The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this report.

Overview

We are a full-service investment bank dedicated to providing corporate finance, strategic advisory and related services to public and private companies across multiple sectors and regions. The sectors that we currently serve include life science/healthcare, energy, metals and mining, financial services and cleantech, and the regions we currently serve include the United States and China. Our primary product and service offerings include financing transactions, including private placements and public offerings. We also provide research and sales and trading services to institutional investors. We are the leader in the PIPE (private investment in public equity) and RD (registered direct offering) transaction markets. We have been ranked the #1 Placement Agent in terms of the aggregate number of PIPE and RD financing transactions completed every year since 2005 and in 2009 year-to-date.

Business Environment

Market conditions and valuations for companies in the life science sector and other sectors in which we are active, as well as general market conditions, can materially affect our financial performance. From mid-2007 through the first quarter of 2009, declining valuations, extreme volatility and lack of liquidity in certain sectors of the capital markets, notably the life science sector, as well as a slowing of economic growth generally led to declines in financing activity, smaller financing transactions, and a resulting decline in our revenue. Beginning in the second quarter of 2009, market conditions have improved as evidenced by an increased number of financing transactions and an increase in the size of the transactions.

Although on September 15, 2009, Ben Bernanke, the Chairman of the Federal Reserve Bank, announced that the recession in the United States had ended and the recovery had begun, it is not possible to predict the breadth or depth of the recovery or whether it is even sustainable. It is also difficult to forecast whether the recent improvement in market conditions will continue and for how long. Despite these concerns, we remain cautiously optimistic about our short-term prospects. This optimism is based on our performance and that of the financial markets over the last six months. During the third quarter of 2009, we completed 32 financing transactions raising $634.7 million compared to five financing transactions raising $58.4 million in the first quarter of the year. In addition, we are not burdened with exposure to commercial paper or real estate risk and hold no investments in structured products or vehicles that have undergone client revaluations, such as collateralized debt obligations and credit default swaps. On the other hand, the nature of our revenue generation, including the size of transactions, the timing of transaction closings and the sectors in which those transactions occur, make future performance difficult to predict and potentially highly variable. Revenues for many of the services we provide are earned only upon the successful completion of a transaction. Accordingly, revenues and net income in any period may not be indicative of full-year results or the results of any other period and may vary significantly from year-to-year and quarter-to-quarter depending on whether and when transactions are completed and the number, size and type of transactions completed.

Business Segments

Through June 30, 2009, we operated in one business segment. Commencing July 1, 2009, we began operating in two business segments, Capital Markets and Merchant Banking. The Capital Markets reportable segment includes our investment banking, sales and trading activities and research. The Capital Markets reportable segment is managed as a single operating segment that provides the following principal sources of revenue:

• investment banking fees, which are derived from corporate finance activities and strategic advisory services;

• realized and unrealized gains with respect to securities held for our own account;

• commissions on sales and trading activities;

• conference fees; and

• other miscellaneous sources of revenues, such as interest.

Although we have multiple sources of revenue derived within Capital Markets, most of our revenue is derived from our investment banking services and consists of private placement, underwriting and strategic advisory fees earned upon the successful completion of financing or other types of corporate transactions, such as mergers, acquisitions and dispositions. We do not separately analyze financial data or operating results, such as operating expenses, profit and loss or assets, for our various operating units. For example, our sales and trading unit generates commission revenues and incurs various expenses specifically related to its activities,

The Merchant Banking segment is primarily comprised of operating activities related to Aceras BioMedical. On May 12, 2008, we formed Aceras BioMedical, a joint venture through which we, in partnership with Aceras Partners, LLC, make principal investments in early-stage biotechnology and life sciences companies. In conjunction with the establishment of the joint venture, we formed a new wholly-owned subsidiary, RPI, which holds a 50% stake in Aceras BioMedical and serves as the holding vehicle for all of our principal-related businesses. At September 30, 2009, RPI's outstanding investment commitment to Aceras BioMedical over five years to fund operations and the joint venture's principal investments in life science companies was $15.7 million. RPI receives 50% of Aceras BioMedical's economic interest in all investments made.

Critical Accounting Policies

Our Condensed Consolidated Financial Statements are prepared in conformity with GAAP, which require management to make estimates and assumptions that affect the amounts reported in the Condensed Consolidated Financial Statements and related notes. Actual results can and will differ from estimates. These differences could be material to the financial statements.

