In response to your question regarding the shareholder proposal, the Company received a request from a shareholder for a ballot initiative, which if approved, would have required the Company to first obtain shareholder approval prior to the issuance any preferred stock. Although the Company was confident that under Federal Securities Law the proposal pertained to a matter that was appropriately not relegated to shareholders, it undertook to inquire with the SEC if they concurred with this position. The SEC responded, expressing agreement with the Company. We have seen some shareholder concern on this matter as a result of individuals pointing to the Company’s legacy of distressed financings that were dilutive to shareholder interests. Although the Company’s current management does not possess knowledge of all the facts and circumstances that led to previous financing decisions, it appears that the Company was at great risk as a going concern. So given the going concern risk, the distressed dilutive financings may very well have been the best alternatives available at the time , allowing the Company to ultimately survive to this day. To put this in further perspective, the suggested shareholder proposal was aimed at restricting the Company’s issuance of its 5,000,000 shares of preferred stock, although it would have done nothing to address the approximately 120,000,000 shares of authorized, but unissued, common stock available at that time. While we understand that preferred stock may be issued with preferential rights to common, we believe that the proposal could have been misleading in its ability to materially influence dilution.
