliability; and

   
Timeliness in delivering finished products.

 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 13.
 

 
Nexus believes that it has developed a particular strength relative to some of
its major competitors in the manufacturing of complex, low-to-moderate volume,
leading-edge products. Competition from existing or potential competitors could
result in reduced prices, margins and market share which would significantly and
negatively impact operating results.

Nexus has entered into a business development services agreement with Celerity
Systems, Inc. Pursuant to the agreement with Celerity, upon request, Celerity
shall assist us in managerial assistance, including significant guidance and
counsel in management, operations or business objectives and policies. Such
assistance may include strategic and financial planning, designing budgets, and
control systems. No services have been provided by Celerity to date.

Nexus is well-known in the industry in which it competes, particularly in the
northeast region. Together with its website and other marketing activities, the
company believes its trade name and trademark has value to the business. In
connection with the acquisition purchase price allocation, the company recorded
$257,735 valuation for its trademark and trade name. Subsequently, an impairment
charge in the amount of $45,070 was taken in Fiscal 2005 in accordance with SFAS
No. 142, “Accounting for Goodwill and Other Intangible Assets”.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 14.
 
 
CORPORATE FINANCIAL DATA

In order to help determine a Fair Market Forced Liquidation Valuation, an
analyst needs to look at the finances of the overall and general formulation of
the organization. Value depends upon a great many factors, especially, past
performance, risk and industry growth rate potential / reward. In as much as
Nexus Custom Electronics, Inc. is NOT a publicly traded organization, the amount
of data both collected and available is limited. However, an overall financial
review of the organization is denoted via the information furnished the
undersigned to be utilized in regard to this corporate Fair Market Forced
Liquidation Valuation.

NEXUS CUSTOM ELECTRONICS

Statement of Income

July 1, 2007 - September 30, 2007

First Quarter - Fiscal Year 2008
 
 

   
1st Quarter
     
Totals
         
Sales
   
1,904,567
 
Sales Discounts
   
7,396
 
 Net Sales Billed
   
1,897,170
                     
Materials
   
1,069,781
 
Outside Services
   
100
 
Material Overhead
   
131,861
 
Direct Labor
   
280,275
 
Manufacturing Overhead
   
897,090
 
Inv Reval and Physical Adjustments
   
(41,292
)
Scrap and Restock Charges
   
6,834
 
Excess Material Provision
   
0.00
 
NRE Costs
   
22,316
 
Cash Discounts Taken
   
0.00
 
Overhead Adjustment
   
(113,750
)
Manufacturing Expense
   
2,253,214
           
GROSS PROFIT
   
(356,043
)
(Gross Profit Percentage)
   
-18.77
%

 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 15.

Admin Expense
   
296,385
 
Selling Expense
   
42,854
 
 Indirect Expense
   
339,239
           
Operating Profit
   
(695,282
)
Mfg Consultant (Expense)
   
0
 
Other Income (Expense)
   
1,757
           
 EBIT
   
(693,526
)
(EBIT Percentage)
   
-36.56
%
                   
Net Interest Expense (Income)
   
142,773
 
Woburn Re-Structure
   
4,020
                     
Profit / Loss Before Taxes
   
(840,318
)
         
Cash Purchase Acctg Expense
   
128,638
 
Non-Cash PA Exp (Amort. Intang)
   
37,227
 
Adjusted Pretax
   
(1,006,183
)
                   
Federal Taxes
   
0
 
State Taxes
   
133
 
Total Taxes
   
133
                     
Net Profit/(Loss)
   
(1,006,316
)
(Net Profit Percentage)
   
-53.04
%
         
EBITDA
                 
EBIT
   
(693,526
)
Depreciation
   
133,911
 
 EBITDA
   
(559,614
)
(EBITDA Percentage)
   
-29.50
%

 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 16.

NEXUS CUSTOM ELECTRONICS

Balance Sheet

September 30, 2007

ASSETS
             
CURRENT ASSETS:
     
Cash
   
114,574.56
 
Accounts receivable (Net)
   
727,807.84
 
Inventory
   
1,744,933.81
 
 Identifiable Intangibles
   
858,879.76
 
Other Current Assets
   
126,901.31
           
Current Assets
   
3,573,097.28
           
PPE - Cost
   
9,218.308.44
 
Accumulated Depreciation
   
(7,823,621.38
)
         
 Net PPE
   
1,394,687,06
           
Prepaid Income Taxes
   
9,386.48
           
Long Term Asset; Goodwill
   
110,170.25
           
TOTAL ASSETS:
   
5,087,341.07
                     
LIABILITIES AND EQUITY
                 
LIABILITIES
       
 Accounts Payable
   
3,819,038.44
 
Accrued Compensation
   
249,190.35
 
Accrued Expenses
   
795,925.76
 
Current Portion of LTD and Capital Leases
   
196,578.30
 
Current Portion, MyData Equipment
   
118,703.00
 
CSI Funding
   
350,000.00
 
  --Revolver, Comerica
   
0.00
 
Current Liabilities
   
5,529,435.85
                                         
JACO Earn Out Obligation, 9/30/2005
   
105,453.00
 
Long Term Debt, Comerica
   
0.00
 
Long Term Debt, UPS Capital
   
240,000.00
 
JACO Note Payable
   
2,750,000.00
 
Intercompany, Sagamore
   
1,506,070.51
 
YA Global Funding
   
2,478,321.98
           
Long Term Liabilities
   
7,079,845.49
 
 
       
