UNITED STATES DISTRICT COURTDISTRICT OF MASSACHUSSETT S

Kent Garvey. Albert Overhauser, James T .Marsh, Roger E . Buck, and Thomas Loveless,on behalf of himself and all others similarlysituated,

Master File No. 04-CV-10438 (RGS )

AMENDED CLASS ACTION COMPLAINTFOR VIOLATION OF SECURITIES LAW S

Plaintiff(s) ,

James Arkoosh and Diomed Holdings . Inc . ,

Defendants .

CLASS ACTION

Plaintiffs Demand a Trial by Jury

Plaintiffs, by their counsel, for their class action complaint allege upon persona l

knowledge as to themselves and their own acts and upon information and belief as to all othe r

matters, based upon an investigation by their counsel that included interviews of individuals wit h

personal knowledge of facts alleged herein, and a review of the publicly available documents ,

news articles . and news releases of Diomed Holdings, Inc .

INTRODUCTION AND OVERVIE W

1 . This is a class action lawsuit brought on behalf of those persons (the "Class") wh o

acquired the common stock of Diomed Holdings, Inc . ("Diomed" or the "Company") during the

period from February 14, 2002 through and including March 21, 2002 (the "Class Period") .

Plaintiffs allege violations against all defendants ("Defendants") of Section 10b of the Securitie s

Exchange Act of 1934 and Rule I Ob-5 promulgated thereunder . Plaintiffs' claims arise out of th e

Defendants' manipulation of the market price of Diomed stock during the Class Period .

2. Diomed is a publicly traded company that develops and sells equipment for photodynamic

therapy and endovenous laser treatment. for use in the treatment of cancer and varicose veins,

respectively .

3 . Defendants knowingly and intentionally engaged in deceptive acts and practices in causing

the artificial inflation of Diomed stock, by improperly compensating stock analysts to promote

the purchase of the company's stock .

4. During the Class Period, Defendants knowingly and intentionally failed to disclose the fact

that Defendants have, either directly or through another party . secretly paid stock analysts to

praise and promote Diomed stock in an effort to artificially inflate the market price of Diomed

common stock .

JURISDICTION AND VENUE

5 . This action arises under Sections 10(b) and 20 of the Securities Exchange Act of 1934 (the

"Exchange Act"), 15 U .S .C. § 78j(b) and 78t, and Rule I Ob-5, 17 C.F.R. § 240.10b-5

promulgated thereunder .

6 . The Court has jurisdiction over the subject matter of this action pursuant to Section 27 of

the Exchange Act. 15 U.S .C . § 78aa and 28 U .S .C . § 1331 .

7 . Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28 U .S .C.

§ 1391(b) . Many of the wrongs alleged in this complaint occurred in substantial part in this

District, including the preparation and dissemination of materially false and misleading

statements to the investing public . Diomed maintains its principal place of business in this

District in Andover, Massachusetts .

8. In connection with the acts, transactions and conduct alleged herein . Defendants, directly

and indirectly, used the means and instrumentalities of interstate commerce, including the United

States mails, interstate telephone communications and the facilities of national securitie s

exchanges and markets .

CLASS ACTION ALLEGATIONS

9. Plaintiffs bring this action as a class action pursuant to Federal Rules of Civil Procedure

23(a) and (b)(3) on behalf of the Class defined above . Excluded from the Class are the

defendants. members of the immediate family of any officers or directors of Diomed, an y

subsidiary or affiliate of Diomed, any of their subsidiaries or affiliates, or any entity in which an y

excluded person has a controlling interest, as well as the legal representatives, heirs, successor s

and assigns of any excluded person .

10. While the exact number of Class members is unknown and can only be ascertained throug h

appropriate discovery, plaintiffs believe there are thousands of them . Joinder of all Class

members is impracticable . Furthermore . because the damages suffered by the individual Class

members may be relatively small, the expense and burden of individual litigation make i t

impossible for the Class members individually to redress the wrongs done to them .

11 . Common questions of law and fact exist as to all members of the Class and predominat e

over any questions affecting solely individual members . Among the questions of law and fact

common to the Class are :

a) whether the federal securities laws were violated by Defendants' acts as alleged herein ;

b) whether Defendants engaged in deceptive acts and practices in violation of the federalsecurities laws :

c) whether James Arkoosh is a "control person" within the meaning of the federal securitieslaws;

d) whether Defendants made false and misleading statements during the Class Period ;

e) whether the market prices of Diorned securities during the Class Period were artificiallyinflated as a result of the conduct alleged in this complaint ; and

f) whether Plaintiffs and the other members of the Class have sustained damages and . if so .the proper measure of those damages .

12. Plaintiffs' claims are typical of the claims of other Class members . Plaintiff and the othe r

class members sustained damages arising out of Defendants' wrongful conduct .

13 . Plaintiff will fairly and adequately protect the interests of the members of the Class an d

have retained counsel competent and experienced in class actions and securities litigation .

Plaintiffs have no interests antagonistic to or in conflict with those of the Class .

14. Plaintiff knows of no difficulty that will be encountered in the m anagement of thi s

litigation that would preclude its maintenance as a class action .

15. The names and addresses of purchasers of Diomed stock are available from Diomed' s

transfer agent . Notice can be provided to such record owners via first class mail using technique s

and forms of notice similar to those customarily used in class actions .

THE PARTIES

16 . Plaintiffs Kent Garvey, Albert Overhauser, James T . Marsh, Roger E. Buck, and Thoma s

Loveless, purchased shares of Diomed stock during the Class Period and were damaged thereby .

A copy of each of the plaintiffs' certification executed pursuant to the PSLRA is attached to th e

Amended Complaint .

17. Defendant Diomed Holdings, Inc . is a Delaware corporation with its principal executive

office and place of business at 1 Dundee Park , Andover, Massachuse tts 01810 . Diomed develops

and markets products p rimari ly designed for : 1) cancer and pre -c ancer treatments using Photo

Dynamic Therapy (`PDT") and 2) greater saphenous vein reflux treatment and other clinical

applications using Endovenous Laser Treatment ("EVLT") . Diomed was formerly a public shell

company known as Natexco Corp . based in Victoria, British Columbia .

18 . Defendant James Arkoosh was the Non-Executive Chairman of Diomed Board o f

Directors at all relevant times herein . As Chairman of Diomed . Arkoosh actively participated in

the drafting of Diomed's SEC filings, and press releases, and therefore he knew or was reckless i n

not knowing of the adverse material information omitted from the SEC filings, press releases and

Diomed website . At all relevant times herein . Arkoosh was the Chief Financial Officer and Chie f

Operating officer of Verus International Holdings, the largest single shareholder of Diomed wit h

15 .2% of Diomed's outstanding stock. In addition, Arkoosh owned personally 131,750 shares o f

Diomed stock .

19. Defendants are liable, jointly and severally, as direct participants in and co-conspirators of .

the wrongs complained of herein .

The Reverse Merger and AMEX Listin g

20. Prior to February 14, 2002, Diomed was a privately held company . With the assistance o f

Arkoosh, and Verus, Diomed arranged to merge with a publicly traded shell corporation name d

Netaxco Corp. based in Vancouver.

21 . On or about February 14, 2002, Defendants completed a $10 .00 million private placement

of stock in Diomed (5,000,000 shares at $2 .00/share) . Simultaneously, Diomed completed a

reverse merger with Natexco Corp . a publicly traded shell corporation . with the resulting publicl y

traded entity being renamed Diomed . Diomed shares immediately began trading on the American

Stock Exchange and within days shot up from $2 .0 per share to nearly $9 .0 .

22 . The cause of this share price rise was the publication of stock analyst newsletters and an

accompanying email campaign that were secretly bought and paid for by Arkoosh, and Diomed .

Manipulation of the Market for Diomed Stoc k

23. Beginning in January 2002, Defendants embarked on a plan to artificially inflate th e

market price of Diomed stock by secretly paying various stock analysts to promote the purchas e

of Diomed stock without disclosing that such analysts' opinions were bought and paid for b y

Defendants .

24. The analysts issued a series of highly positive reports bluntly urging investors to purchas e

Diomed stock, claiming that it would quickly rise to $12 .0 or more .

25. The statements made by these stock analysts about the Company were misleading t o

Plaintiffs and the market because Defendants never disclosed the material fact that the analyst s

were paid either directly or indirectly by Diomed and Arkoosh to praise and promote Diomed' s

stock as part of a manipulative and deceptive pump and dump scheme .

26. In early February of 2002, stock analyst Larry H . Abraham released an issue of Insider

Report' titled "Special Situation Report : Diomed: Portrait of a Biotech Winner," giving Diomed a

glowing review and a strong BUY recommendation : "BUY Diomed, Inc . and do it now . . . I can

tell you without reservation that the company mentioned earlier, Diomed, Inc . meets every

criteria that I have developed and paid dearly to refine . It has the science, the people, the mone y

and a great business model, plus a timeline for profitability that is here and now, not 15 years o r

even five years from now." Attached as Exhibit A is the February 2002, Larry Abraham Inside r

Report .

27. Abraham implored investors to purchase Diomed stock with such statements as "I urge m y

Insider Report readers to participate in the Diomed opportunity along with me by contacting thei r

brokers . . . . So let me repeat : Buy Diomed (DIO : Amex) and do it now."

28 . Defendants never disclosed, however, the fact that Larry Abraham had been hired b y

Diomed and Arkoosh to write the report . This fact is confirmed by the Dow Jones Newswir e

article dated March 21, 2002 (attached as Exhibit B), in which Abraham had "told Dow Jone s

1 The Insider Report was produced by a Florida business called Catalyst Communications ("Catalyst") .Catalyst is identified by Abraham as having received and administered a $700,000 production budget forthe report . However, the report does not disclose who actually paid this $700,000 for the publication ofthe report . Catalyst has been linked to previous illegal securities fraud schemes and at least one ofCatalysts' principals has been sanctioned by the SEC . See infra.

Newswire that he was approached by Diomed and by Catalyst to write his bullish February report

on the company ." The article goes on to state the following :

In phone interviews. Catalyst's owner Bart Walters said that a total of $700,000was spent to hire Larry Abraham, print and produce 800,000 copies of the reportand send them out to prospective investors . He said that his firm was pai ddirectly by Verus International - that's right, the same Verus that's not only amajor and long-time shareholder of Diomed, but which also since December hasbeen advising Diomed at a cost of $15,000 a month .

29. The association between Verus International ("Verus") and Diomed is confirmed by ,

among others . Verus's own website, listing Diomed as one of its portfolio companies and listing

the role of Verus as follows :

• Recapitalized balance sheet to support rapid growth and acquisitions .• Rationalize corporate business plan and operations to support future fmancings .• Advised company on RPO transaction raising $10 million .• Advised on AMEX listing.• Assisting company with Global M&A and future financings .

30. Furthermore, a direct link between Verus and Diomed is established by the fact that Jame s

Arkoosh. Chairman of Diomed's Board of Directors, also happens to be the Chief Operatin g

Officer, Chief Financial Officer of Verus and a principal of Verus .2 In fact, Arkoosh is s o

actively involved with Verus that a March 11 , 2002 New York Post a rt icle by noted financia l

journalist Christopher Byron has confirmed that upon telephoning Verus International, "Jame s

Arkoosh came on the line ." Attached as Exhibit C is the New York Post article .

31 . In addition, the February 14, 2002 Form 8-K SEC filing by Diomed includes a consulting

services agreement showing that a Verus affiliate received an advisory fee of S750.000 upon the

closing of the Merger, which was paid from the proceeds of the $10 .00 million private placement

that closed in Mid- February at the time of the reverse merger . Venus also received a consulting

2 http ://www.diomedinc.com/News Events/press%20reIeases/31-03-01 .htm

agreement from Diomed that called for payments of $15,000 per month plus up to anothe r

$15,000 per month in expenses for financial advisory services .

32. Diomed's February 14, 2002 Form 8-K SEC filings also show that Diomed entered into a

written employment agreement with Arkoosh to serve as Chairman of Diomed in consideration o f

$50,000 and 50,000 Diomed common shares annually to be paid directly to Verus - not t o

Arkoosh .

33 . Hence, since Arkoosh is the Chief Operating Officer, Chief Financial Officer and a

principal of Verus and is also simultaneously the Chairman of Diomed, the Defendants' activ e

participation in this pump and dump stock manipulation is crystal clear . Larry Abrahams stated

that he had been "approached by Diomed" to write his February report, it is unmistakably clear

that Diomed knowingly and intentionally paid stock analysts to promote its stock to unsuspectin g

investors .

34 . At least three other stock touts were also paid to promote Diomed stock during the Clas s

Period .

35 . An investment newsle tter called the SmallCap Network Newsletter Digest wrote severa l

glowing reports on Diomed on February 22, 26 and 27 . 2002 and March 4 and 13, 2002 . Attached

as Exhibit D . The SmallCap network disclosed that it was paid $50,000 in cash by Mohamme d

Patel for writing the reports .

36. An investment newsletter called the OTC Journal Newsletter wrote a series of reports o n

February 22, 26, 27, and 28, 2004 and March 2, 4, 11, 15, and 23, 2004 . One of the OTC Journal

newsle tters is attached hereto as Exhibit E . All of the repo rts are available at

www.otcjournal .com. The OTC Journal Newsletters disclosed that "MarketByte, LLC has bee n

paid a fee of $100.000 in cash and 250,000 options convertible into free trading shares,

exercisable at $3 .50, by Mohammed Patel, an individual, for publishing information on Diomed

Corp for a period of one year ."

37 . According to Christopher Byron, when he called Verus International . Arkoosh came on the

line and told Byron that he has no idea who or where Mohamed Patel was - though he did say

that he "may have met him casually once or twice." (See Exhibit C, p . 3) Upon information and

belief, Mohammed Patel does not exist and is simply a creation of Defendants or is a merely a

shill intended to mask Defendants payments to Catalyst and Larry Abraham .

38. An investment newsletter "Stockwatch" also issued a highly positive report on Diomed in

February 2002. The report stated that "This Virtually Unknown Medical Company is Poised to

make Huge Profits for itself, and for Fortunate Investors Who Get in Early?" According to the

Vancouver Sun, the report stated that Stockwatch was paid by Catalyst Communication s

(Walter's and Kephart's firm), which had been given a marketing budget of $875 .000 and options

to buy 350,000 shares of Diomed stock from an unidentified "third party group with interests i n

Diomed to promote the stock ." (See Vancouver Sun article attached as Exhibit F) .

39. Upon information and belief, this so-called "unidentified third-party group" cited as the

sponsor of the Stockwatch newsletter tout refers to none other than Verus and Arkoosh, based on

the fact that Catalyst's owner Bart Walters had said in the Dow Jones article mentioned above

that his firm was paid directly by Verus for purposes of promoting Diomed stock . Moreover, the

$875,000 budget closely matches the $750,000 Verus received from Diomed in the reverse

merger, plus the $50,000 annual salary paid to Verus for Arkoosh's work as Chairman and the

$15,000 monthly financial consulting contract between Diomed and Verus .

40. The stock promotions outlined above were all paid for by Diomed. Some or all of the

payments were made by Diomed through Verus - a major shareholder of Diomed that provides

Diomed with financial advice and assistance pursuant to contract . James Arkoosh, the Chairma n

of Diomed Board of Directors , is also the COO and CFO of Verus . Defendants had ful l

knowledge of the fact that Diomed had paid for the stock recommendations by Larry Abrahams ,

Stockwatch, James Stock, and numerous other newsletters .

41 . In addition, when Christopher Byron, the New York Post reporter, called Verus and spok e

with Arkoosh, he asked Arkoosh who Mohammed Patel was (the sponsor of the OTC Journal and

SmallCap Network), Arkoosh replied that "he had no idea who . or where . Mohammed Patel wa s

- though he did say that he may have met him casually once or twice ."' (Exhibit C, p . 3) . Thus ,

Arkoosh admits to knowing Patel, even if he did not completely confess to having used Patel a s

the bagman to funnel the money to OTC Journal and SmallCap Newsletter . Whether or not Patel

exists in reality or whether Arkoosh simply made up Mohammed Patel as a convenient alias is a

question that can be resolved only through discovery.

42. Diomed and Arkoosh intentionally paid for the unlawful promotion of Diomed stoc k

through third party "shills" Verus and Catalyst Communications in an effort to circumvent th e

securities laws and hide the origin of the payments . Verus was controlled by its CFO and CO O

Arkoosh, who was simultaneously the Chairman and major shareholder of Diomed .

43 . The fact that Diomed and Arkoosh did not pay Abraham directly, but used Verus an d

Catalyst as fronts in an attempt to disguise their payments is evidence that they intentionally

sought to hide the origins of the payments to the analysts . This underhanded arrangement is

evidence of Defendants intentional engagement in deceptive acts and practices with the intention

of manipulating the market of Diomed Securities . Moreover, Diomed and Arkoosh knowingly

misled investors by failing to disclose in the Descriptive Memorandum and current report file d

10

with the SEC on February 14, 2000 the fact that Defendants had paid various newsletters to tout

Diomed stock .

