10QSB 1 r10q-21.txt QUARTERLY REPORT Securities and Exchange Commission Washington, D.C., 20549 FORM 10-QSB (Mark one) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal quarter ended March 31, 2001 Commission file Number 0-28416 or [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 ===================================================================== ValCom, Inc. (Name of small business issuer specified in its charter) ===================================================================== Delaware 58-1700840 -------- ---------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 26030 Avenue Hall - Studio #5, Valencia, California 91355 ----------------------------------------------------- (Address of Principal executive offices) (Zip code) (661) 257-8000 -------------- Issuer's telephone number
===================================================================== Securities registered pursuant to 12(b) of the Act: None Securities to be registered pursuant to Section 12(g) of the Act: Common Stock and Preferred Stock Common Stock $0.001 Par Value - Preferred Stock $0.001 Par Value --------------------------------------------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [ X ] NO [ ] As of March 31, 2001 the Registrant had 93,311,507 shares of its $0.001 par value Common Stock Outstanding. ===================================================================== May 18, 2001 =====================================================================
Table Of Contents ValCom, Inc. FORM 10-QSB INDEX Page PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements 4 Consolidated Balance Sheets as of December 31, 2000 and and March 31, 2001 Consolidated Statements of Operations 6 for the three months ended March 31, 2000 and 2001 Consolidated Statement of Changes 8 in Shareholders' Equity for the three months ended March 31, 2001 Consolidated Statements of Cash Flows 7 for the three months ended March 31, 2000 and 2001 Notes to Consolidated Financial State- 9 ments Item 2. Management's Discussion and Analysis 14 of Financial Condition and Results of Operations Condition Part II. OTHER INFORMATION Item 1. Legal Proceedings 17 Item 2. Changes in Securities 17 Item 3. Defaults Upon Senior Securities 17 Item 4. Submission of Matters to a Vote 17 of Security Holders Item 5. Other Information 17 Item 6. Exhibits and Reports on Form 8-K 17 Signatures 18
-2- PART I. FINANCIAL INFORMATION INDEPENDENT ACCOUNTANTS' REPORT ------------------------------- We have reviewed the accompanying consolidated balance sheet, statement of operations, and cash flows of ValCom, Inc., and subsidiaries as of March 31, 2001, and for the three-months period then ended. These financial statements are the responsibility of the company's management. We conducted our review in accordance with standards established by the American Institure of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such as opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be conformity with generally accepted accounting principles. /s/ Jay J. Shapiro, CPA P.C. ---------------------------- JAY J. SHAPIRO, C.P.A. a professional corporation May 18, 2001 Encino, California -3- Financial Statements VALCOM, INC. AND SUBSIDIARY ----------------------------- CONSOLIDATED BALANCE SHEETS -----------------------------
March 31, Dec.31, 2001 2000 ------ ----- (Unaudited) (Audited) Cash $ 18,660 $ 52,777 Accounts receivable 88,714 116,322 Other receivables 52,634 52,634 Prepaid expenses 14,366 11,569 Property held for sale 3,940,000 3,940,000 ------------ ------------- Total Current Assets 4,114,374 4,173,302 ------------ ------------- Fixed Assets - net 11,875,160 11,750,687 Production costs 113,660 110,201 Prepaid loan fees 97,711 100,501 Deposits 30,000 30,000 Investment in partnership 113,523 -0- -------------------------- Total Assets $16,344,428 $ 16,164,691 ============== ============== See accompanying notes to consolidated financial statements -4- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current liabilities: Accrued wages due stockholder $ 700,000 $ 670,000 Advances due stockholder 236,009 200,508 Loan payable affiliate -0- 150,000 Accrued interest payable 299,240 325,010 Other current liabilities 265,470 55,661 Credit line payable 243,470 110,000 Notes payable -- current portion 1,389,000 1,289,586 Accounts payable 304,831 298,506 ----------- --------- 3,438,020 3,099,271 Notes Payable 6,012,346 5,902,919 ----------- ----------- Total Liabilities 9,450,366 9,002,190 ------------ ----------- Commitments and contingencies Stockholders' equity: Preferred stock, par value $0.001; 10,000,000 shares authorized: 1,543,000 shares issued and outstanding at March 31, 2001 and December 31, 2000 respectively. 1,543 1,543 Common stock, par value $.001; 100,000,000 shares authorized; 93,331,507 and 90,139,843 shares issued and outstanding at March 31, 2001 and December 31, 2000 respectively. 93,332 90,140 Additional Paid in capital 8,857,206 8,242,899 Retained Earnings (deficit) (2,058,019) (1,172,081) ------------ ----------- 6,894,062 7,162,501 ------------ ----------- $16,344,428 $16,164,691 ============ ===========