TOTAL LIABILITIES
   
12,609,281.34
                     
EQUITY
                 
Sagamore Equity
   
(5,250,000.00
)
         
Retained Earnings, FY05
   
5,809,449.12
 
Retained Earnings, FY06
   
3,453,110.59
 
Retained Earnings, FY07
   
2,503,064.18
 
(Profit)/Loss, FY08
   
1,006,316.38
           
 TOTAL EQUITY
   
(7,521,940.27
)
                   
TOTAL LIABILITIES AND EQUITY
   
5,087,341.07
 

 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 17.

Notes Regarding The Company and the Balance Sheet

COMPANY FACES INVENTORY OBSOLESCENCE AND SLOW MOVING INVENTORY

Nexus purchases raw materials specified in the material requirements to
manufacture products that customers order. If a customer cancels an order and
materials cannot be returned to suppliers, nor used on other products, the
inventory may need to be adjusted downward in the financial statements or
written off. Prior to its acquisition by Sagamore, Nexus had never prepared
financial statements that had been audited. As a result of the preparation of
the financial statements of Nexus, and the related audits for the period from
July 1, 2004 through October 3, 2004, and the years ended June 30, 2004 and
2003, which were done in connection with and at the time of the company's
acquisition and the filing of its initial registration statement; Sagamore
determined that Nexus purchased customized component parts that were included in
raw material inventory that arose from customer orders that were subsequently
replaced or cancelled prior to July 1, 2002. These materials could not be
returned to suppliers nor used in connection with orders from other customers.
As a result, Nexus effectively recorded obsolescence charges of approximately
$2,000,000 prior to July 1, 2002.

The company has adopted procedures currently to periodically perform an in depth
review of its inventory to determine if adjustments are required to its carrying
value for accounting purposes. The company recorded an obsolescence and slow
moving inventory reserve of $913,777 in Fiscal 2005 as the result of reduction
of sales, cancelled purchase orders, and technical obsolescence.
 
 
2007

Further, the undersigned has been informed by Corporate Management that as of
October 29, 2007 Nexus had a total of $1,540,277 of inventory that is considered
“slowing moving” and its value would have to be substantially reduced on the
corporate balance sheet and records.
 
 
GOING CONCERN MATTERS

The consolidated financial statements have been prepared assuming that Nexus
will continue as a going concern. However, the Company incurred a net loss of
$7,556,949 in Fiscal 2005, and had a net working capital deficiency of
$3,578,734 at June 30, 2005. It also did not meet certain covenants under its
credit facility with Comerica and promissory note with Jaco, and accordingly,
the outstanding balance of $3,779,423 under the credit facility ($2,759,423
under the revolver and $1,020,000 under the term loan) and the outstanding
balance of $2,750,000 under the note agreement were in default as of June 30,
2005, and is classified in current liabilities in the consolidated balance
sheet. Accordingly, there was in 2005 substantial doubt as to the ability of
Sagamore Holdings and its subsidiary to continue as going concern.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 18.

The company did not meet the requirements of four (4) covenants under the
provisions of its credit facility with Comerica: Minimum working capital ratio;
debt service ratio (“EBITDA”, as defined, divided by interest and principal
payment requirements); leverage ratio (liabilities to tangible net worth ratio)
and minimum tangible net worth (tangible net worth includes subordinated debt
but excludes intangible assets), and, therefore, was in default. During the
period while the company is in default under the credit facility, the lender may
force immediate repayment of amounts due ($3,779,423 at June 30, 2005), and
invoke penalty interest (up to three percentage points or approximately $114,000
annually) at the lender’s discretion. Since the Company has not been notified
that it will be charged penalty interest, it has not accrued any as of June 30,
2005.

The Company entered into a forbearance agreement with Comerica on July 15, 2005,
effective July 1, 2005 through August 1, 2005, which essentially provided an
extension of the revolver under the credit facility which expired on July 1,
2005, and also provided that Comerica would not exercise its right to call for
acceleration of all amounts due under the term loan and revolver under the
credit facility if the Company met certain conditions. Effective August 1, 2005,
the company and Comerica agreed to extend the maturity date of the revolver
under the credit facility to September 1, 2005. Nexus and Comerica are currently
negotiating an extension of the forbearance agreement from September 1, 2005
through June 30, 2006. If an extension is agreed upon, the Company intends to
attempt to negotiate an amendment to the credit facility in order to renew the
facility and have the company in compliance going forward. However, there can be
no assurance that the company will get an extension on the forbearance
agreement.

Nexus Electronics is also in default under its promissory note agreement with
Jaco due to being delinquent on interest payments, as well as effecting a change
in control event subsequent to June 30, 2005. As a result of these events of
default, the $2,750,000 underlying note was also classified as a current
obligation since Jaco has a right to accelerate payment. The company disputes
the amount due Jaco under the purchase agreement. In addition, the company
intends to pursue its claims and remedies against Jaco.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-044

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 19.
 