44 . Had the Plaintiffs known that the analysts were being paid by Diomed to praise and

promote its products, services, and prospects for growth, they would not have bought or retained

Diomed common stock based on such a recommendation . Due to the improper monetary

influences imposed upon these analysts by Diomed and Arkoosh, the analysts' reports on Diomed

could not be deemed fair and impartial and were in fact misleading and had the effect of

manipulating the market price of Diomed stock . Defendants' failure to disclose this material fact

intentionally and directly misled Plaintiffs into relying upon the mistaken assumption that the

analysts' reports were fair and impartial in purchasing and retaining Diomed stock, for the

purpose of causing the stock to be artificially inflated .

45 . These misstatements and omissions on the part of Defendants caused the Diomed stock to

be artificially inflated up to a high of $9.00 per share during February of 2002, when Diomed

made its debut on the AMEX. Since then the stock price has dwindled precipitously, trading at

$0.20 per share at the time of the filing of this action .

ADDITIONAL SCIENTER ALLEGATION S

46. Diomed and Arkoosh both acted with actual knowledge and intention that their actions

would have the effect of manipulating the price of Diomed stock during the class period .

47. Diomed completed a $10 .0 million private placement of stock on February 14, 2002 at

$2.00 per share. This stock sale relied on a strong market for Diomed securities, without which

investors would not have purchased Diomed stock . The misleading and market manipulating

newsletters cited above helped create a strong demand for Diomed shares .

48 . In February 2002 , Arkoosh owned 131,750 Diomed shares, but more importantly, he was

COO and CFO of Verus which owned 4 .4 million Class A shares (the equivalent of 17 .6 million

common shares ) of Diomed stock or 15.2% of the outstanding shares . Mr. Arkoosh is both a

CPA and a lawyer licensed to practice law in Washington State and is a former partner of KPMG

LLP .

49. Section 17(b) of the Securities Act of 1933 provides :

It shall be unlawful for any person, by the use of any means or instruments oftransportation or communication in interstate commerce or by the use of themails, to publish, give publicity to, or circulate any notice, circular,advertisement, newspaper . article, letter, investment service, orcommunication which, though not purporting to offer a security for sale,describes such security for a consideration received or to be received, directlyor indirectly, from an issuer, underwriter, or dealer, without fully disclosingthe receipt, whether past or prospective, of such consideration and theamount thereof.

50. As CPA and corporate lawyer for an international public accounting firm, Arkoos h

certainly was aware that conspiring to secretly pay stock analysts to publish highly positiv e

reports and issue buy recommendations was a criminal violation of the securities laws .

Defendants' actions were intended to evade compliance with § 17(b) in an effort to manipulate th e

price of Diomed securities .

51 . Larry Abraham stated that he was approached by Diomed and Catalyst Communications t o

write the report on Diomed . Catalysts' owner Bart Walter's stated that he paid $700,000 to

Abraham to write the report and disseminate 800,000 copies to investors . Walter's stated tha t

Catalyst was paid directly by Verus International - the same company that Diomed retained as it s

financial advisor and paid $750,000 pursuant to the merger and the same company that Diome d

Chairman James Arkoosh was both COO and CFO of . (See Exhibit B, p .3) . In fact, the $700,00 0

amount paid that Abraham and Catalyst admit receiving closely approximates the $750.000 paid

12

by Diomed to Verus in the merger on February 14, 2002 . The $50,000 difference is likely

Catalysts' fee for acting as the go-between . Counsel for plaintiffs personally contacted Caro l

Remond of Dow Jones and verified that all of the statements set forth in the March 21, 200 2

article (Exhibit. B) are true and correct .

52. Further evidence of knowing and intentional stock manipulation by Diomed and Arkoos h

is that Catalyst partner Patrick Kephart has been previously charged by the SEC in 1996 fo r

bribing stock brokers to sell certain securities to their clients . Kephart and his co-defendants wer e

alleged to have made over $2.6 million in a pump and dump scheme . Attached as Exhibit G is th e

SEC litigation release describing the complaint against Kephart . The complaint was later settle d

by those defendants by the payment of money. (See Exhibit F) .

53. Arkoosh intentionally used Catalyst and the mysterious " Patel" as a go -between or smoke-

screen so that neither Diomed 's, Arkoosh's or Verus' names would be disclosed as the sponsor s

of the Diomed analyst reports . Arkoosh used these third-parties solely to disguise the true origin s

of the payments to the analysts . This attempt to "cover-up" Defendants' tracks evidence s

Defendants' knowing and intentional wrongdoing .

54. Arkoosh's intentional violation of § 17(b) of the Securities Act, while not a private cause o f

action unto itself, is prima facie evidence of Defendants' intention to violate § 10(b) of th e

Exchange Act and Rule I Ob-5 .

55 . Verus has a history of engineering reverse mergers with shell companies where the

resulting entity stock price immediately increases on heavy demand and then plummets in a

typical pump and dump scenario . (See Exhibit H) . These stocks include Warty Corp. (AMEX :

IPT), Emagin Corp . (AMEX : EMA), On2 Technologies (AMEX: ONT), and Refocus Group

13

(OTCBB : RFCG) . See also , Exhibit C . p. 2-3 . This pattern evidences Arkoosh's scienter as he

was COO and CFO of Verus, as well as Chairman of Diomed .

PROOF OF PLAINTIFFS' RELIANC E

56. Plaintiffs and members of the Class reasonably relied on the misleading statements se t

forth above in purchasing Diomed Stock during the Class Period .

57. Plaintiffs intend to employ two separate and alternative presumptions of reliance i n

demonstrating that Plaintiffs have reasonably relied on the misleading SEC filings and pres s

releases in purchasing shares of Diomed stock during the Class Period .

Applicability Of Affiliated Ute Presumption Of Reliance

58 . Plaintiffs need not prove reliance either individually or as a class because under the

circumstances of this case, involving primarily a failure to disclose, positive proof of reliance i s

not a prerequisite to recovery, pursuant to ruling of the United States Supreme Court in Affiliated

Ute Citizens of Utah v . United States , 406 U . S . 128 ; 92 S . Ct . 1456; 31 L. Ed. 2d 741 ; 1972 U .S.

LEXIS 163 ; Fed. Sec . (1972) . All that is necessary is that the facts withheld be material in th e

sense that a reasonable investor might have considered them important in the making of thi s

decision .

Applicability Of Presumption Of Reliance : Fraud-On-The-Market Doctrine

59. In the alternative, Plaintiffs will rely, in part, upon the presumption of reliance establishe d

by the fraud-on-the-market doctrine in that :

a) Defendants made misleading public statements or failed to disclose material fact s

during the Class Period ;

b) the omissions and misleading statements were material ;

14

c) the securities of the Company traded in an efficient market ;

d) the misleading statements and omissions alleged would tend to induce a reasonabl e

investor to misjudge the value of the Company's securities ; and

e) Plaintiffs and members of the Class purchased their Diomed securities between th e

time defendants failed to disclose or misrepresented material facts and the time the

true facts were disclosed, without knowledge of the omitted facts or misleadin g

statements .

60 . At all relevant times, the market for Diomed's securities was an efficient market for th e

following reasons, among others :

(a) Diomed's stock met the requirements for listing, and was listed and actively trade d

on the American Stock Exchange, an efficient and automated market . During the

class period on average approximately 1 .6 million shares of Diomed stock wer e

traded on a weekly basis . During the Class Period approximately 14.2 million

Diomed shares were outstanding according to the Company's March 22, 2002 10- K

filing (unadjusted for a later reverse stock split on ). Thus, more than 11 .26% of the

outstanding Diomed shares were traded on a weekly basis, permitting a very stron g

presumption of an efficient market ;

(b) As a regulated issuer, Diomed filed periodic public reports with the SEC and th e

NASDAQ and/or NASD ;

(c) Diomed regularly communicated with public investors via established marke t

communication mechanisms, including through regular disseminations of pres s

releases on the national circuits of major newswire services and through other wide-

15

ranging public disclosures, such as communications with the financial press an d

other similar reporting services :

(d) Diomed's stock price reacted quickly in response to material news about th e

Company;

(e) Several third party stock analysts and well-known financial reporters issued reports

and wrote articles on the Company during the Class Period ; and

(G) A specialist at the American Stock Exchange was assigned to ensure efficien t

trading of Diomed stock and upon information and belief more than ten registere d

traders acted as additional market makers in Diomed stock during the Class Period .

61 . Asa result of the foregoing . the market for Diomed's securities promptly digested curren t

information regarding Diomed from all publicly available sources and reflected such informatio n

in Diomed's stock price . Under these circumstances, all purchasers of Diomed's securities durin g

the Class Period suffered similar injury through their purchase of Diomed's securities a t

artificially inflated prices and a presumption of reliance applies .

DEFENDANTS' CONDUCT CAUSED DAMAGE TO INVESTOR S

62. Defendants manipulated the market for Diomed stock causing the market price of th e

stock to be artificially inflated during the Class Period through the publication of the bogus stoc k

analyst reports that were bought and paid for by Defendants . Plaintiffs paid an artificially high

price for Diomed shares during the Class Period. When the fraud was revealed, the price of

Diomed shares dropped and continued falling over a period of months, causing plaintiffs to suffe r

damages as the value of the Diomed shares they purchased declined substantially as a result o f

Defendants' fraud .

16

COUNT I

AGAINST ALL DEFENDANTS FOR VIOLATION OF

SECTION 10(B) OF THE EXCHANGE ACT AN D

RULE 1OB-5 OF THE SECURITIES AND EXCHANGE CO MM ISSION

63 . Plaintiffs repeat and reallege each and every allegation contained in the foregoin g

paragraphs as if fully set forth herein.

64. This Count is asserted against Defendants Diomed, and Arkoosh and is based upon Sectio n

10(b) of the 1934 Act, 15 U . S.C . §78j (b). and Rule I Ob-5 promulgated thereunder .

65 . During the Class Period . Defendants Diomed and Arkoosh , singly and in concert, directl y

engaged in a common plan, scheme, and unlawful course of conduct, pursuant to which the y

knowingly or recklessly engaged in acts , transactions, practices. and courses of business which

operated as a fraud and deceit upon plaintiffs and the other members of the Class. and failed to

disclose material information in order to make the statements made, in light of the circumstance s

under which they were made, not misleading to plaintiffs and the other members of the Class .

The purpose and effect of said scheme, plan, and unlawful course of conduct was, among othe r

things, to induce plaintiffs and the other members of the Class to purchase Diomed common stoc k

during the Class Period at artificially inflated prices .

66. Throughout the Class Period, Diomed acted through Arkoosh, the Company's Chairman .

The willfulness, motive, knowledge, and recklessness of Arkoosh is therefore imputed to

Diomed, rendering the Company primarily liable for the securities law violations of these

Defendants committed while performing in their official capacity as Company representatives . In

the alternative and additionally, Diomed is liable for the acts of Arkoosh under the doctrine of

respondeat superior .

17

67. Defendants had an affirmative duty to disclose fully the truth regarding th e

misrepresentations and omissions delineated above . Defendants' knowing and intentional failure

to do so was a conscious violation of the securities laws .

68. As a result of the failure to disclose material facts . the information that Defendants Diomed

and Arkoosh disseminated to the investing public was materially false and misleading as set fort h

above, and the market price of Diomed common stock was artificially inflated during the Clas s

Period. Plaintiffs and the Class relied on the above-described false and misleading statements i n

purchasing Diomed shares during the Class Period . In ignorance of the false and misleadin g

nature of the statements described above and the deceptive and manipulative devices an d

contrivances employed by said Defendants, Plaintiffs and the other members of the Class relied ,

to their detriment, on the integrity of the market price of the stock in purchasing Diomed commo n

stock. Had Plaintiffs and the other members of the Class known the truth, they would not hav e

purchased said shares or would not have purchased them at the inflated prices that were paid .

69. Plaintiffs and the other members of the Class have suffered substantial damages as a result

of the wrongs herein alleged in an amount to be proved at trial .

70. Diomed is directly liable for acts and omissions of Arkoosh under the doctrine o f

respondeat superior.

71 . By reason of the foregoing, Defendants Diomed and Arkoosh directly violated Sectio n

10(b) of the Exchange Act and Rule I Ob-5 promulgated thereunder in that they: (a) employe d

devices, schemes, and artifices to defraud; (b) failed to disclose material information; or (c )

engaged in acts, practices . and a course of business which operated as a fraud and deceit upo n

plaintiffs and the other members of the Class in connection with their purchases of Diome d

common stock during the Class Period .

18

COUNT I I

AGAINST ARKOOSH FO R

VIOLATION OF SECTION 20(A) OF THE EXCHANGE AC T

72 . Plaintiffs repeat and reallege each and every allegation contained in each of the foregoin g

paragraphs as if set forth fully herein .

73. Arkoosh by virtue of his management positions, directorships, stock ownership and/o r

specific acts described above, was, at the time of the wrongs alleged herein, a controlling perso n

within the meaning of Section 20(a) of the 1934 Act,

74. Arkoosh had the power and influence and exercised the same to cause Diomed to engage

in the illegal conduct and practices complained of herein .

75 . By reason of the conduct alleged in Count II of the Complaint, Arkoosh is liable for the

aforesaid wrongful conduct, and is liable to plaintiffs and to the other members of the Class for

the substantial damages which they suffered in connection with their purchases of Diomed

common stock during the Class Period .

PRAYER FOR RELIEF

WHEREFORE, plaintiffs , on behalf of themselves and the Class , pray for judgment as follows :

a. Declaring this action to be a proper plaintiff class action maintainable pursuant to Rul e

23(b)(3) of the Federal Rules of Civil Procedure and declaring Plaintiffs to be proper representatives o f

the Class ;

b. Awarding Plaintiffs and other members of the Class damages together with interes t

thereon;

c . Awarding Plaintiffs and the other members of the Class their costs and expenses in this

litigation, including reasonable attorneys' fees and experts' fees and other costs and disbursements ; and

19

J . Awarding Plaintiffs and the member's of the Class such other and further relief as may be

just and proper under the circumstances .

DEMAND FOR TRIAL BY JURY

Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, plaintiffs hereby demand trial b y

jury of all issues .

DATED: September 3, 2004 LAW OFFICES OF SCOTT LOPE Z

Scott Lop6Law Oftc s of Scott Lopez24 School Street , 8th FloorBoston, Massachusetts 02108Telephone : (617) 742-5700Facsimile : (617) 742-571 5

Liaison Counsel for Plaintiffs and the Clas s

Laurence Rose n

The Rosen Law Firm, P .A .

350 Fifth Avenue. Suite 5508New York . NY 10118

Telephone : (212) 686-1060

Facsimile : (212) 202-3827

Irosen@rosenlei-,al .com

Lead Counsel for Plaintiffs and the Clas s

20

.11/05/03 WED 11 : 25 FAX 206 5 X086 SAFECO INSURANCE J00 1

CERTIFICATIO N

The individual or institution listed below (the "Plaintiff') authorizes the Rosen Law Firm, P .A. to filean action or amend a current action under the federal securities laws to recover damages and to seekother relief against Diomed Holdings, Inc., and certain of its officers and directors . The Rosen LawFirm, P.A. will prosecute the action on a contingent fee basis and will advance all costs and expenses .

Plaintiff declares, as to the claims asserted under the federal securities laws, that :

1 . I have reviewed the complaint against Diomed Holdings, Inc . and certain of its officers and directorsand authorized the filing thereof by the Rosen Law Firm, P .A., whom I retain as counsel in this actionfor all purposes .

2. I did not engage in transactions in the securities that a re the subject of this action at the direction ofplaintiff's counsel or in order to participate in this or any other litigatioh under the securities laws of theUnited States.

3 . 1 am willing to serve as a lead plaintiff either individually or as part of a group . A lead plaintiff-is a

representative party who acts on behalf of other class members in directing the action, and whoseduties may include testifying at deposition and trial .

4. The following is a list of all of the purchases and sales I have made in Diomed Holdings, Inc .common stock since January 1, 2002 . 1 have made no transactions during the class period in the debtor equity securities that are the subject of this lawsuit except those set forth below .

Number ofShares Purchasedor Sold

• Date(s) Price Paid Date(s) Sold Price SoldPurchased Per Share (if applicable) Per Share

$ ( $$ S

$ $$ $S $$ $$ $S S$ $

$ S$ S$ $$$ $

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM: (212) 202-3827

11/05/03 WED 11:25 FAX. 206 5 p086 SAFECO INSURANCE

5. I have not, within the three years preceding the date of this certification, sough t to serve or served asa representative party on behalf of a class in an action involving alleged violations of the federalsecurities laws, except : for the following company(ies) :

16 002

6 . I will not accept any payment for serving as a representative party beyond my pro rata share of anyrecovery, except reasonable costs and expenses, such as travel expenses and lost wages directly relatedto the class representation, as ordered or approved by the court pursuant to law .