We believe our application of accounting policies and the estimates required therein are reasonable. These accounting policies and estimates are constantly re-evaluated, and adjustments are made when facts and circumstances dictate a change. Historically, actual results have not differed materially from those determined using necessary estimates.

Our management believes that our critical accounting policies (policies that are both material to the financial condition and results of operations and require management's most difficult subjective or complex judgments) are our valuation of financial instruments, valuation of goodwill and other intangible assets, income taxes and our use of estimates related to compensation and benefits during the year.

Valuation of Financial Instruments

The Fair Value Measurements and Disclosures Topic of FASB ASC 820-10 defines fair value, establishes a framework for measuring fair value, and requires enhanced disclosures about fair value measurements. The Fair Value Measurements and Disclosures Topic of FASB ASC 820-10 defines fair value as "the price that would be received to sell an asset and paid to transfer a liability in an ordinary transaction between market participants at the measurement date." Additionally, the Fair Value Measurements and Disclosures Topic of FASB ASC 820-10 disallows the use of block discounts on positions traded in an active market.

Fair value generally is based on quoted market prices. If quoted market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations, price activity for equivalent instruments and valuation pricing models. Among the factors considered in determining the fair value of financial instruments are discount margins, weighted average spreads, discounted anticipated cash flows, the terms and liquidity of the instrument, the financial condition, operating results and credit ratings of the issuer or underlying company, the quoted market price of publicly traded securities with similar duration and yield, as well as other measurements. Certain financial instruments have bid and ask prices that can be observed in the marketplace. For financial instruments whose inputs are based on bid-ask prices, mid-market pricing is applied and adjusted to the point within the bid-ask range that meets our best estimate of fair value. For offsetting positions in the same financial instrument, the same price within the bid-ask spread is used to measure both the long and short positions.

The valuation process for financial instruments may include the use of valuation models and other techniques. Adjustments to valuations derived from valuation models may be made when, in our judgment, either the size of the position in the financial instrument in a non-active market or other features of the financial instrument such as its complexity, or the market in which the financial instrument is traded require that an adjustment be made to the value derived from the models. An adjustment may be made if a financial instrument is subject to sales restrictions that would result in a price less than the quoted market price. Adjustments from the price derived from a valuation model reflect management's judgment that other participants in the market for the financial instrument being measured at fair value would also consider in valuing that same financial instrument and are adjusted for assumptions about risk uncertainties and market conditions. Results from valuation models and valuation techniques in one period may not be indicative of future period fair value measurements.

Financial instruments owned and financial instruments sold, not yet purchased are stated at fair value, with related changes in unrealized appreciation or depreciation reflected in principal transactions, net in the accompanying Condensed Consolidated Statements of Operations. Equity interests in certain private equity securities and limited partnership interests are reflected in the Condensed Consolidated Financial Statements at fair value, which is often represented at initial cost until significant transactions or developments indicate that a change in the carrying value of the securities is appropriate. This represents our best estimate of exit price

As defined in Fair Value Measurements and Disclosures Topic of FASB ASC 820-10, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, we use various methods including market, income and cost approaches. Based on these approaches, we utilize assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and or the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable firm inputs. We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. Based on the observability of the inputs used in the valuation techniques, we are required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial instrument assets and liabilities carried at fair value have been classified and disclosed in one of the following three categories:

Level 1 primarily consists of financial instruments whose value is based on quoted market prices such as listed equities.

Level 2 includes those financial instruments that are valued using models or other valuation methodologies calibrated to observable market inputs. These models are primarily industry-standard models that consider various assumptions, including discount margins, credit spreads, discounted anticipated cash flows, the terms and liquidity of the instrument, the financial condition, operating results and credit ratings of the issuer or underlying company, the quoted market price of publicly traded securities with similar duration and yield, time value, yield curve, default rates, as well as other measurements. In order to be classified as Level 2, substantially all of these assumptions would need to be observable in the marketplace or able to be derived from observable data or supported by observable levels at which transactions are executed in the marketplace. Financial instruments in this category include certain warrants and restricted securities received in conjunction with our investment banking activities.

Level 3 is comprised of financial instruments whose fair value is estimated based on internally developed models or methodologies utilizing significant inputs that are unobservable from objective sources. Included in this category are warrants, private securities and convertible notes received in conjunction with our investment banking and merchant banking activities, loans receivable and limited partnership interests.