 
According to information supplied the to the undersigned, while new financial
statements that have been prepared are not audited, the company is still in
default under most, if not all of the covenants of the loans as outlined above,
herein.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 20.
 

NEXUS CORPORATE PROPERTY

Currently, corporate headquarters is located at 402 Prospect Street, Brandon
Vermont. This location is an approximately 32,000 square foot facility located
in Brandon, Vermont, which is also used for manufacturing and storage in
addition to our office space. This property is owned and occupied by our
wholly-owned subsidiary, Nexus, and is fully encumbered by a first security
interest in the amount of $5,000,000 held by Comerica Bank on all property Nexus
now or later owns or has an interest.

The company also operates a second facility in Woburn, Massachusetts through
Nexus. This facility's address is 317 New Boston Street, 2nd Floor, Woburn
Massachusetts. The property is leased and has a base rent of $14,197 per month.
The lease expires on July 31, 2008, and has a three-year option to renew with
base rent increases of 3.34%. Nexus believes that its present facilities will be
adequate to meet our needs for the foreseeable future.

 
Further Property Identification

The subject property known as Nexus Custom Electronics, Inc., is located at 402
Prospect Street in the Town of Brandon, Vermont. It consists of a circa 1975
one-story steel framed building of approximately 30,418 square feet located upon
a 5.7 acre parcel of land. The property is presently owned by NECI Acquisitions,
Inc., and is described with a QuitClaim Deed recorded September 27, 2004, in
Book 170, pages 411-412 of the Town of Brandon Land Records.
 
 
Property Location

Brandon is located in Rutland County, in the western central portion of the
state and has a population of roughly 4,194 persons. The town is bisected by
Route 7, the major north-south highway on the west side of the state
approximately sixteen (16) miles north of Rutland and fourteen miles south of
Middlebury. In an east-west direction, the town is bisected by Route 73.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 21.
 
 
The downtown of Brandon is a classic New England village with central green, a
large hotel, a well established central business district with fine old
residences and commercial buildings of historic and architectural work. Most
shopping and professional services are available, including post office, banks,
restaurants, and retail shops; many of which cater to the tourist trade.
Manufacturing includes electronic supplies, fertilizers, grist mills, lumber,
millwork, and woodworking.

The subject property is located at 402 Prospect Street which is located
approximately one-quarter (1/4) mile north off U. S. Route 7, in the Conant
Square District of the Town of Brandon. The immediate area is an established
residential neighborhood of primarily single family dwellings, and adjacent to
the Pleasant Height residential subdivision.

Property Zoning

According to the Town of Brandon Zoning Ordinance, the subject property lies in
an area designated as the "Neighborhood Residential District". Permitted uses in
this district are residential, planned residential developments and open space.
Uses requiring a conditional use permit within this district include agriculture
uses, natural resource extraction uses, commercial #1 uses, community support
and recreational uses, mobile home parks, and public service uses. The minimum
lot size of this district is 0.25 acres, the minimum front setback is twenty
(20) feet, and the minimum side and rear setbacks is five (5) feet. The present
building improvements are a pre-existing legal, non-conforming use under the
current zoning regulations.
 
 
Site Data

The subject site is shown on the town of Brandon Tax Map #20-51 as parcel #42.
This property is irregular in shape and consists of 5.7 acres of land. The land
is level on road grade, being entirely open with a spacious northernly and rear
lawn area with woods located along the rear boundary. There are two (2) paved,
single entrance driveways located off Prospect Street, one leads to a visitors
parking area for approximately twenty-five (25) vehicles and the other leads to
an employee parking area for approximately seventy-five (75) vehicles. Located
at the rear of the land is a paved surface truck turn-around area and driveway
leading to the shipping and receiving docks.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 22.

 
There is municipal water and sewer, and overhead electrical and telephone
service. The subject property is located on the National Flood Insurance
Program's Flood Insurance Rate Map, Community Panel Number 5000900000-5C dated
February 19, 1982. This property is not located within the designated flood
hazard area.

Description of the Improvements

Located upon the above land parcel in a circa 1975 one-story steel frame
building with several subsequent additions totaling approximately 30,418 square
feet of building area. The building is built upon a concrete foundation and
concrete slab.

The building exterior has steel siding, double hung and fixed glass windows, and
a metal and rubber membrane roof. There is a front covered entry leading to the
main office area, an additional covered entry leading into the main factory
portion of the building, and a side and rear truck loading dock.

The interior layout of the building is briefly described as follows:

Main reception and waiting room, leading to the executive office area with
conference room, engineering, accounting, and computer center.

The manufacturing area surrounds an open interior court yard, which is accessed
of the employee's kitchenette and dining area. Located in the southwest corner
of the building is a receiving area and the production staff offices; and a
shipping area located at the rear of the building.

Located at the rear of the manufacturing area in the northwest corner of the
building is an area set for spray finishing which has several large exhaust
fans.

The building interior is primarily finished with drywalls and ceilings, vinyl
tile and carpeted floors, and fluorescent lighting. The building is fully
insulated and has propane gas-fired heating and air conditioning throughout. The
building is completely sprinkled.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 23.