I declare under penalty of perjury that the foregoing is true and correct . Executed this day of2003.

KE t. N /Name (p rint) :

Address : I I L L ~, Pi k ST 7 1

S ir/e, LVA W12--2--Phone ;

Az szoe-///

If

Email : P-Ie rrVf)((P-V'A06-Ce')M

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM (212) 202-3827THE ROSEN LAW FIRM P A276 FIFTH AVENUE, SUITE 405NEW YORK, NY 10001

ORM 1LTO:

CERTIFICATIO N

The individual or institution listed below (the "Plaintiff") authorizes the Rosen Law Firm, P .A. to filean action or amend a current action under the federal securities laws to recover damages and to seekother relief against Diomed Holdings, Inc ., and certain of its officers and directors. The Rosen LawFirm, P .A. agrees to prosecute the action on a contingent fee basis and will advance all costs andexpenses. Any legal fees and expenses will be determined by, and payable, only upon order of theCourt in the action .

Plaintiff declares, as to the claims asserted under the federal securities laws, that :

1 . I have reviewed the complaint against Diomed Holdings, Inc . and certain of its officers and directorsand authorized the filing thereof by the Rosen Law Firm, P .A., whom I retain as counsel in this actionfor all purposes .

2 . 1 did not engage in transactions in the securities that are the subject of this action at the direction ofplaintiffs counsel or in order to participate in this or any other litigation under the securities laws of theUnited States.

3. I am willing to serve as a lead plaintiff either individually or as part of a group. A lead plaintiff is arepresentative party who acts on behalf of other class members in directing the action, and whoseduties may include testifying at deposition and trial .

4. The following is a list of all of the purchases and sales I have made in Diomed Holdings, Inc .-common-stock since January 1 ; 2002 . I have made no transactions during the class period in-the debtor equity securities-that-are the-subject-of this-lawsuit-except those set forth below.

Number ofShares Purchasedor Sold

- Date(s)Purchased

P rice Paid Date(s) Sold Price SoldPer Share (if applicable) Per Share

1,000 March 5, 2002 $7.70 Nov. - 2003 $ 0 .3 0$ $$ _ $$ $$ $$ $$ $$ $$ $$ $$ $$ . $$ . $

. . :. -. •- - , :~ ; : : T-acs :.

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM: (212) 202-3827

5 . I have not, within the three years preceding the date of this certification, sought to serve or served asa representative party on behalf of a class in an action involving alleged violations of the federalsecurities laws, except : for the following company(ies) :

6. 1 will not accept any payment for serving as a representative party beyond my pro rata share of anyrecovery, except reasonable costs and expenses, such as travel expenses and lost wages directly relatedto the class representation, as ordered or approved by the court pursuant to law .

I declare under penalty of perjury that the foregoing is true and correct . Executed this 30 b, day ofMarch, 2004.

0A.,(- 0"'k-4'M

Albert Overhauser

Phone: (i65) 'fIf- 3 03 7

E-mail: p La P0 t*A,4t . 114- -

Mr. Albert W. Overhauser236 Pawnee Dr .W. Lafayette, IN 47906-2115

(765) q-63 4- U

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM at (212) 202-3827OR MAIL TO :THE ROSEN LAW FIRM PA350 FIFTH AVENUE, SUITE 5508NEW YORK, NY 10118

CERTIFICATION

The individual or institution listed below (the "Plaintiff') authorizes the Rosen Law Firm, P .A. to filean action or amend a current action under the federal securities laws to recover damages and to seekother relief against Diomed Holdings, Inc ., and certain of its officers and directors. The Rosen LawFirm, P .A. will prosecute the action on a contingent fee basis and will advance all costs and expenses .

Plaintiff declares, as to the claims asserted under the federal securities laws, that :

1 . I have reviewed the complaint against Diomed Holdings, Inc . and certain of its officers and directorsand authorized the filing thereof by the Rosen Law Firm, P .A., whom I retain as counsel in this actionfor all purposes .

2. I did not engage in transactions in the securities that are the subject of this action at the direction ofplaintiff s counsel or in order to participate in this or any other litigation under the securities laws of theUnited States.

3 . 1 am willing to serve as a lead plaintiff either individually or as part of a group . A lead plaintiff is arepresentative party who acts on behalf of other class members in directing the action, and whoseduties may include testifying at deposition and trial .

4. The following is a list of all of the purchases and sales I have made in Diomed Holdings, Inc .common stock since January 1, 2002 . I have made no transactions during the class period in the debtor equity securities that are the subject of this lawsuit except those set forth below .

Number ofShares Purchasedor Sold

Date(s)Purchased

Price PaidPer Share

Date(s) Sold Price Sold(if applicable) Per Share

100 03/11/2002 $8:00 $

200 04/02/2002 $5.45 $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

$ $

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM : (212) 202-3827

$ $

$ $

5. I have not , within the three years preceding the date of this ce rt i fication, sought to se rve or served asa representative party on behalf of a class in an action involving a lleged violations of the federalsecurities laws, except : for the following company(ies) : ,J C )',j C-

6. I will not accept any payment for serving as a representative party beyond my pro rata share of anyrecovery, except reasonable costs and expenses, such as travel expenses and lost wages directly relatedto the class representation, as ordered or approved by the court pursuant to law .

I declare under penalty of perjury that the foregoing is true and correct . Executed this 6 sixth day ofNovember , 2003 .

17 ,

(print): James T .

Address : 2600 W. Michigan Ave. Lot 38EPensacola, Florida 32526-228 2

Phone: (850) 944-9447

Email: jtmrsh@yahoo.com

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM (212) 202-3827 OR MAIL TO :THE ROSEN LAW FIRM PA276 FIFTH AVENUE, SUITE 4051.TVnrvnvv "krv 1(lnnt

CERTIFICATIO N

The individual or institution listed below (the "Plaintiff) authorizes the Rosen Law Firm, P .A to filean action or amend a current action under the federal securities laws to recover damages and to seekother relief against Diomed Holdings, Inc ., and certain of its officers and directors . The Rosen LawFirth, PA will prosecute the action on a contingent fee basis and will advance all costs and expenses .

Plaintiff declares, as to the claims asserted under the federal securities laws, tliat :

1 . I have reviewed the complaint against Diomed Holdings , Inc. and certain of its officers and directorsand authorized the filing thereof by the Rosen Law Firm, P.A, whom I retain as counsel in this actionfor all purposes .

2. 1 did not engage in transactions in the securities that are the subject of this action at the direction ofplaintiff s counsel or in order to participate in this or any other litigation under .the securities laws of the -United States.

3. I aru willing to serve as a lead plaintiff either individually or as part of a group . A lead plaintiff is arepresentative party who acts on behalf of other class members in directing the action, and whoseduties may include testifying at deposition and trial .

4. The following is a list of all of the purchases and sales I have made in Diamed Holdings, Inc .common stock since January 1, 2002 . I have made no transactions during the class period in the debtor equity securities that are the subject of this lawsuit except those set forth below .

Number of Date(s)Shares Purchased Purchasedor Sold

Price Paid Date(s) SoldPer Share Cif applicable)

Price SoldPer Share

i50 March 11, 2002 $7.00 NIA N/A$ $$ $$ $$ $$ $$ $$ $$ $

$ $

$ $$ $

$ $

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM: (212) 202-3827

~ w ..~~ . a_ .-... r a rare 1'G/ lb,9O (O1 Z ZHp(n N . O i

r 7

5 . 1 have not, within the three years preceding the date of this certification, sought to serve or served asa representative party on behalf of a class in an action involving alleged violations of the federalsecurities laws, except : for the following company(ies) :

6. I will not accept any payment for serving as a representative party beyond my pro rata share of any

recovery, except reasonable costs and expenses, such as travel expenses and lost wages directly relatedto the class representation, as ordered or approved by the court pursuant to law .

I declare under penalty of perjury that the foregoing is true and correct. Executed this 05 day ofNovember. 2003.

Roger E. BuckName (print) :

Address: 5435 Cascade DriveWest Beud,Wl 53095

Phone: 262-675-0169

Email: rbuck64@hotmail.com

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM (212) 202-3827 OR MAIL TO :

THE ROSEN LAW FIRM P A276 FIFM AVENUE, SUITE 405NEW YORK, NY 10001

CERTIFICATIO N

The individual or institution listed below (the "Plaintiff') authorizes the Rosen Law Firm, P .A. to filean action or amend a current action under the, federal securities laws to recover damages and to seekother relief against Diomed Holdings, Inc ., and certain of its officers and directors . The Rosen LawFirm, P.A. agrees to prosecute the action on a contingent fee basis and will advance all costs andexpenses. Any legal fees and expenses will be determined by, and payable, only upon order of theCourt in the action.

Plaintiff declares, as to the claims asserted under the federal securities laws, that :

1 . I have reviewed the complaint against Diomed Holdings, Inc . and certain of its officers and directorsand authorized the filing thereof by the Rosen Law Firm, PA, whom I retain as counsel in this actionfor all purposes.

2. I did not engage in transactions in the securities that are the subject of this action at the direction ofplaintiffs counsel or in order to participate in this or any other litigation under the securities laws of theUnited States.

3. I am willing to serve as a lead plaintiff either individually or as part of a group. A lead plaintiff is arepresentative party who acts on behalf of other class members in directing the action, and whoseduties may include testifying at deposition and trial .

4. The following is a list of all of the purchases and sales I have made in Diomed Holdings, Inc .common stock since January 1, 2002. I have made no transactions during the class period in the debtor equity securities that are the subject of this lawsuit except those set forth below .

Number ofShares Purchasedor Sold100600

Date(s)Purchased

March 5, 2002March 7, 2002

Price PaidPer Share

$7.31$6.31

Date(s) Sold Price Sold(if applicable) Per Share

$$

200 March 25, 2002 $4.38$

$$

$ $$ $$ $$ $$ - $$ $$ $$ $$ $$ $

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM: (212) 202-3827

~ -

5 . I have not, within the three years preceding the date of this certification, sought to serve or served asa representative party on behalf of a class in an action involving alleged violations of the federalsecurities laws, except : for the following company(ies) :

6. I will not accept any payment for serving as a representative party beyond my pro rata share of anyrecovery , except reasonable costs and expenses , such as travel expenses and lost wages directly relatedto the class representation, as ordered or approved by the court pursuant to law .

I declare under penalty of perjury that the foregoing is true and correct _ Executed this 'day ofMarch, 2004 .

Thomas LovelessI1 Lori Lee DriveLafayette, IN 479051 -4725

Phone: 765-449-741 1E-mail: thomloveless@hotmail.com

PLEASE FAX CERTIFICATION TO ROSEN LAW FIRM at (212) 202-3827OR MAIL TO :THE ROSEN LAW FIRM PA350 FIFTH AVENUE, SUITE 5508NEW YORK, NY 10118is

LarryAbraham's

Our 20th Yea r "Is It Not a Cause?" February 2002

SPECIAL SITUATION REPORT :

DIOMED : PORTRAIT OF A BIOTECH WINNE R

New Year's Resolutio n

What's the old saying? Give a man a fish andfeed him for a day . Teach a man to fish and feedhim for life? Probably the right thing to do is giv-ing a man a fish and then telling him how youcaught it . . . right?

My first important task undertaken this year isto do just that . The fish is an exciting clinical so-lutions company called Diomed, Inc . (DIO :AMEX) .

Let's not mince any words . I am going to giveyou the bottom line right up front and then explainwhy. If you act on it, you have made an excellentinvestment decision that is going to make you a lotof money. BUY Diomed, Inc . and do it now .

Biotech Investor 's Toolbox

Ever since I made my first investment for ourpublisher's portfolio in a new generation biotechor medical device company over ten years ago, Ihave been developing a matrix for what, when,why and how an investor can confidently partici-pate in this most dynamic sector .

First, I surrounded myself with experts in thefield in which I'm interested . For many investors,the technology sector was a sea of jargon anddifficult to navigate . Getting a grip on the biotechsector can be an equally daunting task . My ad-visory cadre includes a former Deputy Directorfrom the Food and Drug Administration (FDA), a

former department head for The American RedCross, a team of doctors and scientists fromKent State University and a myriad of high pro-file medical and business professionals, includ-ing the deputy finance director at Microsoft .

With my all-star team assembled, I set out todefine what makes a biotech company a winneron Wall Street . What we discovered was pretty

basic. Science, people and money is the sim-ple, yet magic, formula . Naturally, it is more

complicated in practice, but viewing a company'smerits with your focus on these elements canput you way ahead of the pack when making aninvestment decision .

What's more, the system works . Over thepast few years, I've reeled in some whoppers .Supergen, a pharmaceutical company specializ-ing in cancer drugs is up 270% since I recom-mended it . Immunex, recent takeover target ofAMGEN, rose over 300%. AVII is up over 250%since we discovered it and Hollis Eden Pharma-ceuticals is up 150% . Each of these companiesscore high on our matrix and each one per-formed as predicted .

The best part is, after doing the dirty work ofdeveloping an evaluation system for biotechcompanies, the sector is RED HOT! In fact,NASDAQ, the technology proving ground, justreplaced 13 of its "NASDAQ 100" indicatorstocks . 8 of the 13 replacements were in the bio-tech arena . Every major and minor investmentpublication on the newsstands chronicle newdiscoveries and big mergers . And now, armed

with a universally applicable litmustest, we welcome the biotech revo-lution with open arms .

Before the advent of AIDS andHIV, the timeline for bringing a newmedical therapy to market wasabout 15 years at a cost of approxi-mately $500 million . Now, becauseof congressional pressure by spe-cial interest groups, the FDA proto-cols have cut that time in half andcosts have come down to about $75or $80 million. Still a lot of money,but considerably less than before .

For the first time, I've assembled all our find-ings and arranged them in a fairly logical andinformative special report called The BiotechRevolution" . It is an investor's toolbox for profit-ing in the booming biotech sector . My publisherhas included some information on this specialreport in this mailing package and is even kindenough to tell you how to get your hands on acopy. I genuinely hope that you procure one andstart applying the principles contained therein .

Definition of a Winner

I can tell you without reservation that thecompany mentioned earlier, Diomed, Inc . meetsevery criteria that I have developed and paiddearly to refine . It has the science, the people,the money and a great business model, plus atimeline for profitability that is here and now, not15 years or even five years from now .

With Diomed, the timeline is now and thescience is fully funded, thus eliminating thetwo biggest considerations any investor everfaces with any stock in any sector : Time andmoney .

INSIDER REPORT Editorial Office Subscription Office Subscription InformationEditor-in-Chief: Larry Ii. Abraham P.O . l3ox 8 .1 903 The Insider Report One Year $19 9Publisher: AAI D .G . Ltd ., Inc. Phoenix, AZ 85071 P.O. 84903 Two Years : $358Editorial Consultant : Scott Stanley Phoenix, AZ 8507 1

800-528 .0559 or 602-252-4477 FAX 602-943-7363E-mail : PMC70I@aol .con t

Insider Report is a private ncw%letter cornnxrning on political s xi .] and economic eve rim Infomiation is obt:w l from nsaates believod to be reliable, bid uuunot lx; guaranteed as to its accuracy orcompleteness. Use ofsuch infamatioi or rocornrrraidations is at tl)e risk of the reader, tsithout responsibility on our pcut Meralms of Insider Rgwn staf f may liritn line to time hold p itiots in invest-ments mentioned. (Back issues ofInsider Report ate S 12 each) Copyright ® 2001 by A .M .D.G . Ltd, Inc. All rights resrved. Unaufluizod reproduction of this newsletter or its contents by Xerogra-phy, facsimile, or any of er mcaru is illegal arid punishable by lame .

Insider Report -2- Special Report

"I can tell youwithout reserva-tion that Diomedmeets everycriteria that /have developedand paid dearlyto refine. "

When the NASDAQ meltdown firststarted in March of 2000, it be-came very clear that any emerg-ing company that didn't have thecash necessary to become profit-able was in deep trouble as thecapital markets began to dry up .

Additionally, if the timeline towardprofitability was not clear or theburn rate for their capital to getthere was adverse or even ques-tionable, they too were in trouble,and so the dominoes started to fall .

Today, a company like Diomed which is wellfinanced, currently profitable or will be shortly, andis growing revenue with each passing month, isamong the first tier of companies investors shouldbe seeking in this sector or any sector . So if youknew nothing more of Diomed than this auditedfact, it would be worthy of your investment dollars .But there is more, much more which should com-pel your decision to buy it .

