June 28, 2006

BY JAKE BLEED

ARKANSAS DEMOCRAT-GAZETTE

The New York-based com­pany that counts Gov. Mike Huckabee among its directors began merging Tuesday with a separate shell company, a cheap and fast way to go pub­lic.

With a complex series of stock transactions, Park Ave­nue's Flagship Patient Advo­cates Inc. will become part of Finity Holdings Inc., an Ohio-based shell company whose shares were recently traded for a penny and whose ma­jor shareholders include two men who were convicted last year of bank fraud and other charges in Colorado.

The resulting company will be renamed Patients & Physi­cians Inc., said Fred Nazem,

chairman and chief executive officer of both Flagship and Finity. The new company will specialize in providing mem­bers-only medical services, in­cluding referrals to a network of top medical and surgical specialists around the world.

Nazem said Finity and Flag­ship will officially merge to­day, with the filing of a restat­ed certificate of incorporation. Finity shareholders authorized the transaction at a meeting at Flagship's offices Tuesday.

Huckabee was traveling in Japan on Tuesday. He said he did not participate in the merger decision. He said his involvement with the company is limited and that he wasn't sure if he would benefit from his involvement with Flag-See MERGER,Page 2B

Merger

• Continued from Page 1B ship.

"Obviously, he doesn't have me on there because I'm one of the world's richest men," Huckabee said.

Nazem asked Huckabee to
join the company after reading
the governor's book, Quit Dig­
ging Your Grave with a Knife
and Fork, and hearing some of
his lectures on health.           ._

Shell company transactions
can be hugely profitable. Re­
publican candidate for governor
AsaHutchinson saw a $2,800
"initial investment in Fortress
America Acquisition Corp.
grow to more than $1 million
on paper after the shell com­-
pany acquired another business,
earlier this month.               

Finity isn't much of a compa­ny, with no assets reported on the company's balance sheet, according to filings with the Securities and Exchange Com­mission.

However, the company does have regulatory approval to be traded publicly, which makes it an attractive partner for pri­vately held companies that are looking to go public, said Bob Williams, managing director of Little Rock-based Delta Trust.

Finity's shares are traded un­der the ticker symbol FNTY on the Over the Counter Bulletin Board, a market used primarily by small companies with low-value, "penny" stocks, includ­ing Fortress America.

Finity's shares ended Tues­day trading at eight cents a share, up from one cent on June 13.

Going public is expensive,
Williams said, and is an option
usually reserved for large and
growing companies. For smaller
outfits, it's easier and cheaper
to take over a shell company
and its publicly traded stock,
what Williams call "a back­
wards acquisition of a public
 shell company."_____________

the governor.

Nazem said only Finity shares will be affected by the combination. Flagship share­holders, including Huckabee, will retain the same number of shares, Nazem said.

Flagship and Finity have the same officers and directors, ac­cording to Finity's proxy, and Huckabee will remain a direc­tor of Patients & Physicians Inc.

Huckabee is one of 10 of-
ficers and directors listed in
Finity's proxy statement filed
with the SEC on June 15. The
25,000 shares that Huckabee
has the option to exercise rep-­
resent less than one-tenth of
one percent of the Flagship's
outstanding shares.               _

Tuesday's decision by the Finity shareholders will see the company execute a series of transactions designed to bring the value of shares in Finity in line with Flagship. That in­cluded a 125-to-l reverse stock split, and the authorization of tens of millions of additional shares.

"The reverse stock split is really just getting the numbers of the stock right," Nazem said, adding that the transactions didn't change the actual value of either company.

It was part of what Nazem called a "housecleaning" of Finity. The shell company was originally founded as Colum­bia Capital Corp. in 1993, and partnered with Boulder, Colo.-based BestBank, in processing credit cards.

BestBank was later declared insolvent, and two men involved with both companies, Glenn Gallant and Douglas Baetz of Fort Lauderdale, Fla., were later found guilty by a federal jury on 63 counts, including bank fraud, and continuing a finan­cial crimes enterprise.

Although a federal judge lat­er dismissed 27 of those counts, the pair still face a minimum sentence of 10 years on some counts, said Jeff Dorschner, a