Although the original building was built in 1975, there have been several
subsequent additions and extensive renovations, and the general physical
condition is considered above average.

 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 24.
 

VALUATION COMPARISON TECHNIQUES

Before turning to the direct analysis and valuation of Nexus Custom Electronics,
Inc. an overall explanation of the general methods used to value businesses,
especially small or family owned or controlled organizations needs to be
outlined and explored. They are explained below in succinct form for a reader’s
reference.

VALUATION METHODS OUTLINE

The purpose of this valuation report is to value the above noted contract
manufacturing corporation that has been conducting business (in whole or part)
for a substantial period of time. Based upon data, as explained below, the
valuation we are seeking is a Fair Market Forced Liquidation Value as opposed to
a Fair Market Value (FMV - Treasury Regulation 20.2031-1(b); Revenue Ruling
59-60, 1959-1 C.B. 237; as modified by Revenue Ruling 65-193; I.R.B. 1965-2, and
Revenue Ruling 68-609, I.R.B. 1968-48) concept, or a book value. In order to
obtain a corporate valuation, several methods can be selected including -
Comparative Company Method utilizing Net Income or EBITDA, Excess Earnings
Method and the Discounted Cash Flow method which encompasses Capitalization of
Earnings or the Liquidation Method. In as much as the undersigned has been
informed that a corporate foreclosure could be in process, the undersigned was
requested to value Nexus Custom Electronics, Inc. under the Fair Market Forced
Liquidation Method. For completeness of thought and understanding the most
widely utilized and commonly engaged methods of valuing an organization will be
outlined below.

Comparative Earnings Method Utilizing Net Income

The idea behind the Comparative Earnings Method is that the value of companies,
organizations or service entities involving comparative ventures in the same or
similar industry provide objective evidence as to values at which investors are
willing to, value, buy or sell in a specific industry.

In applying the comparative earnings valuation approach, the consultant usually
computes a value multiple for each comparative method or industry. The
appropriate multiple is then determined and adjusted for the unique aspects of
the organization being valued, namely a Net Income is computed. The multiple is
then applied to the organization being valued to arrive at an estimate of value
for either the entire organization and / or the appropriate ownership interest.
A market multiple represents a ratio that expresses the fair market value of an
organization as a percentage of annual net revenues (or financial position) as
the denominator. Value multiples can either be computed on a per share basis or
a total annual earnings or other measure. The most well known value multiple is
price / earnings whereby a company’s stock price is divided by its earnings per
share. Once a number of comparative organizations and their adjusted financial
information has been selected, the last step is to determine and compute the
appropriate earning multiples.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 25.
 
 
In valuing organizations, such as Nexus Custom Electronics, Inc., the
comparative method, also sometimes known as or referred to as Market Data
Comparable Approach, is well known and utilized in the overall business services
sector. The approach requires the analyst to have some first hand information of
actual purchases or sales of similar organizations that are involved in or known
as “electronic contract manufacturers” and evidence that these organizations are
comparable in “economic fiber” to the subject organization under analysis. The
database of comparative corporate data should be broad based and contain data
involving a good number of organizations, related organizations and affiliated
organizations in the electronic contract manufacturing business sector, in
addition to geographic locations, sizes, average revenues, mark-ups utilized,
and a whole host of other economic and financial data. While a significant
amount of this type of information is often confidential in nature, a good
number of such organizations that are similar to Nexus Custom Electronics, Inc.
have available data via public / SEC sources and databases.

Based upon the above, in order to place all of the variable information into a
usable number or guideline, a price-annual or revenue multiplier has often been
utilized in recent years. Here, the subject corporation’s revenues are
capitalized by the price-revenues multiple and the result is an estimate of the
fair market value of the subject organization under analysis. While this
approach can often require limited finance or economics as it analyzes
organizations of a similar nature, the accuracy of the final valuation is also
based upon general overall data often times referred to as a “rule of thumb”
analysis.

This technique for electronic contract manufacturing sector is generally relied
upon and has become more customized and tailored to the specific corporation or
entity under analysis. Hence, this method would have been utilized if the
undersigned was seeking a Fair Market Value of Nexus Custom Electronics Inc.
organization.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 26.
 
 
However, this valuation method denotes that the organization would continue
operating in its normal mode of operation and remain a going concern. Since data
has been presented to the undersigned that a possible corporate foreclosure is
being considered that would effectively end the ability of the company to
continue as a going concern, said valuation method will not be utilized herein
to obtain a Fair Market Forced Liquidation Value for an electronic contract
manufacturing services type organization.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 27.
 

The Excess Earnings Method

The Excess Earnings Method was developed by the United States Treasury
Department in 1920 in Appeals and Review Memorandum 34 (ARM 34). Its current
version is found in Revenue Ruling 68-609. The excess earnings method is
commonly used in valuing a wide variety of small businesses.

The idea for the Excess Earnings Method is to compute the company’s equity value
based on the “appraised” value of tangible assets, plus an additional amount for
intangible assets. A company’s tangible assets should provide a current return
to its owners. Since there are risks associated with owning the company’s
assets, the rate of return on those assets should be commensurate with the risks
involved. That rate of return should be either the prevailing industry rate of
return required to attract capital to that industry or an appropriate rate above
the risk-free rate.