What Diomed Does

Let's take a look in depth : Ever since 1961when Theodore H . Maimen invented the firstlaser, we have watched this marvelous tech-nology expand into ever more exciting fields .When we first heard of lasers it was almos t

"With Diomed, the timeline is nowand the science is fully funded,thus eliminating the two biggestconsiderations any investor everfaces with any stock in any sector:Time and money "

entirely within the realm the procedures andof sci-fi and exotic "Diomed's clinical process is solv- profit potential . Withweaponry . Everything ing the problems of varicose veins the EVLT platform, Di -

'from lasers in outer omed s clinical proces sspace floating on a plat- that affects 25 percent of adult is solving the problem sform waiting to inciner- women and 18 percent of adult of varicose veins tha tate a major city in a men. In people over the age of affects 25 percent ofblink of an eye or han dheld pistols toted by the 50, this painful, ugly, and at times ,

adult women and 1 8percent of adult men .

Captain Kirk's of the fu- life-threatening malady plagues In people over the ag eture, captivated our over 50 percent of both men and of 50, this painful, ugly ,imaginations . Then and at times, life -when the Gulf War women." threatening malad yerupted, we sat on our plagues over 50 per-couches and watched cent of both men an dhow laser-guided missiles and smart bombs women . Right now, eight of the twelve member ssent from bombers at 30 thousand feet or na- of the American College of Phlebology are usin gval destroyers hundreds of miles away could and validating Diomed's EVLT varicose veingo precisely down the ch imney of a computer- treatment . (Phlebology is the medical name fo rprogrammed target . varicose veins or blood clotting . )

But during the past forty years, other la-ser developments and applications whilemaybe not at first blush as exciting hadbeen unfolding . The reality is that within themedical field, the developments of lasertechnology are every-bit as exciting as anysmart bomb and far more beneficial to hu-manity . The semiconductor laser, or what isnow called a diode laser can work its won-ders in ways almost beyond imagination . Forexample : a diode laser can, with perfect pre-cision, burn up to 200 separate holes in anarea the size of a pinhead and each hole isthe exact same diameter .

Now using the same capability plus fiber op-tics, this same precision can be applied to a hostof medical therapies such as laser eye surgerywhich we all know about - and this is where theDiomed story becomes ever so provocative .

Diomed calls itself a "clinical solutions com-pany" and as such , it is developing and enhanc-ing its patented procedures in two separate plat-forms . "Platform" is a biotech buzzword meaning"multiple applications ." The Diomed platformsare EndoVenous Laser Treatment (EVLT) andPhoto Dynamic Therapy (PDT) .

Let me explain both as simply as I can as to

Their reasons are logical , practical and ve rycost effective . EVLT enjoys a 98 percent suc-cess rate . It is easy to perform , leaves no scar-ring, requires no general anesthetics , no hospitalstays , costs much less, and is more acceptableto the patient . ( See website , summerlegs .com.)With EVLT the procedure takes about 45 min-utes, uses only a local anesthetic in an outpa-tient environment and the recove ry time is virtu-ally the next day . All this and at a 50% or so re-

I my Insider Reportreaders to participate in theDiomed opportunity with me bycontacting their brokers .

In addition, the InvestorRelations department isavailable to answer yourquestions and will forward aninvestor information packageon the company to you and/oryour broker. Their toll-freenumber is (866) 934-6633.

Special Report -3- Insider Report

duction in cost as compared to Working with other biotech drugother therapies . "If the EVLT solu - companies such as Axcan ,

fion Were the total-DUSA, Pharmacyclycs , and QLT ,

After exhaustive testing Dio-med officially launched EVLT on ity of DioSeptember 9, at the World Con- tential, itference on Phlebology held in an irresiRome. At that time, the companyhad already received CEmark ap- but it is Jproval for its procedure . CEmark ginningis the European equivalent to an „FDA approval . FDA approval is StOry

expected in the first quarter of '02 ,and in all likelihood, will be granted by the timeyou are reading this as the company has alreadysubmitted its comprehensive data from bothclinical trials and in an FDA form 510K .

the use of photosensitive drugscoed's p0- could easily replace surgery as awould be primary solution for eliminatin g

stible buy,cancer cells . The trials cited

coronary restinosis ( arteria lblockage ) . In all instances , Diomed 's lasersand fiber optics are the only FDA approvedmodalities for the drug companies ' tests, yetDiomed navs none of the costs for the trials .

' above are in "'fast track" Phase Iust the be- and II clinicals, and are currently

Of the being tested by the companie slisted above with a "clinical trial"to attack various concerns an d

The profit potential for just EVLT is enor-mous considering that Diomed offers a one-stop-shopping solution to the phlebologist .The patented Diode laser, the patented fiber,the user's kit, and the training are all built intothe EVLT marketing and business model forpractitioners and provides the company withoperating margins of over 50 to 60 percent . Itis conservatively estimated that just the EVLTrevenues in 2002 will provide $12 .5 million ofDiomed's $18.1 million. And then, in '03, thetotal revenues ramp up to $28 .6 million withEVLT still comprising about 60 percent of thatgross .

If the EVLT solution were the totality of Dio-med's potential , it would be an irresistible buy,but it is just the beginning of the story . In thePhoto Dynamic treatment of cancer , three ele-ments are necessa ry : an efficacious drug, asafe and reliable delivery system , and a lightsource to target and enhance the drug . Insome 20-odd clinical trials currently underway,Diomed supplies two of these three criticalelements . Its patented Diode laser and its pat-ented optical fiber .

"The profit potential for just EVLTis enormous considering that Dio-med offers a one-stop-shoppingsolution to the phlebologist ."

"PDT usage in the fight againstcancer is estimated to be growingtowards a $2 billion market overthe next several years and Dio-med's contributions to these appli-cations are conservatively esti-mated to be no less than 15 per-cent of that total and growing. "

PDT usage in the fight against cancer is esti-mated to be growing towards a $2 billion mar-ket over the next several years and Diomed'scontributions to these applications are conser-vatively estimated to be no less than 15 per-cent of that total and growing . What you needto know about PDT is really quite simple . Itcould virtually eliminate the need for invasive,traumatic, and usually questionable surgery,reduces dramatically the need for heavy dos-ages of highly toxic chemotherapy and attacksonly the cancer cells leaving the healthy cellsunharmed . As to the competition, Diomed'sposition is very well protected with its laserand optics patents and regulatory approval asa modality required by the FDA . A supplier ofunique Diodes and fiber optics, its leadershipin Diode laser technology, its close relation-ship with the leading PDT companies, and it s

Insider Report -4- Special Report

one-stop support with de-vices, disposables, and ser-vices all work to the compa-nies' benefit .

If and when new compa-nies move into the field ofPDT, as most certainly theywill, it is reasonable to assum ethat they will partner up withDiomed, just as the current users have . In prac-tice Diomed's business strategy is to jointly de-velop the market with early stage PDT compa-nies just as they have with the current users,having already sold over 70 of their currentlypatented lasers to Axcan alone. The real kickerin this scenario is that Diomed makes money onclinical trials of which they will be huge benefici-aries when proven successful, and they don'tspend a dime . I know of no similar situation inthe world of biotech or biomed .

As exciting and profitable as their PDT andEVLT platforms are, both currently and pro-jected, Diomed is aggressively planning to ex-pand its technology both internally and with itsstrategic partner, Olympus of Japan . They willexpand manufacturing, make key acquisitions,and improve both revenues and margins . Thisvision for the company's future brings us tothe critical subject of people .

Managing for Profits

I learned a long time ago, that in any com-pany, be it big, small, old, or new, the most im-portant ingredient is management . In this area,Diomed has a unique mix of business experi-ence, financial expertise, and technical excel-lence . The President and Chief Executive Offi-cer, Peter Klein is originally from Germany andstudied electronic engineering at the famedRobert Bosch School . He relocated to the UnitedStates in 1994, and has spent 16 years in themedical image processing business as founder,president and co-chairman of Tomtec ImagingSystems and more recently as President andCEO of Medison American, a subsidiary of theKorean group where he led a number of corpo-rate restructuring transactions .

"I think Diomed in itscurrent reality wouldeasily justify a price ofbetween $8 and $10per share just basedon comparables."

Mr. Klein's technical exper-tise is complemented by thetwenty-two years of interna-tional business and consult-ing experience with JimArkoosh, formerly of KPMGand Diomed's Chairman . Anattorney and CPA, Mr .Arkoosh has exactly the typ eof vast business experience

to maximize and leverage the companies pro-prietary technologies. I will outline for you thebalance of the Diomed management team atthe end of this report, however let me take amoment to discuss with you the "people be-hind the people" .

Blue Chip Funding

The behind the scenes group involved inthe private funding of Diomed, its "VentureCapitalists," if you will, are Verus Internationalof New York and London . This private mer-chant bank is an absolute "Who's Who" onWall Street. Among its owners, directors andadvisors are TOP current and former execu-tives of Citigroup, Goldman Sachs, MorganStanley, Merrill Lynch, Paine Webber, andWIT Capital . Famed British billionaire entre-preneur Sir Richard Branson (Virgin Group) iseven an advisor to Verus . These are the kindsof people that spotted the Diomed opportunity,invested millions, and helped install the man-agement team discussed above and below . Ifthe analysis performed by this team warrantedtheir significant investment then Diomed cer-tainly merits participation by any passive in-vestor. As I told you, my matrix fills out the Di-omed capability and potential with no uncer-tain terms.

"As to the competition, Diomed'sposition is very well protected withits laser and optics patents andregulatory approval as a modality"required by the FDA . "

Special Report -5- Insider Report

And, Finally . . .

As to its operating capability and its profitabil-ity, revenues are conservatively expected to beat $18.1 million in the current calendar year, andratchet up to over $28 million in '03 . Dependingon the final outcome of last-minute financingsprior to trading, that means that the Diomedprofit in just 2002 could be somewhere in theneighborhood of 20 cents a share or as high as30 cents a share and growing at a 50 percentper annum rate for the foreseeable future .

So, as you can see, this is not a timelinewith fifteen years requiring $500 million, this isa company which has everything you couldpossibly want right now. Diomed has just be-gun offering it's shares to the public on theAmerican Stock Exchange . I think Diomed inits current reality would easily justify a price ofbetween $8 and $10 per share just based oncomparables .

However, the real fact is that there are nocomparable situations to Diomed either as toclinical solution or price potential in either of itstwo platform technologies .

Let me also disclose that our publisher'sportfolio is well invested in Diomed and has nointention of letting go of even one share any-time in the foreseeable future .

I urge my Insider Report readers to participatein the Diomed opportunity along with me by con-tacting their brokers . In addition, Diomed's InvestorRelations department is available to answer anyquestions you might have, and they will be happyto forward an information package on the companyto you and/or your broker. You can reachthem toll-free at (866) 943-6633 .

So let me repeat : Buy Diomed (DIO: Amex)and do it now .

More Diomed Managemen tKevin Stern, age 41, Genera! Manager. Stern

joined Diomed in March of 2000 . He is an experi-enced and successful general manager having spentten years with a medical diagnostic manufacturerjoining the company in its early start-up phase andgrowing it rapidly to a workforce of over 700 peopleand a 30-fold increase in production . Kevin hasmanaged FDA inspections, passing with no observa-tions .

Charles T. Hoepper, CPA, age 51, CFO. Hoepperjoined Diomed in November 2000. He is an experi-enced financial executive who most recently hasbeen the CFO of small and medium-sized busi-nesses in service and distribution and telecommuni-cations industry . In 1996, he successfully completed!an IPO with Solomon Smith Barney that resulted in alisting on the New York Stock Exchange . From 1985to 1991, he was Director of Finance for MCI, duringa period of dynamic and rapid growth . Hoepper hasa CPA and an undergraduate degree from the Uni-versity of Illinois and an MBA from St. John's Uni-versity.

Tom Mang , Ph.D., Director of PDT Marketing .After receiving his BA in biology at the State Univer-sity College in Buffalo , Tom went on to get his MS innatural science in 1979 and his Ph . D. in biophysicsin 1983 at State University of New York in Buffalo,Roswell Park Division . Dr. Mang became Director ofPhotodynamic Therapy at Roswell Park Cancer In-stitute in 1987 then went on to become Director ofPhotodynamic Therapy at the Department of Radia-tion Oncology at Buffalo General Hospital in 1995.

He has consulted with many corporations in-volved with PDT such as Miravant Medical Tech-nologies, Sonofi Pharmaceuticals, and LaserscopeLaser Systems Inc . He has authored or co-authoredover fifty publications concerning PDT .

He developed and implemented research pro-grams of new applications of photodynamic therapyand received private foundation funding .

Tom joined Diomed as director of PDT marketingand brings an over-abundance of experience to leadthe marketing initiative for photodynamic therapy .

The team continues to expand. Tiziano Caldera,Mike Irvin, Richard Walker, Anne-Louise Lord, andGeoff Carter round out the on-line management'steam all of whom bring targeted experience and ca-pability.

Insider Report -6- Special Report

Picking the Right StocksWhat makes a critical difference to us as buy-ers of shares is very simple : Have we pickedthe right companies ?

When we examine the core holdings of ourbig-cap recommendations made over theyears, the answer to the above question is anon-qualified "Yes, we have." If you look backthree years on our core selections of Ameri-can International Group (AIG), Microsoft(MSFT), Exxon Mobile (XOM), Boeing Com-pany (BA), and Royal Dutch (RD) you find thefollowing: AIG up 300 percent split adjusted ;MSFT up 100 percent split adjusted ; XON up80 percent merger- and-split adjusted ; RD up10 percent plus 3 percent dividend per an-num; and BA is dead-even .

If, however, you go back five years-the timeeach of them have been a part of the core-the picture is even more rewarding .

However, the real story here is not just howwell they all have fared, price-wise, but whathas happened to each of them in weatheringstorms. Huge insurance losses, Justice De-partment attempts to break up or destroy, oil-price fluctuations of a historic nature, and to-tally unanticipated airline cutbacks are part ofthe history of these great companies duringthe past three years . I should also add that,within this three-year timeline, each of thesereached much higher prices than now (as theyalso reached on the downside), but neither ofthe extremes tell the real story .

Furthermore, each and all of these companiesstill are excellent buys at current prices . Thereasons for this are the same as when I firstrecommended them. They are well managed,have plenty of capital, and provide an excel-lent product or service . The premise was cor-rect for buying each, so the conclusion wasand is valid . The only reason that any of themshould be sold in the months and years aheadis if there is a fundamental change in the com-pany, thus changing the premise .

As to our "speculations" the picture is, as ex-pected, far more stock specific . There havebeen both spectacular successes and utter fail-ures, and with many of them the conclusion hasyet to be written .

However, if you factor in our selling strategy, onspeculative recommendations, the picture is farmore rewarding . Remember on all of our specu-lative recommendations we sell half of the origi-nal position once the stock has doubled, we sellhalf of the new position if it doubles again, andthen we hold the balance for the long term re-gardless of the price movement .

I could take pages of this report to chart justhow successful this strategy would have beenover the past three to five years with companiesof various goods and services . This never hasbeen more evidenced than in the biotech selec-tions--all of which I hope you still are holdingeven after pocketing some terrific profits . Theobvious exception is Immunex (IMNX) which isbeing bought up by Amgen at a price of $30 .We urged you to buy it at between $11 to $12 .

Here again, our premise for speculative stocksonce examined is valid, and the validity is in theconclusions . The exceptions to the above num-ber no more than three companies, all of whichhave one thing in common: management lied tous as they did to many others and the resultswere, in hindsight, entirely predictable .

I might add that, as embarrassing as this is foryour editor, it is not a condition limited to small-caps or speculative stocks--i .e., Enron, XOCommunications, or Xerox, being the obviousbig-cap examples . Unfortunately, there will beothers, but this comes with the territory .

The Enron Scandal

The Democrats are twisting and turning the En-ron collapse into whatever potential political lev-erage they can and it is downright humorous .Led by Rep. Henry Waxman (D-Calif .) and, ofcourse, the mainstream media, the political fall-out of these efforts thus far has been the equiv-

Special Report -7- Insider Report

valent to an empty pickup truck on a sheet ofice-just spin and no go .They can't decide if they should attack the ad-ministration or not, bail out Enron, or try to makeit appear that somehow Bush profited by letting itgo down . I honestly believe that when the smokeclears we will find that Enron got itself caught onthe wrong side of trading derivatives for energycontracts and panicked into cover-up . That is theonly thing that could cause so much money todisappear so fast . It seems that the truth of En-ron meets the old Texas test of "all hat and nocattle . "

American Trial Lawyers

The greatest single threat to American internalsecurity is not the al-Qaida network, but ratherthe American Trial Lawyers Association . Thesejackals are out of control, completely out of con-trol, and if Mr. Bush does not rein them in withtort reform as promised in his campaign they willdestroy the last vestiges of our Constitutionwhile making megabucks in the process .

Class-action lawsuits have been elevated fromthe sublime to the ridiculous, placing everymanufacturer of anything in an untenable riskposition. Just the announcement of a class-action suit can send a stock into a short-sellers

dream . I suggest one of the first places to launchan investigation by the SEC or its congressionaloversight committee would be on the connec-tions between trial lawyers initiating such law-suits and the professional short sellers profitingfrom them .