See accompanying notes to consolidated financial statements -5- VALCOM, INC. AND SUBSIDIARIES ------------------------------- CONSOLIDATED STATEMENT OF OPERATIONS ------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, ------------------------------------ (UNAUDITED)
March 31, 2001 2000 ----- ----- Revenue: Rental $ 389,370 $ 380,321 Production 260,000 108,139 Other -0- 6,833 ------------ ------------ $ 649,370 $ 495,293 Cost and Expenses: Production 198,172 123,955 Selling and promotion 45,202 -0- Depreciation 46,579 55,831 Administrative and general 1,063,979 234,861 ----------- ----------- $1,353,932 $ 414,647 ----------- ----------- Operating income (loss) ( 704,561) 80,646 Interest Expense ( 181,377) (144,187) ----------- ----------- Net Income (loss) ( $885,938) ($63,541) Basic net income (loss) per share........... ($ 0.01) ($0.00) ============ =========== Weighted number of shares 91,735,000 89,900,000 ------------- -----------
See accompanying notes to consolidated financial statements -6- VALCOM, INC. AND SUBSIDIARIES ----------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOW ------------------------------------ FOR THE THREE MONTHS ENDED MARCH 31, -------------------------------------- (UNAUDITED)
2001 2000 ---- ---- Operating Activities: Net Income (Loss) ($ 885,938) $ (63,541) Items Not Requiring Cash: Depreciation and amortization 49,368 55,831 Stock issued for services 262,500 52,500 ------------- ------------ ($ 574,070) $ 44,790 ------------- ------------ Changes in: Receivables 27,608 22,846 Mortgage escrow holdback -0- (327,900) Prepaid expenses ( 2,797) -0- Other assets -0- (36,245) Production costs ( 3,459) -0- Accounts payable and other accrued expenses 190,364 37,573 Loans payable 133,470 -0- Due to stockholder 65,501 155,000 ----------- ----------- $410,687 ($148,726) =========== =========== Cash Provided (used) by Operations (163,383) ( 103,936) Investing Activities: Acquisition of fixed assets (171,052) ( 17,083) Investment in partnership (113,523) -0- ----------- ----------- Cash Used by Investing Activities (284,575) ( 17,083) ----------- ----------- Financing Activities: Principal amount on notes payable 208,841 41,753 Withdrawal of capital contributions 2,000,000 Issuance of stock 205,000 ----------- ------------ Cash Provided (Used) by Financial Activities 413,841 (1,958,247) ------------ ------------ Increase (Decrease) in Cash and Cash Equivalents ( 34,117) (2,079,266) Cash and cash equivalents, beginning of year 52,777 2,279,432 ------------ ------------ Cash and cash equivalents, end of year $ 18,660 $ 200,166 ============ ============ Supplemental disclosure of cash flow information: Interest paid $181,377 $114,187 ============ ============ Income taxes paid $ 800 $ 1,600 ============ ============
See accompanying notes to consolidated financial statements -7- VALCOM, INC. AND SUBSIDIARY --------------------------------------- UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY ----------------------------------------------- FOR THE THREE MONTHS ENDED MARCH 31, 2001 ---------------------------------------
Additional Common Preferred Paid-in Accumulated ------- ---------- Capital Deficit Shares Amount Shares Amount ---------- ----------- ------- ------- ------ ------- Balance Jan.1, 2001 90,139,843$90,140 1,543,000 $1,543 $8,101,157 ($1,172,081) Shares issued for services 1,500,000 1,500 261,000 ( 218,750) Shares issued for debt retirement 331,664 332 149,668 Shares issued for cash 410,000 410 204,590 Conversion of preferred Acquisition of Half/Day 950,000 950 140,791 Net loss for the Period ( 667,188) --------- ------- ----------- --------- --------- ---------- Balance March 31, 2001 93,331,507 $93,332 1,543,000 $1,543 $8,857,206 ($2,058,019) ========== ======= ========== ========= ========== ===========