Any returns produced by the company above the rate on tangible assets are
considered to arise from intangible assets of the organization. Accordingly, the
weighted average capitalization rate for tangible assets and intangible assets
should be equivalent to the capitalization rate for the entire company.

While the Internal Revenue Service and a substantial number of professionals in
the Financial and Economic industries have come to utilize and rely upon this
valuation technique, this method is usually employed and relied upon in the
analysis of professional and medical practices. In these instances, it is the
earnings of the professional that are above “normal compensation” as determined
by industry standards that create the corporate value. In the matter at hand,
especially for business service / business maintenance organizations, no such
normal earnings or industry standards are collected, published or made available
and therefore the excess earnings method, in spite of its sound fundamental and
economic underpinnings, cannot be utilized for the present corporate valuation
under analysis.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 28.
 

Discounted Net Cash Flow Approach

The Discounted Net Cash Flow Approach and the Capitalized Returns Approach are
based upon the premise that the value of an ownership interest in a company is
equal to the net present value of the future benefits of that ownership. The two
(2) well known and accepted valuation approaches that directly use this premise
are the Discounted Net Cash Flow Approach and the Capitalized Returns Approach.

The Capitalized Returns Approach tends to be the more appropriate valuation
method when it appears that an organization’s current operations are indicative
of its future operations (assuming a normal growth rate). On the other hand, if
there is going to be a sale or transfer of an organization, the Discounted Net
Cash Flow Approach tends to be more appropriate, since future returns could be
expected to be “substantially different” from current operations.
(“Substantially different” means materially greater or less than a normal growth
rate.) In some cases, it may be desirable to use both of these approaches to
estimate a company’s value.

The Discounted Net Cash Flow Approach requires an analyst to quantify the
financial benefits associated with future ownership of a specific ongoing
corporate organization. In order to achieve these goals, projection of net cash
flows are made for a specific period of time, usually five (5) to eight (8)
years. Usually, the projected number of years equates to the length of time it
would take for an organization to create, from the ground up, a comparable
on-going corporate entity that is competitive with the established organization.
The projection requires an income forecast, usually by category of income (type
of product, number of products sold, length of existing contracts and type of
sales organization utilized), and expense forecast, based upon the normal
expected future costs (allowing for inflation) to operate the organization and
an investment forecast for expenditures on new equipment, if any, and a cost of
capital forecast.

This last forecast takes into consideration the total capital structure of the
organization, along with the inherent risks that inure to the specific
organization in a specific industry based upon known or reasonably projected
economic, financial, and legal ramifications as reflected in the discount rate
chosen. The fair market value of the organization under analysis is then the
cumulative present value of all future cash flows.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 29.
 
 
Since the laws, rules and regulations regarding electronic contract manufacturer
providers, as reflected in the report herein above are mostly set, they are not
subject to a constant revisions or alterations regarding their operations. In
addition, the general operations of business service organizations are usually
not effected by most of the ongoing changes in our national legal system,
including multiple and sometimes conflicting national and state legislation.
Thus, it would appropriate to utilize this method, as a check or support for the
Comparative Market Method in the valuation of Nexus Custom Electronics, Inc. IF
the organization had earned a profit in the proper periods AND was going to
remain as a “going concern” in the overall stream of business and commerce.

Since data has been presented to the undersigned that a possible corporate
foreclosure is being considered that would effectively end the ability of the
company to continue as a going concern, said valuation method will not be
utilized herein to obtain a Fair Market Forced Liquidation Value for an
electronic contract manufacturing services type organization. Under a forced
corporate foreclosure accurate or moderately accurate cash flow projections
usually cannot be prepared or supported and are basically not relied upon for an
organization in a potential foreclosure position. Thus, the potential
foreclosure will not allow for accurate future projections and use of the
Discounted Cash Flow Method.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 30.
 

Liquidation Approach

A Liquidation Value assumes that the company will not remain a going concern and
the owner will sell its assets piecemeal. Usually, a liquidation sale will loose
some or all of the value reflected by economic goodwill. The assessment of
liquidation value must consider the time required to sell assets in an orderly
fashion or the discounts associated with a fire sale (or both). The valuation
should consider costs of liquidating assets, such as commissions, shrinkage of
inventory and receivables, and ongoing operating expenses.

VALUE IN EXCHANGE, IN AN ORDERLY DISPOSITION

Under this premise, it is assumed subject assets are sold piecemeal, and not as
part of a mass assemblage. It is assumed the assets are given an adequate level
of exposure in their normal secondary marketplace.

However, due to the orderly disposition market transaction assumption, this
premise does not contemplate any contributory value effect of the subject
tangible assets on the intangible assets or of the subject intangible assets on
the tangible assets.
 
 
VALUE IN EXCHANGE, IN A FORCED LIQUIDATION

Under this premise, it is assumed the subject assets are sold piecemeal, and not
as part of a mass assemblage. It is also assumed the assets are not allowed a
normal level of exposure of their normal secondary market. Rather, the assets
are permitted an abbreviated level of exposure to a market of the highest
bidders present (who may or may not represent the collective demand side
marketplace for such assets), such as in an auction environment.