Watching the Metals

Keep your eyes on precious metals. If gold con-tinues to hold above $2 .75 per ounce and silverabove $4 .60 per ounce over the next month, wecould see the reversal of what has been atwenty-year price depression with a squeeze onthe short sellers resulting in the doubling ofprices for both metals almost overnight .

My favorite silver stock remains Silver Standard(SSRI), currently at about $2 .50 (U .S.) . My fa-vorite gold stock is Harmony Gold (HGMCY) atabout $7 (U .S .) per share . Both of these compa-nies are highly leveraged to the metal pricesthey represent and could grow three to six timesfaster than the metals prices themselves .One of the major stories which may emerge outof 2002 is the re-emergence of precious metals .Buying positions on both of the above now, withthe understanding they can be added to later,makes a lot of sense . Being without any positionmakes no sense at all .

Information within this newsletter contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933and Section 21 B of the Securities Exchange Act of 1934 . Any statements that express or involve discussions with respect to predictions,expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historicalfact and may be "forward looking statements" . Forward looking statements are based on expectations, estimates and projections at thetime the statements are made that involve a number of "risks and uncertainties which could cause actual results or events to differ materi-ally from those presently anticipated . Forward looking statements in this action may be identified through the use of words such as"projects", "foresee", "expects", "will", "anticipates", "estimates", "believes", "understands" or that by statements indicating certain actions"may", "could", or "might" occur . All information provided within this newsletter pertaining to investing, stocks, securities must be under-stood as information provided and not investment advice . The Insider Report advises all readers and subscribers to seek advice from aregistered professional securities representative before deciding to trade in stocks featured within this newsletter . None of the materialwithin this report shall be construed as any kind of neither investment advice nor a solicitation to buy or sell any security . Investing insecurities carries a high degree of risk and readers of this newsletter are strongly urged to review all information relative to the companydiscussed at the company's website www .diomedinc .com. Further, readers are urged to review disclosure documents and public filingsrelating to Diomed at the EDGAR section of the Securities and Exchange Commission Website www .sec .gov and at the American StockExchange website at www .amex.com. Additional information about investing in securities can be found at the National Association ofSecurities Dealers website at www .nasd .gov . In compliance with the Securities Act of 1933, Sectionl7(b), the distribution of this newslet-ter report on Diomed to current and potential new subscribers was funded at a cost of approximately $700,000 . Catalyst Communicationsreceived and administered this production budget . Multi-National consultants received a fee of $5,000 to arrange and pay for professional3d party due-diligence of Diomed Inc . Further Multi-National Consultants expects to receive a share option of approximately 100,000shares of Diomed for international marketing consulting services in relation to their products and services . Larry Abraham and his pub-lisher expect to receive new subscriber revenue as a result of this mailing, the amount of which is unknown at the time of publication . Beaware of an inherent conflict of interest resulting from such compensation . All factual information in this report was gathered from sourcesbelieved to be reliable but Insider Report can make no guarantee as to its accuracy or completeness, it should be considered advertisingand for informational purposes only . Use of the material within this newsletter constitutes your acceptance of these terms .

Insider Report -8- Special Report

March 21, 2002

IN THE MONEY : Big Names And Other Notables BackDiome d

By CAROL S . REMON D

A Dow Jones Newswires Colum nNEW YORK -- A high-profile attorney who represented O .J . Simpson . A co-owner of aprofessional hockey team . A former Wall Street banker who appears regularly ontelevision .

It seems like a disparate group. But these people do have at least one thing incommon : They are investors in a tiny medical company that recently began tradingon the American Stock Exchange .

Diomed Holdings Inc . (DIO) has few assets, fewer employees and, until recently, abuoyant stock price .

What attracted these big-name people to this little company? Obviously, the hope ofbig returns . There's been talk in the market that if Diomed's stock price strengthens,it could become part of one of the Russell indexes . And if that happens, institutionslooking to match those indexes would have to scoop up its shares .

But there are a few things investors in Diomed would probably like to know thathaven't been disclosed :

-- One of its larger shareholders paid an outside firm $700,000 to produce a glowingresearch report on Diomed . That outside firm employs a man the Securities andExchange Commission in 1996 charged with paying kickbacks to brokers to buy andsell certain securities . He settled with the SEC without confirming or denying guilt .

-- Some of the company's regulatory filings list its shares outstanding at 9 .2 million,as does Diomed's stock transfer agent . But after conversion of certain othersecurities the company has outstanding, which with some work you can figure outfrom Diomed's filings, that number of shares outstanding is really closer to 30million .

-- One member of Diomed 's board was sanctioned by British regulators for his role inthe fall of Barings Securities . Another headed a company sanctioned by the SEC forparking stock .

Notable Owners

The story of Diomed as a publicly traded entity began in February, when the then-private company did a reverse merger with a shell company called NetaxcoCorporation .

Even before Diomed became public it began to attract some high profile investors,including the once-feared corporate raiders and greemailers Sam Belzberg and hisson Marc .

The Berlzberg family made a name for itself in the 1980s by teaming up with Texasoilman and corporate raider T . Boone Pickens Jr . and financier Drexel BurnhamLambert Inc. in some of that decade's major takeover battles . Belzberg oncespecialized in buying up large blocks of stocks and getting companies to effectivelypay greenmail to avoid the threat of a hostile takeover .

Patriarch Sam and son Marc through a series of investments over the last threeyears became owners of 1 .02 million and 2 .78 million Diamed shares, respectively,through a couple of investment vehicles .

The Belzberg's relationship with Diomed doesn't stop there . A long-time Belzbergassociate, Ajmal Khan, is the largest holder of Diomed stock with 4 .42 million shares .Khan is a founder and chief executive officer of Verus International Group Ltd ., aCayman Islands-based investment firm that in a marketing presentation claims tohave been co-established by Citigroup (C) and to count Citigroup as a strategicpartner . Citigroup denies any formal relationship with Verus .

Another notable Diomed insider is lack Rivkin, vice president at CitigroupInvestments until his retirement in December . Before that, he was director of globalresearch at Smith Barney, a unit of Citigroup . Rivkin, chairman of Verus InternationalGroup Ltd ., appears to have began buying preferred stock in the then-privatecompany in March 2001 at $1 a share .

Most recently, Rivkin, a regular guest on CNBC, was one of 46 investors that boughtDiomed stock at $2 a share through a private placement . Other investors in that dealinclude Alan Dershowitz, the well-known defense attorney, author and Harvardprofessor who helped successfully defend former football star O .J . Simpson againstmurder charges ; and Morris Belzberg, part owner of the Pittsburgh Penguins icehockey team and cousin of Sam Belzberg and Belzberg's son-in-law MatthewBronfman, the Seagram heir .

Dershowitz said he became involved with Diomed through his son . The attorney saidhe didn't know anything about the company's use of outside firms to promote itsstock .

Research ❑r Promotion ?

Diomed's stock has taken a turn for the worst recently after reports circulated aboutthe aggressive use of paid-for-advertising to promote the stock, including anewsletter called the Larry Abraham's Insider Repast produced by a Florida businesscalled Catalyst Commu .

A spokeswoman for Diomed de nied that the company paid any fees, or authorizedthe issuance of-stalk, to Catalyst, Abrahams or Mohammed Patel, an individualidentified in two other newsletters as Rdv` ng financed-the-promotion of Diomedstock . (In those cases a total of $ 1 50,000 in cash and 250,000 options convertibleinto free trading shares exerciseable at $3 .50 were paid out) .

But Abraham told Dow Jones Newswires that he was approached by Diomed and byCatalyst to write his bullish February report on the company .

In phone interviews, Catalyst's owner Bart Walters said that a total of $700,000 wasspent to hire Larry Abraham, print and produce 800,000 copies of the report andsend them out to prospective investors . He said that his firm was paid directly byVerus International - that's right, the same Verus that's not only a major and long-time shareholder of Diomed, but which also since December has been advisingDiomed at cost of $15,000 a month .

Verus' Khan and Rivkin didn't return phone calls .

Patrick Kephart, identified by Catalyst's Walters as "his partner," was charged by theSEC for paying kickbacks to brokers for selling certain securities to their clients. In1998, Kephart, without admitting or denying SEC allegations, agreed to disgorge$72,000 in profits and fines .

Others associated with Diomed have had run-ins with regulators, too . Marc Belzbergand the Vancouver-based family holding company First City Financial were sued bythe SEC in 1986 for stock parking and forced to disgorge $2 .7 million in profits fromthe attempted but failed takeover of Ashland Oil Inc . The Belzbergs were accused ofparking stock with Bear Stearns & Co . to avoid disclosing their stake in Ashland, laterselling back the stock to Ashland Oil at a profit . The U .S . Court of Appeals upheld alower court ruling against First City Financial Corp. and Marc Belzberg in 1989 .

And then there is Peter Norris, a Diomed director and former chief executive officerof Barings Securities, who in 1998 was barred for four years from acting as a directorof any British company because of his role in the 1995 collapse of that bank . Thatban is to end at the end of this March .

Speaking of Britain, Diomed is headquartered in Andover, Ma ., but 40 of its 49employees work at Diomed Ltd ., a U .K . subsidiary .

Insiders in Diomed who bought stock as low as $1 and $2 a share stand to profitgreatly from the company's stock promotion, especially if Diomed's marketcapitalization allows it to make it in Russell's small-cap benchmark index, the Russell2000 . Inclusion in the index is decided at the end of May . Analysts estimate that tobe included in the Russell 2000 this year, a company will need to have a marketcapitalization of at least $120 million .

Which brings us back to the question about just how many Diomed shares areoutstanding .

In filings with the SEC, Diomed lists 9 .2 million shares outstanding, a numberconfirmed by the company's transfer agent, Corporate Stock Transfer Inc . But acloser look at regulatory exhibits and recent filings by Verus and Marc Belzberg'sfund, Winton Capital Holdings Ltd ., shows that in fact Diomed has close to 29 millionshares outstanding, including a float of 9 .2 million, 5 million shares issued through aFebruary private placement which can't be sold for a period of 6 months . Alsorecently issued to former Diomed shareholders are preferred shares that convert into14.7 million common shares over the next two years .

That's a total of 28 .9 million shares outstanding, which means that even at itscurrent price of $4.15 a share, Diomed is close to making the Russell 2000 cutoff .

-By Carol S . Remond, Dow Jones News, 201 938 2074,carol .remond@dowjones .comURL for this article :

http ://online .wsj .com/article/0„BT CO 20020321 006172 .djm,00.htm l

Updated March 21, 2002 4 :24 p .m . EST

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IF IT LOOKS TOO GOOD . . .New York Post; New York ; Mar 11, 2002 ; Christopher Byron ;

Abstract :In fact, the only real asset Natexco had were its shares, which became shares in DioMed when Natexco wasmerged last month into a privately owned British company named DioMed, Ltd . that happened to be in theaforementioned micro-invasive modality business . In the merger, 29 million shares of DioMed were created, withroughly half going to the old Natexco owners and half to the British crowd.

1 am also sure that a Mr. Ajmal Khan, who works the penny stock circuit under the moniker Verus International,has good and legitimate reasons for holding 4 .4 million shares of DioMed in a Post Office box in the CaymanIslands, as appears to be the case through a footnote in a recent DioMed financial filing.

* DioMed board member Ajmal Khan has 4 .4 million shares of DioMed in a post office box in the Cayman IslandsHe's also a board member of four companies that, like DioMed, started trading via reverse mergers . All foursoared, then plummeted.

Full Text :(Copyright 2002, The New York Post . All Rights Reserved)

WANT a good sign that the bull market is making a comeback? Then look no further than some of the recentaction on the American Stock Exchange, where big fortunes get turned into little ones with the regularity of thetides .

Case in point : an instructive little pile-up in the making known as DioMed, Inc . The New York Post introduced youto this outfit last week, and here's some more you may want to know about it .

Exactly what this Massachusetts-based biotech company does is hard to say, except perhaps, if one reads thefinancials, that it seems to involve the sale of "clinical modalities in micro-invasive medical procedures . "

In any case, there's apparently not a whole lot of demand for them at the moment because, if you read thecompany's financials, it turns out that DioMed had sales of less than $10 million last year .

NOR does it seem that the micro-invasive modality game is what you'd call a license to print money, no matterhow many you sell . DioMed's financials show that the company took in revenues of roughly $30 million in the lastfour years, while spending $50 million simply to get it .

As for the folks at DioMed who are calling the shots in all this, well, one of them turns out to be a Canadian-basedstock promoter who has a large cache of the company's stock tucked safely away in the Cayman Islands .

One of the board members is a Briton who got sanctioned in the Barings Bank swindle and has been barred fromserving on the board of a public company in the U .K. until almost just the other day .

The company's financials also inform us that DioMed's auditor is the Arthur Andersen accounting firm of Enronfame. And for icing on the cake comes a recent DioMed press release declaring that the company has just addedto its board of directors some pointless window dressing in the form of a former Canadian Prime Minister, Ms . KimCampbell .

So, why does all this add up to evidence that the bull market is back? Because DioMed is exactly the sort of stockthat should send any normal person fleeing the room at the mere mention of its name : suspect auditor, offshoreaccounts, weird product, teeny-weeny revenues, board members with back-stories - this stock's got it all, thecomplete package .

YET in spite of all that, DioMed's share price has actually soared 2,800 percent on the Amex - from 25 cents tomore than $7 - in just the last eight weeks, by far the greatest gain of any listed stock on Wall Street this year.

Well, to be perfectly fair about it, the run-up wasn't actually caused by everyday Amex investors at all .

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In reality, DioMed was actually tee'd up in a way that has put more than 99 percent of the gain in the pockets of aclique of inside investors via a gimmick known as a "reverse merger into a penny- stock shell" but well get into allthat in a minute .

First, however, some ruminations regarding the action on the Amex itself these days - most notably in light ofreports that the New York Stock Exchange has opened talks to acquire the American Stock Exchange, whereoutfits like DioMed abound .

Now, if those repo rts are true , then here is a bit of helpful advice to NYSE Chairman Richard Grasso , to hastenthe inevitable outcome of the deal : Dick , why not just hose down the trading floor with two or three gallons ofEbola virus and get it over with quick , because that's what you ' ll be doing to the NYSE's reputation as a more-or-less safe place to invest your money if you invite in the crowd from down the street .

Though it has largely been forgotten by now, the Amex began life back in 1921 when the NYSE threw out abunch of penny-stock brokers as being too disreputable even to let in the door .

The group marched up the street to a building behind Trinity Church, where they set themselves up as somethingcalled the New York Curb Exchange and began trading stocks all over again .

In 1953, the group changed its name to the American Stock Exchange, but it has never managed to get the stinkoff its shoe as a pump-and-dump romper room .

As recently as last December , the General Accounting Office issued a critical repo rt of the Amex' s listingstandards , which basically boil down to letting the Exchange list almost any company imaginable , no matter howcheesy or suspect .

In Janua ry, the Amex told the Securities & Exchange Commission that it was Honest to God going to betightening things up (right after lunch ) - to which Mr. Harvey Pitt , who runs the SEC, pronounced himself" pleased ," with the result that things now seemed to have returned to business as usual .

THAT'S where DioMed comes in . This company began life in 1998 as a Canadian penny stock , incorporated inNevada under the name Natexco Corp ., and supposedly in the business of providing advertising services to otheritty-bit ty companies like Natexco , which was run out of the founder ' s house in Vancouver .

As of last November , when Natexco filed its final qua rterly financial statement before morphing into DioMed, thecompany ' s balance sheet showed a grand total of $64 in cash , $ 10,298 of total assets , and $2,357 of qua rterlyrevenues .

In fact, the only real asset Natexco had were its shares, which became shares in DioMed when Natexco wasmerged last month into a privately owned British company named DioMed, Ltd . that happened to be in theaforementioned micro-invasive modality business . In the merger, 29 million shares of DioMed were created, withroughly half going to the old Natexco owners and half to the British crowd .

BASED on a fairness letter from New York's Atlas Capital, which figured that DioMed's business was worthperhaps as much as $140 million, the stock began trading on the Amex at a bit less than $5 .50 per share, andhas by now climbed to more than $8 .50 .

Now I am sure that DioMed is worth every penny of $140 million for its cutting edge involvement in the micro-invasive clinical modality business .

And I am also sure that a Mr . Ajmal Khan, who works the penny stock circuit under the moniker VerusInternational, has good and legitimate reasons for holding 4 .4 million shares of DioMed in a Post Office box in theCayman Islands, as appears to be the case through a footnote in a recent DioMed financial filing .

Certainly Mr . Khan has had plenty of experience in this general area, since a search of recent Amex listingsshows him as a board member of four separate companies that arrived on the Amex via the reverse merger route- each of which soared and then plummeted .