Compensation and Benefits

The use of estimates is important in determining compensation and benefits expenses for interim and year end periods. A substantial portion of our compensation and benefits represents discretionary bonuses. In addition to the level of net revenues, our overall compensation expense in any given year is influenced by prevailing labor markets, revenue mix and our use of equity-based compensation programs. We believe the most appropriate way to allocate estimated annual discretionary bonuses among interim periods is in proportion to net revenues earned or reasonably expected. Consequently, we generally accrue interim compensation and benefits based on annual targeted compensation amounts and interim revenues received.

Goodwill and Other Intangible Assets Impairment

At least annually, we are required to assess goodwill for impairment by comparing the estimated fair value of the reporting unit with its net book value. Periodically estimating the fair value of a reporting unit requires significant judgment and often involves the use of significant estimates and assumptions. These estimates and assumptions could have a significant effect on whether an impairment charge is recorded and the magnitude of such a charge. We estimate the fair value of the reporting unit based on valuation methodologies we believe market participants would use, including the market value of our common stock which we believe to be the most relevant indicator of value. A two-step test is used to determine whether goodwill is impaired. The first step is to compare our carrying value with our fair value. If our carrying value exceeds our fair value, the second step is applied. The second step is to compare the carrying amount of the goodwill with the implied fair value of the goodwill as determined in accordance with the Intangibles - Goodwill and Other Topic of FASB ASC 350-20. Goodwill impairment is recognized if carrying value exceeds implied fair value. The determination of fair value includes considerations of projected cash flows, relevant trading multiples of comparable exchange listed corporations, and the trading price of our common shares.

Pursuant to the Intangibles - Goodwill and Other Topic of FASB ASC 350-30, we review our finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of any finite-lived intangible asset may not be recoverable.

We compute our provision for income tax expense in accordance with the principles of the Income Taxes Topic of FASB ASC 740-10.

Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date.

In accordance with the Income Taxes Topic of FASB ASC 740-10, at least quarterly we evaluate the realizability of the aforementioned deferred tax assets and liabilities and evaluate the need to record or reverse a valuation allowance. The evaluation includes weighing all the available positive and negative evidence in ascertaining whether it is "more likely than not" that its net deferred tax assets will be realized. In the first quarter of 2009, we determined that it was not "more likely than not" that its net deferred tax assets would be realized and accordingly we recorded a valuation allowance fully offsetting our net deferred tax assets and liabilities, reducing them to zero. We will continue to review the value of our net deferred tax assets and may reverse a portion of our valuation allowance associated with these net deferred tax assets if we continue to generate operating income in the future.

The Income Taxes Topic of FASB ASC 740-10 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return, and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. Management on an ongoing basis, at least quarterly, evaluates our tax positions and ascertains whether those tax positions that may be uncertain require de-recognition or re-measurement. Management does not believe that the Company has any material uncertain tax position requiring de-recognition or measurement in accordance with the provisions of the Income Taxes Topic of FASB ASC 740-10.

Results of Operations

The following table sets forth the results of operations for the three months ended September 30, 2009 and 2008:

Dollars in Thousands                                             Three Months Ended
                                                -----------------------------------------------------
                                                    September 30, 2009          September 30, 2008
                                                --------------------------    -----------------------
                                                                 % of net                   % of net
                                                                 Revenue                     Revenue
                                                                ----------                  ---------
Revenues:
Investment banking                              $     31,253                  $    11,924
Merchant banking                                      28,628                            -
Commissions                                            1,642                        1,396
Conference fees                                        1,579                            -
Principal transactions                                 2,400                       (4,923 )
Interest and other income                                 48                          166
                                                -- ---------                  -- --------
Total revenues                                  $     65,550                  $     8,563
                                                -- ---------                  -- --------
Operating expenses:
Compensation and benefits                             25,470       38.8 %           5,945     69.4 %
Conference fees                                        3,211        4.9 %               -        - %
Professional and consulting fees                       2,210        3.4 %           2,401     28.0 %
Occupancy and equipment rentals                          764        1.2 %             999     11.7 %
Advertising and marketing                                740        1.1 %             412      4.8 %
Communication and market research                        715        1.1 %             719      8.4 %
Depreciation and amortization                            516        0.8 %             762      8.9 %
Business development                                     468        0.7 %             798      9.3 %
Office supplies                                          186        0.3 %             151      1.8 %
Impairment of goodwill                                     -          - %               -        - %
Other                                                    688        1.0 %             641      7.5 %
                                                -- ---------                  -- --------
Total operating expenses                              34,968       53.3 %          12,828    149.8 %
                                                -- ---------                  -- --------
Income (loss) before income taxes                     30,582       46.7 %          (4,265 )  (49.8 )%
Income tax expense (benefit)                             (42 )                      1,415
                                                -- ---------                  -- --------
Net income (loss)                                     30,540                       (2,850 )
                                                -- ---------                  -- --------
Less: Net income to non-controlling interest         (15,000 )                          -
                                                -- ---------                  -- --------
Net income (loss) to common stockholders        $     15,540                  $    (2,850 )
                                                -- ---------                  -- --------