Due to the forced liquidation market transaction assumption, this premise
assumes no contributory value (or other economic interrelationships) from the
subject tangible assets to the subject intangible assets, or vice versa.

Hence, liquidation value is usually determined using one of the following
premises - a) Orderly liquidation that includes selling the assets over a
reasonable time period to get the highest price for each; or b) Forced
Liquidation that includes selling the assets as quickly as possible, such as at
an auction. (Forced liquidation value is sometimes called auction value.)
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 31.
 
 
Liquidation value considers not only the proceeds from selling the assts, but
also the selling costs, the costs to hold the assets until their sale and other
expenses. Typically, although not always, when valuing an interest with absolute
control, a company's net liquidation value represents the lower limit of value.
The Liquidation method should be considered when:

a. The company is in liquidation such as Chapter 7 bankruptcy.

b. The company's current and projected net cash flows from continuing operations
are low compared to net assets, and the company is worth more dead than alive.
Then, the company's liquidation value might be its maximum potential value and
the only usable indicator of value to the owners.

c. The company's current and projected cash flows from continuing operations are
low enough that its liquidation value is almost equal to its going concern
value. Some owners may prefer liquidation, while others may prefer continued
operation. Then, both the liquidation value method and going-concern methods may
be considered in valuing the business.

d. The company is a multi-division or multi-subsidiary holding company where
some divisions are profitable and others are not.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 32.
 

NEXUS CORPORATE DEBT AND OBLIGATIONS - as of October 31, 2007

The undersigned has been informed by Management and independent Corporate
Counsel that the following table below represents the correct and most accurate
listing (rounded to the nearest dollar) of principal and interest outstanding
under the Assigned Documents as of October 31, 2007:

Total Debentures (Principals)
 
$
8,907,620
           
Total Debentures (Interest)
   
556,515
           
Term Note (Principal)
   
520,000
           
Term Note (Interest)
   
16,369
           
Revolving Note (Principal)
   
1,207,342
           
Revolving Note (Interest)
   
37,330
           
Total
 
$
11,245, 176
 

 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

--------------------------------------------------------------------------------

RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
Valuation continued …../…..
 
Page 33.
 

NEXUS CUSTOM ELECTRONICS, INC. - INITIAL APPRAISAL VALUATION

Base upon data and appraisal reports supplied the undersigned, as of October 29,
2007 the following is a listing of the Nexus Custom Electronics, Inc. Corporate
Collateral.
 

   
 Appraised Value 
                    PROPERTY: Plant and Equipment                  
Brandon Machinery & Equipment (September 2007 appraisal)
 
$
896,000
 
Woburn Machinery & Equipment (September 2007 appraisal)
   
704,000
 
Brandon Land & Building (November 2006 appraisal)
   
1,200,000
           
 Total Property - Plant and Equipment
 
$
2,800,000
           
Accounts Receivable (Net of Contras)
 
$
870,211
 

 
Inventory

Brandon Inventory:
   
Active
 
$
1,480,822
 
 
   
Slow Moving
   
1,540,277
 
 
   
Total
 
$
3,021,099
 

Woburn Inventory Total
 
$
683,989
           
 Total Inventory
 
$
3,705,088
           
Total of Assets Excluding Cash
 
$
7,375,299
 

 

Combining all of the above data into a succinct economic scenario affords the
undersigned the opportunity to appropriately determine a Fair Market Forced
Liquidation Value of the Nexus Custom Electronics Corporation as of October 31,
2007.

In order to determine this valuation in an orderly and scholarly manner, each of
the items above will be recalculated into a Forced Liquidation Value and then
retotalled in order to present a summarized forced liquidation value of the
organization.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 34.
 
 
Machinery and Equipment

Corporate machinery and equipment have been independently appraised via a
desktop orderly liquidation appraisal report dated September 4, 2007, with an
effective date of August 31, 2007. In that report "leased equipment" was
included. This leased equipment constitutes approximately $395,000 of the
$1,600,000 of machinery and equipment. Presuming that those who foreclosed on
the existing Nexus Custom Electronics, Inc. ongoing corporation do not assume or
honor the existing leased equipment obligations, then the value of the machinery
and equipment per the orderly liquidation value appraisal becomes $1,205,000.

In as much as the appraisal was denoted as in orderly liquidation valuation,
wherein the appraiser Paul J. Finn of Joseph Finn Co., Inc. of Newton,
Massachusetts defines Orderly Liquidation Value as:

Orderly Liquidation Value as a professional opinion of the estimated most
probable price expressed in terms of currency which the subject equipment could
typically realize at a privately negotiated sale, properly advertised and
professionally managed, by a seller obligated to sell over an extended period of
time, usually within six to twelve months, as of the effective date of the
appraisal report. Further, the ability of the asset group to draw sufficient
prospective buyers to insure competitive offers is considered. All assets are to
be sold on a piecemeal basis "as is" with purchases responsible for removal of
assets at their own risk and expense. Any deletions or additions to the total
assets appraised could change the psychological and/or monetary appeal necessary
to gain the value indicated.