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What I can 't quite figure out though , is why its not possible to track down another fellow named Mohamed Patel,who appears to have paid $50,000 to a web newsletter named TGR, LLC, to crank out stock hypingrecommendations on DioMed for the next year .

The Web site distributing the current of these reports - the so- called Smallcap Network - carries a fine-printdisclaimer describing Mr . Patel vaguely as an "individual," which presumably means he wasn't acting for Mr . Khanand his Verus International outfit .

But when I called Verus International, which happens to hold Ajmal Khan's stash of DioMed in the Caymans, afellow named James Arkoosh came on the line .

Jim turns out to be DioMed's chairman of the board, and he said that he had no idea who, or where, Mohamedwas - though he did say that he "may have met him casually once or twice ." It's all just so confusing .

Maybe Dick Grasso will be able to straighten it all out if and when the Amex becomes part of the NYSE .

Look before you lea p

DioMed stock has soared 2,800 percent on the Amex in the last eight weeks, posting the biggest gain of anylisted stock this year by a large margin . But before you invest, there are some things you might want to know :

* In 1998, DioMed was a Canadian penny stock .

* It was incorporated in Nevada as Natexco Corp ., and last November had $64 in cash, $10,298 in total assets(mostly stock) and $2,357 in quarterly revenues .

* It was merged into DioMed, a biotech company with little revenue, fishy products and even fishier boardmembers .

* DioMed board member Ajmal Khan has 4 .4 million shares of DioMed in a post office box in the Cayman Islands .He's also a board member of four companies that, like DioMed, started trading via reverse mergers . All foursoared, then plummeted .

* Another board member is a Briton who was barred from serving on boards of public companies in the U .K .

* DioMed is listed on the American Stock Exchange, which has been criticized for allowing trading of suspectcompanies .

[Illustration]Kim Campbell, former prime minister of Canada and a DioMed board member . AP

NAICS:523210 NAICS:523210 Duns :00-166-6379 Duns:00-172-4194Start Page : 03 1Companies : American Stock Exchange Duns :00-166-6379 NA/CS:52321 0

DioMed IncNew York Stock Exchange Duns :00-172 -4194 NAICS:52321 0

Natexco CorpVerus Internationa l

Reproduced with permission of the copyright owner . Further reproduction or distribution is prohibited withoutpermission .

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The New York Post Features Diomed Inc . & FormerPrime Minister Joins Compan y

When the SmallCap Digest profiled Diomed Inc ( DIO ) on February 22 wecompany was special . This clinical solutions company reversed merged withcompany onto the OTC Bulletin Board and consequently moved to the AmerExchange within a week . This type of transaction has been unheard of untiDiomed is featured in the business section of the NY Post . The world is becattention to this company and rightly so . Click here to view the Post articl e

In addition to the NY Post article Diomed announced today that Kim Campprime minister of Canada, has been named to its board of directors .

This is a great way to start off the week for those subscribers that already o'The SmallCap Digest feels that Diomed should be accumulated up to $8 p(over the course of this year has the potential to reach $12 . This would reprpotential gain of 90% from Friday's close of $ 6.30 per share . For thosemissed the original profile on Diomed, you may view it by clicking here .

With any investment there is always risk . This holds true especially when inbiotech . However, with that being said, investors should also realize that Di,has significant revenues and expects to reach profitability in this fiscal year .company's business model is not centered on burning cash for FDA approvalcompany has entered into partnerships with the four largest photodynamic(PDT) drug companies .

Companies such as QLT Inc (QLTI ), Pharmacyclics ( PCYC ), DUSA Pharl( DUSA ), and Axcan Pharmaceuticals (AXCA ) spend millions of dollars todrugs approved . Upon approval, Diomed generates revenue by supplying thwith lasers and fibers that are used in the PDT treatment process . Althoughmakers that ultimately receive FDA approvals benefit the most there is signi,risk in owning these companies . Diomed is the "picks and shovels " suppliindustry .

Will the drug makers strive to get more drugs approved? Yes they will and Eapproval could mean millions of dollars in revenue for Diomed . The growthimportant to the future of Diomed but there is another component to the coreven more exciting . Diomed is also the first company to receive FDA appro\,the treatment of varicose veins. The companies revolutionary procedure ha :on Good Morning America and the New York Times .

Varicose veins adversely affect the appearance of the legs of 25% of womenThis simple, relative painless solution has a 98% success rate and requires 4complete the treatment. Women and men worldwide who have been plaguesvaricose veins now have a reasonable solution to their problem. The potentiithis treatment runs into the hundreds of millions of dollars .

Below is today's press release in full :

onday March 4, 8 :56 am Eastern Tim e

Release

RCE: Diomed, Inc .

ormer Canadian Prime Minister Named New D iarc! Membe r

ANDOVER, Mass., March 4 /PRNewswire-FirstCall/ -- Diomed, Inc . (Amex : Iprovider of clinical modalities used in minimal and micro-invasive medical pro,announced today that Kim Campbell, former prime minister of Canada, has beeboard of directors .

Ms . Campbell served as Canada's 19th and first female Prime Minister in 1993 .minister of justice, attorney general, and minister of national defense . In 2000, ;a four-year teen as Consul General of Canada, in which she fostered trade in th,biotechnology industries . Today she is a Visiting Professor of Practice at the JoSchool of Government at Harvard University .

"We are very pleased to enlist Ms. Campbell's skills and expertise on our boarscommented James Arkoosh, Diomed Chairman of the Board . "Indeed, her rangexperience will strengthen and diversify the board . "

Kim Campbell noted, "I am extremely enthusiastic about this opportunity . Dioiinnovative company with vast potential . I am confident I can bring a unique perDiomed's board, and contribute to the company's ongoing success . "

Campbell currently holds a range of prestigious positions, including Senior

Gorbachev Foundation of North America in Boston, and member of the Internaof the Asia Society of New York . Her best selling political memoir, Time and (published in 1996 . Ms. Campbell was educated at the University of British Coli1969, LLB, 1983) and the London School of Economics (Doctoral studies in ScGovernment, ABD, 1970-73) .

'With an increasingly robust board of directors, our recent merger with a publi .;ompany, and several important FDA clearances, Diomed is poised for continutising proprietary laser technologies," commented Diomed CEO Peter Klein .

Diomed provides clinical modalities and specializes in the development and disequipment and disposable items used in minimal and micro - invasive medical pdeveloping and marketing its innovative clinical solutions , it uses proprietary toaims to secure strong commercial advantages over its competitors by gaining g(approvals in advance of others and through exclusive commercial arrangementsin the rapidly growing minimal and micro-invasive medical procedure industry,to integrate disposables into its product lines . Diomed holds proprieta ry technolmethods of synchronizing diode light sources and in certain optical fibers . Dionphotodynamic therapy (PDT) for use in cancer treatments , EndoVenous Laser I(EVLT(TM)) for use in varicose vein treatments , and on dental and general surfapplications .

For more information about Diomed, Inc ., please visit www .di

For More Information :

Contact : Investor Relation s

Phone Number : +01 866-4DIOMED (434-6633)

Fax Number : +01 978-475-848 8

E-mail : Lbruneau@diomed-lasers .comMailing Address : Diomed, Inc .

One Dundee ParkAndover, MA 01810

USA

CE: Diomed, Inc .

Investors with additionalquestions should contact investo rrelations toll free at 1-888-400-

11 0643 . 1

DISCLAIMER : .

The SmallCap Digest is an independent electronic publication committed to providing our readers with factselected publicly traded companies . SmallCap Digest is not a registered investment advisor or broker-deachosen on the basis of certain financial analysis and other pertinent criteria with a view toward maximizininvestors while minimizing the downside risk, whenever possible . Moreover, as detailed below, this public .compensation from third party consultants and/or companies which it features for the publication and circiDigest or representation on SmallCapNetwork .net . Likewise, this newsletter is owned by TGR, LLC . To th e

herein, this newsletter should not be regarded as an independent publication .

Click Here to view our compensation on every company we have ever covered , or visit the following web ahtt : _/www .smallcapdigest .net/compensation disclosure . html for our full compensation disclosure andhttp_W www . smallcapoigest . net/short term alerts . html for Trading Alerts compensation and disclosure . T i

paid a fee of $50,000 in cash a by Mohammed Patel, a n

individual, for publishing information on Diomed Corp for a period of one year .

All statements and expressions are the sole opinions of the editors and are subject to change without noteor other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any recurwe believe all sources of information to be factual and reliable, in no way do we represent or guarantee t h

the statements made herein .

The editor, members of the editor's family, and/or entities with which the editor is affiliated, are forbidderown, buy, sell or otherwise trade stock for their own benefit in the companies who appear in the publicaticand other editorial content of the SmallCap Digest and SmallCapNetwork .net may contain forward-looking

the expected capabilities of the companies mentioned herein .

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN AMENTIONED, INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK . THE ITHIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIE

ANY WAY WITHOUT THE EXPRESSED, WRITTEN CONSENT OF THE EDITORS OF SMALLCAPNETWORK .NE T

We encourage our readers to invest carefully and read the investor information available at the web sites iExchange Commission ("SEC") at http_ //www .sec .aov and/or the National Association of Securities Dealerhttp ://www.nasd .com . We also strongly recommend that you read the SEC advisory to investors concerniwhich can be found at http .JJwww.sec .oov/consumertcy_berfr,htm . Readers can review all public filings b•EDGAR page . The NASD has published information on how to invest carefully at its web site .

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111 1 !

6:08 pm EST, Wed., February 27, 200 :For info, visit www.smallcapnetwork .net

To be removed, please click hereVOLUME 02 : ISSUE I

Diomed Begins Marketing First Laser System toTreat Both Varicose Veins (EVLT(TM)) andSpider Veins :

Just after the market closed today Diomed came out with an unexpectednews release. The announcement is in regards to the release of thefirst laser system on the market which treats both large varicose veinsand the small, unsightly spider veins .

This condition affects an estimated 25% of women world wide . Thecosmetic market for this product is estimated in the $400 million to $1billion range .

Today's announcement expands Diomed's product line, and makes it thefirst company to market this dual purpose device .

Here is the complete text of the press release for your review :

ednesday February 27, 5 :19 pm Eastern Tim e

Press Releas e

OURCE: Diorned, inc .

Diomed Begins Marketing FirstLaser System to Treat BothVaricose Veins (EVLT(TM)) andSpider Veins

ANDOVER, Mass ., Feb. 27 /PRNewswire-FirstCall/ --Diomed, Inc . (Amex : DIO - news), a provider ofclinical modalities used in minimal and micro-invasivemedical procedures, announced today it has releasedthe first FDA-cleared, combined laser system that treatsvascular lesions (including "spider veins") and varicoseveins .

Diomed announced earlier this year it had gained FDAclearance to market EVLT(TM) (EndoVenous LaserTreatment), the first minimally - invasive. laser- basedvaricose vein treatment available in the US thateffectively and safely eliminates varicose veins withouthospitalization , general anesthesia , or the risksassociated with open surgical procedures . Having alsogained FDA clearance for the D l 5plus and D30pluslaser systems and handpieces , the company is now thefirst to offer one versatile laser system that can be usedfor multiple vascular applications - EVLT and thetreatment of spider veins .

"This is important news for practitioners offeringvascular treatments, and for their patients," commentedSteven E. Zimmet. MD, Officer of the AmericanCollege of Phlebology . "A single laser system that canbe used for both varicose and spider vein treatmentsshould make the procedures more accessible to morepatients . "

Wade Fox . Diomed Vice -President of Sales andMarketing said , "With EVLT, we were the first to offera laser -based minimally-invasive treatment to eliminatevaricose veins . Now we're pleased to be the first tooffer a laser system that can be used both for EVLT andfor vascular lesions . "

The Diomed D15plus and D30plus laser systems arenow available on the market . Please visitwww.diomedine .coin for more information .

Diomed provides clinical modalities and specializes inthe development and distribution of equipment and

disposable items used in minimal and micro - invasivemedical procedures . In developing and marketing itsinnovative clinical solutions , it uses proprietarytechnology and aims to secure strong commercialadvantages over its competitors by gaininggovernmental approvals in advance of others andthrough exclusive commercial arrangements . Topa rt icipate in the rapidly growing minimal and micro-invasive medical procedure indust ry , Diomed seeks tointegrate disposables into its product lines . Diomedholds proprieta ry technology in certain methods ofsynchronizing diode light sources and in certain opticalfibers. Diomed focuses on photodynamic therapy(PDT) for use in cancer treatments , EndoVenous LaserTreatment (EVLT(TM)) for use in varicose veintreatments , and on dental and general surgicalapplications .

For more information about Diomed, Inc ., please visitwww.diomedine .com .

URCE: Diomed, Inc .

DISCLAIMER : .

The SmallCap Digest is an independent electronic publication committed to providing our readers withfactual information on selected publicly traded companies . SmallCap Digest is not a registered investmentadvisor or broker-dealer . All companies are chosen on the basis of certain financial analysis and otherpertinent criteria with a view toward maximizing the upside potential for investors while minimizing thedownside risk, whenever possible . Moreover, as detailed below, this publication accepts compensationfrom third party consultants and/or companies which it features for the publication and circulation of theSmallCap Digest or representation on SmaliCapNetwork .net. Likewise, this newsletter is owned by TGR,LLC . To the degrees enumerated herein, this newsletter should not be regarded as an independent

publication .

Click Here to view our compensation on every company we have ever covered, or visit the following webaddress : http ://www .smallcapdigest.net/compensation disclosure .html for our full compensationdisclosure and http ://www.smallcapdigest .net/shortterm alerts .html for Trading Alerts compensation an(disclosure . TGR Group LLC has been paid a fee of $50,000 in cash a by Mohammed Patel, an individual ,

for publishing information on Diomed Corp for a period of one year .

All statements and expressions are the sole opinions of the editors and are subject to change withoutnotice . A profile, description, or other mention of a company in the newsletter is neither an offer norsolicitation to buy or sell any securities mentioned . While we believe all sources of information to befactual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements

made herein .

The editor, members of the editor's family, and/or entities with which the editor is affiliated, are forbidderby company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies whoappear in the publication . The profiles, critiques, and other editorial content of the SmallCap Digest andSmallCapNetwork .net may contain forward-looking statements relating to the expected capabilities of th e

companies mentioned herein .

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING INANY SECURITIES MENTIONED . INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGH

DEGREE OF RISK . THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWSOF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE

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We encourage our readers to invest carefully and read the investor information available at the web sitesof the Securities and Exchange Commission ("SEC") at http ://www . s e~ c .gov and/or the NationalAssociation of Securities Dealers ("NASD") at h ttD ;I/.www.nasd .com . We also strongly recommend thatyou read the SEC advisory to investors concerning Internet Stock Fraud, which can be found a thttp ; / www . ec"c ov_Lcc nsumer c eerf r .htm , Readers can review all public filings by companies at theSEC's EDGAR page . The NASD has published information on how to invest carefully at its web site .

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"Diomed In The Rough "

conjunction with their drugs to treat patients for cancer .

We are veryexcited aboutour mostrecent profile .Medical devicemaker Diomed( DIO ) is a"picks &shovels"company in thephotodynamictherapyindustry alsoreferred asPDT. Thecompanysupplies lasersand fiber opticsto PDTcompanieswhich in turnuse them i n

Just this past week the Wall Street Journal featured an article on PDT :

In the article , which you can view by clicking here, it states :

"Another promising area of treatment involves so-called photodynamictherapy, or PDT. Some light-sensitive drugs, many from a chemical classknown as the porphyrins, are naturally drawn into rapidly dividing tumorcells . Laser light of a particular frequency can trigger a sequence o f

4 :08 pm EST, Tues ., February 26, 200

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To be removed, please click here

VOLUME 02 : ISSUE I

chemical events involving the drugs in those cells that kills tumors whileleaving most healthy tissue unharmed. Fiber-optic lines can deliverlaser light to internal tumors via endoscope .

While such therapy for cancer is close to a decade old and has beenapproved in the U.S. for esophageal and lung cancers, it is only nowattracting wider attention . One reason is that conservative doctors havebeen slow to adopt "hybrid" treatments that involve both drugs andmedical devices .

In addition, the first PDT practitioners hadn't yet worked out ways ofdelivering exactly the right "dose" of laser light to tumors, says KentonGregory, director of the Oregon Medical Laser Center in Portland, whichis studying the use of PDT to treat prostate and breast cancer. Once lightdosage is optimized, "you have a beautiful therapy," he says. "Unlikeradiation, you can use it over and over," without damaging the patient. "

Investors that do not read the SmallCap Digest have no idea thatDiomed is a supplier of the laser light and fiber-optic lines that arementioned in the Wall Street Journal .

