PK Securities has an affiliation with Valuation Associates, LLC (together 'VA') to provide independent derivative valuation, reporting and monitoring services to its municipal clients.

Recent changes in the financial accounting requirements of the Governmental Accounting Standards Board ('GASB') and the Financial Accounting Standards Board ('FASB') have increased obligations by derivative counterparties to report upon the nature and valuation of interest rate swaps, financial derivatives and other hedging activities. Municipal issuers and borrowers also face increased demands to disclose derivatives activity and portfolio valuations from rating agencies, bond insurers and analysts that support the issuance and trading of municipal bonds. Financial accounting and disclosure requirements are growing in both volume and complexity and must be met by all entities that use swaps.

VA has the resources, expertise and established services to assist government entities and enterprises meet the growing requirements for derivatives reporting. Our proprietary product, SwapWatch©, has been developed to assist swap counterparties face the demands from requesting parties that require input from resources frequently unavailable to those not directly involved in the derivatives industry. The very nature of the derivatives markets makes accurate information difficult to access. Additionally, the methods needed by reporting entities to evaluate the information necessary to establish a swaps program and prepare swaps valuations are frequently absent or weak. SwapWatch© offers up-to-the-minute and ongoing knowledge and information critical to the accurate valuation of derivatives and the evaluation of swaps programs. Highly tailored and responsive to each client's portfolio and reporting needs, SwapWatch© provides reports of changing positions as frequently as required and requested. Our services assist each client meet and integrate financial accounting and disclosure requirements.

SwapWatch© is fully independent of all swaps counterparties, financial advisors and underwriters, thus providing a completely objective opinion and valuation of swap positions. We have no overlapping relationships with any entity that may color our independent opinion.

To assist municipal clients in on-going compliance with reporting regulations, our consulting services ensure that clients meet their reporting goals. Regular reports are designed to meet efficiently the demands of those requesting derivatives disclosure. In brief, some of the key consulting services offered by VA are:

• A thorough assessment of derivative product activities including the adequacy of swap policies;
• A careful review of derivative enabling documents and current swap contracts to ensure compliance and integration;
• Shadow pricing of negotiated derivatives transactions and provision, if needed, of Fair Market Price Certificates;
• Succinct, comprehensive valuation and market reports tailored to specific swap positions and the requirements of rating agencies, insurers, board, oversight committees and other relevant entities. In addition to updating the format as these entities expand their requirements or as reporting needs change, our clients are alerted and informed when market changes affect their positions;
• Evaluation of unsolicited proposals regarding derivative products and the provision of 'what-if?' analysis to support strategic planning and financial planning needs.

SwapWatch© is an independent, timely and invaluable tool for all municipal issuers either contemplating or already involved in derivative transactions. We provide all relevant data necessary to keep Board members and oversight committees fully informed and in a position to make critical decisions. We also provide the information necessary to assist the professionals who contribute to the preparation of financial statements.

Additional information can be found at www.swapwatch.com.