As clearly noted, the value is for an orderly liquidation as opposed to a forced
liquidation value. Translating an orderly liquidation value into a forced
liquidation value, the undersigned denoted that significant selling and
administrative expenses need to be deducted, as well as a significant discount
that buyers would place on the value of the assets noting that the liquidation
was forced and needs to be concluded in a timely manner. Thus, it is the opinion
of the undersigned that the Fair Market Forced Liquidation value of the
machinery and equipment excluding the leased equipment is valued at $785,000.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 35.
 

 
Corporate Real Estate

Corporate real estate has been independently appraised via a summary limited
appraisal report dated November 21, 2006, with an effective date of November 17,
2006. In that report, the appraisal is denoted as the Fair Market Value of the
fee simple title of the real estate property located at 402 Prospect Street in
Brandon, Vermont. The appraised property consists of a one-story steel-framed
building of approximately 30,418 square feet located upon a 5.7 acre parcel of
land.

In as much as the real estate appraisal was a fair market value of the fee
simple title of the real estate and allowing normal market exposure of up to one
year, the appraiser did not take into account the components and forces for a
Fair Market Forced Liquidation Value of the real estate. Translating a fair
market value real estate appraiser report into a forced liquidation value, the
undersigned denotes that significant selling and administrative expenses need to
be deducted, as well as a significant discount that buyers would place on the
value of the real estate noting that the liquidation was forced and the property
needs to be sold and concluded in a timely manner. Thus, it is the opinion of
the undersigned the Fair Market Forced Liquidation value of the real estate is
valued at $840,000, under a forced liquidation of the property.

CORPORATE INVENTORY (REGULAR INVENTORY)

Corporate inventory (both Brandon inventory and Woburn inventory) is carried on
the corporate books according to GAAP policies, practices, and procedures. Such
GAAP policies, practices, and procedures do not take into account a forced
liquidation.

As clearly noted, the value for the inventory is accounted for under GAAP as
opposed to the economics and finance of a forced liquidation value. Translating
regular / standard inventory accounted for under GAAP value into a forced
liquidation value, the undersigned denotes that significant selling and
administrative expenses need to be deducted, as well as a significant discount
that buyers would place on the value of the inventory noting that the
liquidation was forced and needs to be concluded in a timely manner. Thus, it is
the opinion of the undersigned that the Fair Market Forced Liquidation value of
the regular inventory (also referred to as active inventory) under a forced
liquidation should be valued at $1,515,000.
 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 36.
 
 
CORPORATE INVENTORY (SLOW MOVING / OBSOLETE)

Corporate inventory (both Brandon inventory and Woburn inventory) as noted
above, is carried on the corporate books according to GAAP policies, practices,
and procedures. Such GAAP policies, practices, and procedures do not take into
account a combination of obsolescence and / or a forced liquidation.

As clearly noted, the value for the inventory is accounted for under GAAP as
opposed to the economics and finance of a combination of obsolescence and / or a
forced liquidation. Translating obsolete / slow moving inventory accounted for
under GAAP value into a forced liquidation value, the undersigned denotes that
significant selling and administrative expenses need to be deducted, as well as
a significant discount that buyers would place on the value of the obsolete /
slow moving inventory noting that the liquidation was forced and needs to be
concluded in a timely manner.

Thus, it is the opinion of the undersigned that the Fair Market Forced
Liquidation value of the obsolete / slow moving inventory (also referred to as
"written down" or "written off" inventory) under a forced liquidation should be
valued at $150,000.

CORPORATE ACCOUNTS RECEIVABLE

Corporate accounts receivable (both Brandon inventory and Woburn inventory) are
carried on the corporate books according to GAAP policies, practices, and
procedures. Such GAAP policies, practices, and procedures do not take into
account a forced corporate liquidation. However, it is well documented that when
ongoing organizations are foreclosed upon and / or cease to operate, a
significant percentage of organizations that owe the foreclosed organization
equitable funds either fail to pay, settle at a reduced rate, or otherwise
negotiate a discount.

As clearly noted, the value for accounts receivable is accounted for under GAAP
as opposed to the economics and finance of a forced liquidation. Translating
accounts receivable accounted for under GAAP value into a forced liquidation
value, the undersigned denotes that significant recordkeeping and administrative
expenses need to be deducted, as well as a discount that would accumulate based
upon those who owe funds who either fail to pay, pay significantly late, and
those who negotiate a settlement for their account, based upon the fact that the
corporation was liquidated via a forced liquidation and needs to be concluded in
a timely manner.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 37.
 
 
Thus, it is the opinion of the undersigned that the Fair Market Forced
Liquidation value of the accounts receivable (also referred to as "written down"
or "written off" accounts receivable inventory) under a forced liquidation
should be valued at $695,000.

OTHER CORPORATE ASSETS

Based upon information provided the undersigned, other than cash, Nexus Custom
Electronics, Inc. does not own any significant assets not accounted for in this
analysis. An entry denoted as "Identifiable intangibles" contains a variety of
items, but does not contain any specific patents, trademarks, or other
significant income producing items. Without the ongoing economic fiber of the
existing corporation, and without specific documented legal protection; the
"Identifiable intangibles" would have a greatly diminished value.