The four big PDT drug companies are currently QLT Inc (QLTI),Pharmacyclics (PCYC), Axcan Pharmaceuticals (AXCA), and DUSAPharmaceuticals ( DUSA ) . Between the four companies, there arescores of drugs and applications that will be making its way through theFDA process . This doesn't even account for the large drug makers thatwill eventually enter the PDT industry by developing their own drugs orjust buying out one of the incumbents . Diomed is partnered with all fourof these companies . Each new PDT drug that is developed and approvedincreases the demand for Diomed's lasers and fibers .

Just last week Axcan reported better than expected earnings . Accordingto a report issued by J.P. Morgan, Axcan will be filing a new drugapplication also known as an NDA with the FDA for the use of Photofrinin the treatment of Barrett ' s Esophagus . The application is estimatedto be filed in March of 2002 . Photofrin is already FDA approved for othertreatments, thus Barrett's Esophagus will experience a shorter FDAprocess . FDA approvals expected in Sept. of 2002 . What this means isthat in quarters 3 and 4 of 2002 Diomed should expect to havesubstantial upside to revenue estimates from PDT .

Remember that each new drug approval means more money to Diomed'sbottom line. The best part is that the drug makers are spending all themoney for the FDA approval process while Diomed sits back and waitswithout having to spend any money . It is an incredible position for acompany to be in .

PDT is an exciting industry but investors in Diomed should realize thatthe company is also the first to receive FDA approval for EVLT(treatment of varicose veins ) . Diomed is no one trick pony .

By being both a leader in the PDT industry as well as EVLT, Diomed is ina unique position where it is diversified across two very different areaswithin the sector . This is a rarity amongst biotech companies and thebeneficiaries are the shareholders . The company's unique businessmodel offers shareholders substantial protection from the risks normallyassociated with owning biotech stocks . Unlike the "approval or bust"companies that place their entire future on the hopes of one drug,Diomed is focused on maximizing revenues and earnings from itspartners .

The stock closed today at $7.30 which is up 5% from when we profiledthe company . It has pulled back from the $8 .50 level which is a greatopportunity for investors who were waiting for a nice entry point . Wefeel that Diomed should be accumulated up to $ 8 per share and overthe course of this year has the potential to reach $12 .

DISCL AIM E R : .

The SmallCap Digest is an independent electronic publication committed to providing our readers withfactual information on selected publicly traded companies . SmallCap Digest is not a registered investmentadvisor or broker - dealer . All companies are chosen on the basis of certain financial analysis and otherpertinent criteria with a view toward maximizing the upside potential for investors while minimizing thedownside risk , whenever possible . Moreover, as detailed below, this publication accepts compensationfrom third party consultants and/or companies which it features for the publication and circulation of theSmallCap Digest or representation on SmallCapNetwork .net . Likewise , this newsletter is owned by TGR,LLC . To the degrees enumerated herein , this newsletter should not be regarded as an independent

Publication .

Click Here to view our compensation on every company we have ever covered, or visit the following webaddress : http_//www.smal_Icaa dg est .net/com pensation disclosure .html for our full compensationdisclosure and http Uwww,sm a licapdigest .net/short_term alerts .htmI for Trading Alerts compensation an(

disclosure . TGR Group LLC has been paid a fee of $50,000 in cash a by Mohammed Patel, a n

individual, for publishing information on Diomed Corp for a period of one year .

All statements and expressions are the sole opinions of the editors and are subject to change withoutnotice . A profile, description, or other mention of a company in the newsletter is neither an offer norsolicitation to buy or sell any securities mentioned . While we believe all sources of information to befactual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements

made herein .

The editor, members of the editor's family, and/or entities with which the editor is affiliated, are forbidderby company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies whoappear in the publication . The profiles, critiques, and other editorial content of the SmallCap Digest andSmallCapNetwork .net may contain forward-looking statements relating to the expected capabilities of th e

companies mentioned herein .

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING INANY SECURITIES MENTIONED . INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A HIGHDEGREE OF RISK . THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWSOF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT TH E

EXPRESSED, WRITTEN CONSENT OF THE EDITORS OF SMALLCAPNETWORK .NET .

We encourage our readers to invest carefully and read the investor information available at the web sitesof the Securities and Exchange Commission ("SEC") at http //www .sec,.gov and/or the NationalAssociation of Securities Dealers ("NASD") at littp ://www .na sd corm . We also strongly recommend thatyou read the SEC advisory to investors concerning Internet Stock Fraud, which can be found a thttp /Iwww.sec .clov/consumec/cyberfr .htm . Readers can review all public filings by companies at theSEC's EDGAR page . The NASD has published information an how to invest carefully at its web site .

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Contact Us Diomed In The Spotligh t

-V '' . This has most certainly been an interesting week for Diomed (DIO) . For° Diomed investors, it started off with some egg in the face . A very nasty

article in the NY Post written by Christopher Byron came just a bit_= = short of deeming the company a fraud . The fact that Mr . Byron wrote

about Diomed is not surprising because in the previous week Diomedwas featured by another columnist . What is a concern to the SmallCa p

' ` Digest is some inaccuracies and misleading information offered by Mr .Byron, who is one of the best business journalists out there .

If the goal of the article was to drive the stock price down then itcertainly was effective to the tune of 20% . Criticism is certainlysomething all public companies deal with on a daily basis . However, avery poorly researched article from one of America's best businesswriters boggles the mind .

Let's look at some what Mr . Byron wrote :

Exactly what this Massachusetts-based biotech company does ishard to say, except perhaps, if onereads the financials, that it seemsto involve the sale of "clinicalmodalities in micro-invasivemedical procedures. "

Readers that visit Diomed's home p age can click the about us sectionand read the following "Diomed develops and markets powerful clinicalsolutions utilizing proprietary technology, erecting barriers to entry andintegrating profitable disposables to participate in the rapidly growingminimal and micro-invasive medical procedure industry . These solutionsinclude the innovative varicose vein treatment Endo Venous LaserTreatment (EVLT) recently featured on "Good Morning America",

cancer and pre-cancer treatments using Photo Dynamic Therapy(PDT), as well as other minimally invasive clinical solutions ."

The company's financials alsoinform us that DioMed's auditor isthe Arthur Andersen accountingfirm of Enron fame .

Anderson's work with Enron has led to the firm's demise. Still,thousands of companies use their services and will continue to do so .This past weekend there are numerous reports that KPMG and Deloitte& Touche are looking to buy out Anderson . Once this occurs, Diomed'sauditors will switch to the acquirer . Suggesting that all of ArthurAnderson 's clients are some how guilty of fraud is not only ludicrousbut irresponsible .

YET in spite of all that, DioMed'sshare price has actually soared2,800 percent on the Amex - from25 cents to more than $7 - in justthe last eight weeks, by far thegreatest gain of any listed stock onWall Street this year.

This statement may be the most troubling of all . Diomed has not soared2,800 percent this year . The stock known as Diomed first traded underthe ticker DIMD for three days on the OTC Bulletin Board . Upon fulfillingthe listing requirement of a minimum $3 stock price, Diomed moved tothe American Stock Exchange on February 22nd was and opened fortrading at $7.03 per share . Since opening on the American StockExchange, Diomed has traded as low as $ 6.00 and as high as $9 .00 .

SmallCap Digest subscribers may recall an article o n reverse m-ergersthat we published on January 16, 2000 . Here is a quick definition, areverse merger occurs when a public company which has no businessand usually limited assets acquires a private company with a viablebusiness . The Private company "Reverse Merges" into the already publiccompany, which now becomes an entirely new operating entity andgenerally changes name to reflect the new merged company's business .

The original public company, commonly known as a Shell company, hasvalue because of its publicly traded status . The shell company isgenerally recapitalized and issues shares to acquire the privatecompany, giving shareholders and management of the private companymajority control of the newly formed public company .

THAT'S where DioMed comes in . 11

This company began life in 1998as a Canadian penny stock,incorporated in Nevada under thename Natexco Corp., andsupposedly in the business ofproviding advertising services toother itty-bitty companies likeNatexco, which was run out of thefounder's house in Vancouver.

s of last November, whenatexco filed its final quarterlynancial statement beforeiorphing into DioMed, theompany's balance sheet showed arand total of $64 in cash,10,298 of total assets, and2,357 of quarterly revenues .

Perhaps, Mr. Byron is unfamiliar with reverse mergers because Diomeddid not begin life as a Canadian penny stock. Having just an elementaryunderstanding of reverse mergers would be enough for most investors tounderstand that Natexco is just a shell used by Diomed to obtain apublic listing . This is exactly what Muriel Siebert , world renown as thefirst woman member of the New York Stock Exchange, did in 1996 . Shetook her brokerage firm public by reverse merging with J . Michaels, adefunct Brooklyn Furniture company . So according to Byron'sdefinition, Siebert Financial ( SIE B ) began life as a down on its luckfurniture company .

And I am also sure that a Mr .Ajmal Khan, who works the pennystock circuit under the monikerVerus International, has good andlegitimate reasons for holding 4 .4million shares of DioMed in a PostOffice box in the Cayman Islands,as appears to be the case througha footnote in a recent DioMedfinancial filino .

The above excerpt implies that Verus International is in the penny stockbusiness . Take a look at the advisory boa rd for Verus Internationaland you will notice the following people and some of thei raccomplishments :

• Jack L. Rivkin : Executive Vice President of CitigroupInvestments, Inc . and its predecessors since October 1995 . Hewas Vice Chairman and Director of Global Research at SmithBarney. Director of the Equities Division and Director of Researchat Lehman Brothers . President of Paine Webber Capital, Inc ., themerchant banking arm of Paine Webber Group .

• Strauss Zelnick is the former President and Chief ExecutiveOfficer of BMG Entertainment, a $4 .6 billion music andentertainment company, and recently founded Zelnickmedia .

• Jonathan Cohen , former Director of Research at Wit Capital andcurrently founder and CEO of JHC Capital Management Inc . Formerlead internet analyst at Merrill Lynch .

• Robert ( Bob) H . Lessin is Chairman and former CEO of WitSoundView Group, Inc ., the largest online investment-bankinggroup focused exclusively on the Internet and technology .

• Peter Norris former CEO of Barings .

This distinguished group of advisors is respected on Wall Street andfinancial circles around the globe . To suggest that they would beinvolved with an entity in the "penny stock circuit" is an insult of thehighest degree . Perhaps Mr. Byron could label the underwriters thattook Webvan , eToys , and Pets .com as boiler room outfits .

Ultimately, people will have different opinions on companies but there isa set of parameters from which to base assessments and they are calledFACTS.

Here are some facts :

e PDT Company Name Treatments Market ( Per Year)

drug DUSA Pharmaceuticals ( DUSA ) Acne $500 Million

maker Actinic Keratoses $ 400 Millionare Bladder Cancer Detection 800k•900k Procedures

spendir Restenosis $1 Billion

millionsBrain Cancer 32,000 New Cases

of Barrett's Esophagus $ 350 Million

dollars Pharmacjclics (PCYC) Brain Cancer 32,000 New Casesto get Prostate Cancer 180 , 000 New Cases

their Cervical Cancer 15,000 New Cases

drugs Breast Cancer 190,000 New Cases

approve

by the Azcan Pharmaceuticals (AXCA) Lung Cancer $ 10 Billion

FDA. Barrett's Esophagus $350 Million

Diomecpartner QLT Inc (QLTI) Restenosis $ 1 Billion

include' Skin Cancer $2.7 Billion

the biggest names in the industry such as QLT Inc ( QLTI),Pharmacyclics (PCYC), Axcan Pharmaceuticals (AXCA), andDUSA Pharmaceuticals ( DUSA ) . Each new drug approved bythe FDA could mean millions in revenue for Diomed through the

sale of lasers and fibers .Diomed has won approval from the US Food and DrugAdministration for its minimally-invasive treatment of varicoseveins . This procedure has been featured on Good Mornin gAmerica and The NY Times .

Ultimately, the question remains if Diomed will be able to execute itsbusiness. Only time will tell but the SmallCap Digest feels that thecompany will be able to perform .

It is imperative that investors conduct proper due diligence on anycompany before investing . The same could be said for writers beforethey decide to publish an article .

For additional facts on Diomed clickhere .

DISCL AIM E R- .

The SmallCap Digest is an independent electronic publication committed to providing our readers withfactual information on selected publicly traded companies . SmallCap Digest is not a registered investmentadvisor or broker-dealer, All companies are chosen on the basis of certain financial analysis and otherpertinent criteria with a view toward maximizing the upside potential for investors while minimizing thedownside risk, whenever possible . Moreover, as detailed below, this publication accepts compensationfrom third party consultants and/or companies which it features for the publication and circulation of theSmallCap Digest or representation on SmallCapNetwork .net . Likewise, this newsletter is owned by TGR,LLC . To the degrees enumerated herein, this newsletter should not be regarded as an independent

publication .

Click He re to view our compensation on every company we have ever covered, or visit the following webaddress : !Lttp. ://.www - sma I Ica pd igest .net/comp_ep!LaCion disclosure .html for our full compensationdisclosure and http ;L/www.smallcaodigest .net/short term alerts .html for Trading Alerts compensation an(disclosure . TGR Group LLC has been paid a fee of $50,000 in cash a by Mohammed Patel, an individual, f o

publishing information on Diomed Corp for a period of one year .

All statements and expressions are the sole opinions of the editors and are subject to change withoutnotice . A profile, description, or other mention of a company in the newsletter is neither an offer norsolicitation to buy or sell any securities mentioned . While we believe all sources of information to befactual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements

made herein .

The editor, members of the editor's family, and/or entities with which the editor is affiliated, are forbidderby company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies whoappear in the publication . The profiles, critiques, and other editorial content of the SmallCap Digest andSmallCapNetwork .net may contain forward-looking statements relating to the expected capabilities of th e

companies mentioned herein .

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING INANY SECURITIES MENTIONED . INVESTING IN SECURITIES IS SPECULATIVE AND CARRIES A I-UGHDEGREE OF RISK . THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWSOF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT TH E

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of the Securities and Exchange Commission ("SEC") at htto ; / www~sec .oov and/or the NationalAssociation of Securities Dealers ("NASD") at http.LZIwww .ijas-O-.com . We also strongly recommend thatyou read the SEC advisory to investors concerning Internet Stock Fraud, which can be found athttp .//wwwsec.gov/co nsumer cy erfr .htm . Readers can review all public filings by companies at theSEC's EDGAR page . The NASD has published information on how to invest carefully at its web site .

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New le tterA ves Inrchi To OTC Journal Members :Ch ro nologica lOrder

® Diomed ( AMEX : DIO) Makes Major Announcement4 After the Close

Just after the market closed today and on the heels of a stabilizing day in thestock, Worried came out with a surprise news release concerning a newproduct release .

The company announced the release of the first laser system on the marketwhich jointly treats both large varicose veins and the small, unsightly spiderveins .

This condition affects an estimated 25% of women world wide . The cosmeticmarket for this product is estimated in the $400 million to $1 billion range,and Todd Pitcher, analyst with Equity Securities, believes the company caneventually gain a minimum of 10% market penetration .

Today's announcement, which came out after the market closed, expandsthe companies product line, and makes Diomed the first company to marketthis dual purpose device .

Here is the complete text of the press release for your review :

Wednesday February 27 , 5 :19 pm Eastern TimePress Releas eSOURCE : Diomed, Inc .

What Is aReverse Merger?

All Quotes Delayed20 Minutes an d

Provided byStockGrou o

Diomed Begins Marketing First Laser System toTreat Both Varicose Veins (EVLT(TM) ) and Spi der

Veins

ANDOVER, Mass ., Feb . 27 /PRNewswire-FirstCall/ -- Diomed, Inc . (Amex :DIO - news), a provider of clinical modalities used in minimal and micro-invasive medical procedures, announced today it has released the first FDA-cleared, combined laser system that treats vascular lesions (including

spider veins") and varicose veins .

Diomed announced earlier this year it had gained FDA clearance to marketEVLT(TM) (EndoVenous Laser Treatment ), the first minimally - invasive,laser - based varicose vein treatment available in the US that effectively andsafely eliminates varicose veins without hospitalization , general anesthesia,or the risks associated with open surgical procedures . Having also gainedFDA clearance for the D15plus and D30plus laser systems and handpieces,the company is now the first to offer one versatile laser system that can beused for multiple vascular applications - EVLT and the treatment of spiderveins .

'This is important news for practitioners offering vascular treatments, andfor their patients," commented Steven E . Zimmet, MD, Officer of theAmerican College of Phlebology . ' 'A single laser system that can be usedfor both varicose and spider vein treatments should make the proceduresmore accessible to more patients . "

Wade Fox, Diomed Vice-President of Sales and Marketing said, ' 'WithEVLT, we were the first to offer a laser-based minimally-invasive treatmentto eliminate varicose veins . Now were pleased to be the first to offer alaser system that can be used both for EVLT and for vascular lesions . "

ie Diomed D15plus and D30plus laser systems are now available on thearket . Please visit www .diomedinc .com for more information .