Our operating income for the three months ended September 30, 2009 and 2008 included the following non-cash expenses:

Dollars in Thousands                           Three Months Ended
                                   -------------------------------------------
                                   September 30, 2009      September 30, 2008
                                   -------------------    --------------------
Stock-based compensation           $               665    $              1,338
Amortization of forgivable loans                   457                       -
Depreciation and amortization                      516                     762
Impairment of goodwill                               -                       -
                                   ---- --------------    ------ -------------
Total                              $             1,638    $              2,101
                                   ---- --------------    ------ -------------

Merchant Banking Segment

Merchant banking revenue, consisting of gains (or losses) on investments by Aceras and other principal investments activity, was $28.6 million. Merchant banking revenue, net of non-controlling interest of $15.0 million, was $13.6 million. We recognize revenue on investments in our merchant banking segment based on consolidated realized and unrealized gains (or losses) reported, including by Aceras. The value of Aceras' assets was determined based on an independent valuation prepared as of September 30, 2009, taking into consideration the cost of the investment, market participant inputs, non-binding offers made by third parties, estimated cash flows based on entity specific criteria, purchase multiples paid in other comparable third-party transactions, market conditions, liquidity, operating results and other qualitative and quantitative factors. The values at which our investments are carried on our books are adjusted to estimated fair value at the end of each quarter and the instability in general economic conditions, stock markets and regulatory conditions may result in significant changes in the estimated fair value of these investments.

Capital Market Segment

Within our Capital Markets segment we derive revenues from two primary sources - investment banking and sales and trading.

Total revenue for the three months ended September 30, 2009 was $36.9 million, representing an increase of 329% from $8.6 million in the comparable period of 2008. The increase was primarily due to a $19.3 million increase in investment banking revenues.

Investment Banking Revenue

     Our investment banking revenue is derived from private placement and
underwriting activities and strategic advisory services. The following table
sets forth our revenue from our investment banking activities for the three
months ended September 30, 2009 and 2008:


Dollars in Thousands                             Three Months Ended
                                     -------------------------------------------
                                      September 30, 2009     September 30, 2008
                                     --------------------   --------------------
Revenue:
Private placement and underwriting   $             30,296   $              8,436
Financial advisory                                    957                  3,488
                                     ---- ---------------   --- ----------------
Total investment banking revenue     $             31,253   $             11,924
                                     ---- ---------------   --- ----------------

Investment banking revenue was $31.3 million for the three months ended September 30, 2009, which included $9.0 million related to warrants received as compensation for activities as underwriter or placement agent valued using Black-Scholes, as compared to revenue of $11.9 million, which included $1.6 million related to warrants received as compensation for activities as underwriter or placement agent valued using Black-Scholes, in the comparable period of 2008.

Private placement and underwriting revenue for the quarter was $30.3 million, including $9.0 million of fair value related to warrants received, compared to $8.4 million in the comparable period of 2008. The increase in private placement and underwriting revenue is a result of increased financing activity in our targeted verticals, especially in life sciences and China, as well as increased demand for capital market offerings, including private placements, registered directs and follow-on offerings.

Strategic advisory fees for the three months ended September 30, 2009 were $957,000, compared to $3.5 million for the comparable period of 2008.

Sales and Trading

Commission revenues increased by $0.2 million, or 18%, to $1.6 million for the three months ended September 30, 2009, compared with $1.4 million for the three months ended September 30, 2008. The increase in commission revenue is a result of increased syndicate activity whereby we act as a member of a selling group.

Principal transactions revenue was $2.4 million for the three months ended . . .