While the "Identifiable Intangibles" are accounted for under GAAP, this
accounting does not take into account the economics and finances of a forced
liquidation. Translating certain "Intangibles" accounted for under GAAP value
into a forced liquidation value, without an ongoing master corporate entity to
hold these "intangibles" into an agglomerated entity, the undersigned denotes
that a significant discount should accrue to these items, as buyers, if any
could be located, would place on the value of the "intangibles" noting that the
liquidation was forced and needs to be concluded in a timely manner.

Thus, it is the opinion of the undersigned that the Fair Market Forced
Liquidation value of the "Identifiable Intangibles" under a forced liquidation
should be valued at $120,000.
 

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 38.

CORPORATE FINANCIAL SUPPORT

In addition and in support for the liquidation valuation approach, the
undersigned examined the Income Statement for Nexus Custom Electronics, Inc. for
the period July 1, 2007 to September 30, 2007, as well as other prior years
income documentation. Simply stated, the organization has almost consistently
failed to produce a profit and without significant outside financing will soon
become totally insolvent and unable to meet its financial obligations. As of
September 30, 2007, the corporation, in addition had a negative working capital
ratio with total current liabilities exceeding total current assets by $2.0
million. Thus, an overall corporate financial analysis review denotes and
supports that the liquidation valuation method is appropriate at this time.

Lastly, note is made of the fact that as of September 30, 2007, the corporation
had a negative total equity of $7,521,000. This when combined with a negative
working capital ratio and the inability to produce an ongoing profit, not only
supports the liquidation valuation method, but supports the significant
probability that the corporation would be unable to obtain independent third
party financing in order to continue to carry out its functions and remain an
ongoing business concern.

 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 39.
 
 
NEXUS CUSTOM ELECTRONICS, INC. - FORCED LIQUIDATION VALUATION

Based upon data and appraisal reports supplied the undersigned, as of October
29, 2007 the following detailed the Force Liquidation Valuation of the Nexus
Custom Electronics, Inc.
 

   
Liquidation Value
                 
PROPERTY: Plant and Equipment
             
Brandon and Woburn Machinery & Equipment
 
$
785,000
 
Brandon Land and Building
   
840,000
           
Total Property - Plant and Equipment
 
$
1,625,000
           
Accounts Receivable (Net of Contras)
 
$
695,000
           
Inventory
                 
Brandon and Woburn (Active Inventory)             $1,515,000
 
 
 
 
(Slow Moving Inventory)     150,000
   
 
           
Total Inventory
 
$
1,665,000
           
Identifiable Intangibles
 
$
120,000
           
Total of Assets Excluding Cash (Rounded)
 
$
4.100,000
 
(Forced Liquidation Valuation)
       

The above total of $4,100,000 appropriately represents the Fair Market Forced
Liquidation Value of the Nexus Custom Electronics Corporation as of October 31,
2007, on a category by category basis, aside from cash that might be held by the
organization.

Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 40.

Forced Liquidation Value in Relation to Corporate Debt

Special note is made of the fact that when comparing the Fair Market Force
Liquidation value of the organization to the TOTAL debt under the Assignment
Documents as of October 31, 2007, the Assigned Debt of the organization is
approximately $7,145,000 greater than the Liquidation Value of Nexus Custom
Electronics, Inc., as of October 31, 2007.

 
 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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RE: In the Matter of Nexus Custom Electronics - Fair Market Forced Liquidation
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Page 41.

RECONCILIATION AND FINAL VALUE ESTIMATES

CORPORATE FORCED LIQUIDATION VALUATION

Nexus Custom Electronics, Inc.

Fair Market Forced Liquidation Valuation

Four (4) separate approaches to value (comparative market approach, discounted
net cash flow, excess earnings approach and liquidation approach) were
potentially utilized in estimating the Fair Market Forced Liquidation Valuation
of - Nexus Custom Electronics, Inc. that is under analysis. The following is a
brief summary of each method and the value indication provided by the analysis
of each.

   
Fair Market Values
 
Valuation Approach
 
($ Dollars)
         
Comparative Market Approach
   
N/A
           
Discounted Net Cash Flow
   
N/A
           
Excess Earnings Approach
   
N/A
           
Liquidation Approach - Forced Liquidation
 
$
4,100,000
           
Final Reconciled Force Liquidation Valuation - October 31, 2007
   
-$4,100,000
 
 
 
 (United States Dollars) 

 
The final corporate valuation amount noted above is based upon the valuation
methods utilized in this valuation report. The factors that are brought to bear
in determining the final valuation are - quantity and quality of the individual
information available, the experience, judgment and education of the appraiser,
Dr. Kenneth Eugene Lehrer, and the degree of confidence placed on each valuation
technique by the appraiser in regard to the specific organization under
analysis.
               
Valuation by:  _______________________________
Dr. Kenneth Eugene Lehrer
November, 2007
 

 
Lehrer Financial Economic Advisory ServiceS / 5555 Del Monte Dr. - St. 802 /
Houston, Tx. 77056 / (713) 972-7912; FAX (713) 964-0444

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