Diomed provides clinical modalities and specializes in the development anddistribution of equipment and disposable items used in minimal and micro-invasive medical procedures. In developing and marketing its innovativeclinical solutions, it uses proprietary technology and aims to secure strongcommercial advantages over its competitors by gaining governmentalapprovals in advance of others and through exclusive commercialarrangements . To participate in the rapidly growing minimal and micro-invasive medical procedure industry, Diomed seeks to integrate disposablesinto its product lines . Diomed holds proprietary technology in certainmethods of synchronizing diode light sources and in certain optical fibers .Diomed focuses on photodynamic therapy (PDT) for use in cancertreatments, EndoVenous Laser Treatment (EVLT(TM)) for use in varicosevein treatments, and on dental and general surgical applications .

For more information about Diomed, Inc ., please visitwww .diomedinc.com .

SOURCE : Diomed, Inc .

For a free due diligence package onDiomed Inc call Investor Relations toll

free at 1-888-400-0643 .

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newsletter should not be regarded as an independent publication .

Click Here to view our compensation on every company we have ever covered, or visit the followingweb address : http ://www.otcjournal .com/disclaimer .html for our full profiles and

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MarketByte LLC has been paid a fee of $100,000 in cash and 250,000 options convertible into freetrading shares, exercisable at $3 .50, by the Mohammed Patel, an individual, for publishing informationon Diomed Corp for a period of one year . Please review our policy on selling shares found in our Missio n

Statement on our home page .

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Diomed promoter faced U .S. allegation s

David BainesVancouver Sun

Wednesday, March 20, 2002

A U.S . company that features former Prime Minister Kim Campbell and Vancouverfinancier Sam Belzberg as directors is being promoted by a Florida stock promoterwho was earlier accused by U.S . securities regulators of bribing brokers .

Diomed Inc ., which trades on the American Stock Exchange, zoomed from 25 centsin December to a high of $8 .80 on March 8, due largely to a high-octane promotioninvolving Patrick Kephart and a host of other penny stock touts .

In 1996, the U.S. Securities and Exchange Commission alleged that Kephart andseveral other brokers paid $477,580 in bribes to brokers to induce them to sellpenny stocks to their clients, and issued promotional material to prospectiveinvestors without telling them they were being paid for their services .

In January, 1998, Kephart -- without admitting or denying the allegations -- agreedto repay $25,000 in profits from the alleged scheme, plus $12,000 interest, and to paya $25,000 penalty .

Kephart 's company , Catalyst Communications , is now an integral part of apromotional campaign that includes the distribution of millions of emails andmailouts beseeching the public to buy the stock .

Diomed, based in Andover, Mass ., has laser technology to treat varicose veins and

supplies equipment for use in photo-dynamic therapy (a treatment for certain typesof cancer) .

After obtaining an appraisal valuing the company at $109 million to $142 millionUS, it went public in February by merging with a shell company listed on the OTCBulletin Board in the U.S.

Emerging as the largest shareholder with 4.4 million shares was Ajmal Khan,chairman of Verus International Group Ltd ., a merchant -banking group located inthe Cayman Islands. Khan does not sit on the board , but Verus' COO, JamesArkoosh, serves as chairman .

Khan, who now splits his time between Barbados and New York, was previously aVancouver resident along with his brother Arshad . In the mid-1990s, they ownedand operated Verus Capital Corp ., which renovated and sold condo developments inthe Vancouver area with Sam Belzberg, former chair and CEO of First City

Financial Corp .

Belzberg serves as a director of Diomed and his son, Marc, owns 2 .8 million shares

through his private firm, Winton Capital Holdings Ltd., also domiciled in the

Cayman Islands .

Also serving on the board is Peter Norris, former CEO of the Barings InvestmentBanking Group in England .

In March, 1998, Norris settled (without contesting) an action brought by the U .K.department of trade and industry against him and nine other former directors andofficers in connection with the bank's collapse due to the unauthorized trading ofrogue bond trader Nick Leeson . He was banned from serving as a director of anyU.K. company for four years . That suspension expired several days ago .

After Diomed was reorganized, the company's share price soared . By Feb. 22, whenits shares were listed on Amex, it was already over $7 US .

On March 5, the company announced that Campbell, who completed a four-year

term as Canadian consul-general in Los Angeles and is now working at Harvard

University, had joined the board .

Three days later, the stock price peaked at $8 .80, but the excitement did not appearrelated to the company' s financial performance, which has been mediocre at best .During the nine months ending Sept . 30, it generated $6 .4 million sales but lost $6.6

million .

On March 11, New York Post writer Christopher Byron wrote an extremely criticalarticle about Diomed, describing it as "an instructive little pileup in the making"and noting that the company had "just added to its board of directors somepointless window-dressing in the form of a former Canadian prime minister, Ms .King Campbell . "

He said Diomed's share price is evidence that the bull market has returned : "It isexactly the sort of stock that should send any normal person fleeing the room at themere mention of its name : suspect auditor [Arthur Andersen], offshore accounts,weird products, teeny-weeny revenues, board members with back-stories -- thisstock has it all, the complete package . "

According to information received by The Sun, the "complete package" alsoincludes an intensive, highly-organized promotional campaign involving :

- James Stock's Stock Tips : "We have a new year, and a fresh and dynamic growth

opportunity to enter the stock market with . ENTER DIOMED! "

Larry Abraham ' s Insider Report : " Let's not mince words . I am going to give you

the bottom line right up front . BUY Diomed Inc. and do it now. "

- Stockwatch: The Guide to Businesses with Extraordinary Potential : "ThisVirtually Unknown Medical Company is Poised to Make Huge Profits, for Itself,and for Fortunate Investors Who Get in Early! "

The Stockwatch report (no connection to Canada Stockwatch of Vancouver) states

it was paid by Catalyst Communications (Kephart's company), which had beengiven a marketing budget of $875,500 US and options to buy 350,000 shares from an

unidentified "third-party group with interest in Diomed" to promote the stock .

That same report urges investors to call the company's investor relations

department, which turns out to be Sundar Communications, a marketing companylocated in downtown Vancouver that has been mailing out information CDs andglossy brochures to prospective investors .

Asked whether he knows Kephart, Sundar president Jason Sundar said Tuesdaythat he does, but refused further comment .

Diomed closed Tuesday at $5.16 US.

dbaines@pacpress . southam.ca

© Copyright 2002 Vancouver Sun

Page 1 of 2

U .S . SECURITIES AND EXCHANGE COMMISSION

Litigation Release No . 15082 \ September 27, 199 6

Securities and Exchange Commission v . Atlantic Capital

Corporation, Wall Street Marketing, Inc ., Pullman Publications,

Inc ., Stephen DeCesare, Mark Missler, Patrick Kephart, Howard

Jenkins, Scott Mijares, Robert Thomas Beatty, Vincent St . Clair

Beatty, Michael Cardascia, David Scott Rossman, Adrian Wilson,

Timothy B . Daley, and David M . Connochie (M .D . Fla .) 96-1043-CIV-

ORL-1 9

On September 27, 1996, the Commission filed a Complaint in

U .S . District Court for the Middle District of Florida allegingthat a group of stock promoters engaged in an 18-month fraudulentscheme in which they paid $477,580 in bribes to seven

stockbrokers to induce them to retail securities to the public .

The Complaint alleges that the promoters netted approximately$2 .6 million from the scheme .

The Complaint alleges as follows : From January 1, 1992through June 30, 1993, Atlantic Capital Corporation of Orlando,Florida published six brochures entitled "Investors Edge," eachof which recommended investment in a different little-known,

publicly traded company . Each company paid Atlantic for this

service in stock options, which Atlantic later exercised topurchase stock . Atlantic distributed each brochure to at least100,000 potential investors . Thousands of individuals responded

to the brochures, via reply cards or by calling Atlantic's toll-

free phone number . Atlantic supplied these "leads" to

stockbrokers who had previously agreed to recommend certain ofthe stocks to investors, in exchange for bribes to be based uponthe quantity of shares sold . Atlantic and its affiliates thensold their stock for net profits totaling $2 .6 million . The

brochures failed to disclose Atlantic's ownership of options orstock in the companies being promoted, or the arrangements forpayment of bribes .

Named as defendants (collectively, the "PromoterDefendants") were :

Atlantic Capital Corporation, Wall Street Marketing, Inc .,

and Pullman Publications, Inc ., affiliated corporations

located in Orlando, Florida (collectively, "Atlantic") ;

Stephen DeCesare, age 35, of Winter Park, Florida, anofficer and director of Atlantic ;

Mark Missler, age 35, of Alamonte, Florida, an officer anddirector of Atlantic ;

Patrick Kephart, age 32, of Apopka, Florida, an employee ofAtlantic ; ❑

OF PAGE 2=====_

Howard Jenkins, age 44, of Plano, Texas, a consultant t o

http ://www.sec .gov/litigation/litreleases/Ir 15082.txt 7/17/2003

Page 2 of 2

Atlantic, who resided in Ovida, Florida during the relevant

period ; and

Scott Mijares, age 36, of Winter Park, Florida , an employeeof and /or consultant to Atlantic .

Also named as defendants were the following current or formerregistered representatives :

Robert Thomas Beatty, age 54, of Hollywood, Florida, who wasemployed by First New England Securities Corp . in DeerfieldBeach, Florida during the relevant period ;

Vincent St . Clair Beatty, age 33, of Parkland, Florida, who

was employed by First New England during the relevantperiod ;

Michael Cardascia, age 30, of Centerport, New York, who wasemployed by Corporate Securities Group of Orlando, Florida

during the relevant period ;

David Scott Rossman, age 37, of Castlerock, Colorado, whowas employed by Kemper Securities in Denver, Colorado duringthe relevant period ;

Adrian Wilson, age 36, of Salt Lake City, Utah, who wasemployed by Covey & Co . in Salt Lake City during the

relevant period ;

Timothy B . Daley, age 35, of Odessa, Florida, who wasemployed by Paragon Capital Corporation in Tampa, Florida

during the relevant period ; andDavid M . Connochie, age 42, of Tampa, Florida and Denver,

Colorado, who was employed by Paragon Capital and by MayfairSecurities, Inc . in Florida and Schneider Securities, Inc .in Denver during the relevant period .

The Complaint charges all defendants with violations of

Section 17(a) of the Securities Act of 1933 ("Securities Act")and Section 10(b) of the Securities Exchange Act of 1934 and Rulelob-5 thereunder . The Complaint also charges the Promoter

Defendants with violations of Section 17(b) of the SecuritiesAct . The Complaint seeks permanent injunctive relief and anorder directing that the defendants disgorge their illegal gains,plus prejudgment interest thereon, and pay civil money penalties

pursuant to the Securities Enforcement Remedies and Penny StockReform Act of 1990J-

littp ://wNvNv .sec .gov/litigation/litreleases/ir 15082.txt 7/17/2003

Selected Transactions

Selected Transactions

Page 1 of 3

Refocus Group (OTC :

r e f 0e US RFCG) as successor to th e

business of Prcsby Corp .,G R 0 U P is a Dallas-based medical

device company engaged in the research and development oftreatments for eve disorders . Refocus owns over 140 domesticand international patents, the vast majority directed tomethods, devices and systems for the treatment of presbyopia,

ocular hypertension, primary open angle glaucoma, maculardegeneration and other eye disorders . Refocus' most mature

products are the patented Presvie-,v implant and relatedmechanical incision device for the surgical treatment of

presbyopia, primary open angle glaucoma and ocularhypertension in the human eye. Refocus has licensed certain of

its patented technology to CIBA Vision, the eye care unit ofNovartis AG (NYSE: NVS) . CIBA Vision was the leadstrategic investor for the private placement in the RPO

transaction . CIBA will manage and fund all of the manufacturing, marketing and patent prosecution. CIBA will

also manage the clinical and regulatory activities . Refocus hasCE--' Mark in Europe and regulatory approval in other countries

to market the Presbyopia and Glaucoma procedure . CIBA isalso intending to obtain regulatory- approval in Canada in theearly part of 2003 for the Glaucoma procedure . While Refocus Jis going through the US FD .\ trials, CIBA will roll out inEurope and Canada starting in 2003 .

Vents Role

• Advised company on RPO transaction raising SI2 .5million .

• Provide financial and strategic adviso ry services .

w vw .refocus _ grouh .co m

Diorned (AM'Ilsl : DIO) is aD I O M E D leading clinical solutions

provider specializing in thede livery of minimal and micro-

invasive medical procedures . Utilizing its proprietary

http:/hvww.verusinternational .com/html/selected_transactions.html 7/3/03

Selected Transactions Page 2 of 3

technology in diode light sources and fiber optics , lliomed is

focusing on photodynamic therapy ("PDT") for use in cancer

treatments , endo venous laser treatment ("fiVL'1') for use in

varicose vein treatments and other clinical applications . Both 1,

PDT and EVLT procedures are typically reimbursable by

health insurance providers provided that the doctor is

knowledgeable about the reimbursement system and obtains

pre-approval . Using high power semiconductor diodes as its

energy source , Diomed diode lasers combine clinical efficacy,

operational efficiency and bottom - line cost effectiveness in a

versatile , compact , lightweight, easy to use and minimalmaintenance system .

Veriis Rol e

• Recapitalized balance sheet to support rapid growth andacquisitions .

• Rationalize corporate business plan and operations tosuppo rt future financings .

• Advised company on RPO transaction raising $10million .

• Advised on AMEX listing .• Assisting company with Global M&A and future

financings .

\VW\V.d iOmedinc.com

eNtagin Corporation

Aemagin (1UN4 FX: EN'Ir1) isdedicated to virtual

imaging solutions

that enhance personal access to information-rich data, text, and

video. Our competitive advantage is established expertise in

advanced microdisplay- and optics technology, a proprietary

intellectual property base, key strategic partners, and a world-

class team of talented individuals. eMMlagin's strategy is to

leverage these core competencies with outsourcing and global .

partnerships, to position our products to enable whole new

segments of the display market through OEMs .

Verus Role

• Advised on RPO transaction raising $27 million• Advised on AMEX listing .• Board role.

www.emagin.com

http :/hvww.verusinternational.cony/httnl/selected_transactions .htrnl 7/3/03

Selected Transactions Page 3 of 3

Ong Technologies (AMEX: ONT) is a

leading technology firm at th ea forefront of video compression . The

Company revolutionized video

encoding with the creation of its

.'advanced full-motion, full-screen,

video compression and streaming

technology (TrueMotion® VP3/V1I34). Ong licenses its highquality video codecs for use in set-top boxes , electronicgaming devices and wireless app lications . In addition, Ongoffers a suite of products and services , including high-levelvideo encoding, hosting, streaming , customized technicalsupport , and consulting services . Headquartered in New YorkCity, the Company has an office in Albany, NY, andoperations in London , UK, and Seoul , Korea .

Verus Role

• Advised on RPO transaction raising $15 million

• Advised on AMEX listing .• Provided financial and strategic advisory .• Board role .

www .on2.co m

http ://www.verusinternational.com/html/ selected transactions.html 7/3/03

Merchant Banking Strategy Page 1 of 2

Merchant Banking S trategy

Venus seeks unique investment opportunitiesin later stage companies across a variety ofindustries (with an emphasis on technologyand life sciences) where we can addsignificant value and leverage our s trategic

partners and global dist ribution network .

Investment Strategy

Types of Transactions: Controlling stake investments in the

form of "PIPILs", buyouts, bridge loans, roll-ups,

restructurings, and public listings through reverse mergers

with public vehicles ("RPO") transactions . Venus typically

takes the lead principal position in any investment .

Investment Size and Stage: The typical investment range isbetween $5 million and $25 million . This includes the totalinvestment by Verus and its syndicate investors . Verus willgenerally seek "control" positions through our investments

with like-minded investors and through board and advisorypositions .

Exit Horizon: Verus International will look to invest incompanies in winch it can reasonably expect an exit in 12 - 36months. Possible exit strategies will utilize our globaldistribution and strategic partners in the form of RPO's

and/or strategic sales .

Advisory and Representation Role : In most instances, Verus

will have board representation and an advisory or

representation role with the company. In the case of an

advisory role, Venus would provide strategic and financial

direction to the company working in tandem with

management .

Investment Criteri a

A wide range of later stage opportunities are considered .Targeted companies include the following characteristics :

. Having weathered the start-up process and established

a core business model that is sustainable ;a nrrytrvn mnnorrPmPnt taom-

http :/hvww.verusinternational .com/html/merchant_baiking_strategy.html 7/3/03

Merchant Banking Strategy Page 2 of 2

• If not already profitable , visibility to profitabi lity withina 12-month pe riod ;

• Having estab lished business partnerships that give it amajor position in a market space ;

• Significant barriers to entry; and• Technology or business that is scalable with global

app lications .

We look for opportunities for synergistic consolidation

and/or companies that are on the verge of extraordinarygrowth .

http ://www.ve rLisinternational .coni/htmllmerchant_banking_strategy.html 7/3/03