See accompanying notes to consolidated financial statements -8- VALCOM, INC. AND SUBSIDIARIES ---------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ UNAUDITED MARCH 31, 2001 AND DECEMBER 31, 2000 NOTE 1 Summary of Significant Accounting Policies ------------------------------------------------- Following is a summary of the significant accounting policies followed in the preparation of these financial statements, which policies are in accordance with generally accepted accounting principles: Organization ------------ ValCom, Inc. (the "Company"), formerly SBI Communication, Inc. was originally organized in the State of Utah on September 23, 1983, under the corporate name of Alpine Survival Products, Inc. Its name was subsequently changed to Supermin, Inc. on November 20, 1985. On September 29, 1986, Satellite Bingo, Inc. became the surviving corporate entity in a statutory merger with Supermin, Inc. In connection with the above merger, the former shareholders of Satellite Bingo, Inc. acquired control of the merged entity and changed the corporate name to Satellite Bingo, Inc. Through shareholder approval dated March 10, 1988, the name was changed to name of SBI Communications, Inc. On January 1, 1993, the Company executed a plan of merger that effectively changed the Company's state of domicile from Utah to Delaware. In October 2000, the Company was issued 75,709,965 shares by SBI for 100% of the shares outstanding in Valencia Entertainment International LLC ("VEI"), a California limited liability corporation. This acquisition has been accounted for as a reverse acquisition merger with VEI becoming the surviving entity. The corporate name was changed to ValCom, Inc. Principles of Consolidation --------------------------- The consolidated financial statements include the accounts of the Company and four wholly-owned subsidiaries of which only SBI Communications, Inc. Alabama has activity during the periods presented. These financial statements include all activities as if the acquisition occurred on January 1, 1999. -9- ValCom, Inc. ------------ Notes to Consolidated Financial Statements -------------------------------------------- Unaudited March 31, 2001 And December 31, 2000 --------------------------- Note 1 Summary of Significant Accounting Policies (cont'd) ---------------------------------------------------------- Use of Estimates ---------------- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could materially differ form those estimates. Commitments, Risk And Contingencies ------------------------------------ Financial instruments that potentially subject the Company to concentrations of risk consist of trade receivables principally arising from monthly leases from television producers. Management believes all receivables to be fully collectible. In addition, the Company has a standby letter of credit for $30,000 and a price protection agreement with a shareholder for $20,000. Cash Equivalents ---------------- The Company maintains cash and cash equivalents (short-term highly liquid investments with original maturity less than three months) with various financial institutions. From time to time, cash balances may exceed Federal Deposit Insurance Corporation insurance limits. Fair Value of Financial Instruments ----------------------------------- The carrying value of cash, receivables and accounts payable approximates fair value due to the short maturity of these instruments. The carrying value of short and long-term debt approximates fair value based on discounting the projected cash flows using market rates available for similar instruments. None of the financial instruments are held for trading purposes. -10- ValCom, Inc. -------------- Notes to Consolidated Financial Statements -------------------------------------------- Unaudited March 31, 2001 And December 31, 2000 --------------------------- Note 1 Summary of Significant Accounting Policies (cont'd) ---------------------------------------------------------- Depreciation ------------ For financial and reporting purposes, the Company follows the policy of providing depreciation an amortization on the straight-line and accelerated and accelerated declining balance methods over the estimated useful lives of the assets, which are as follows: Building 39 years Building Improvements 39 years Office Furniture and Equipment 5 to 7 years Production Equipment 5 to 7 years Amortization of Prepaid Loan Costs ---------------------------------- For financial reporting purposes, costs are amortized on the straight line method over 10 years, the life of the related loan. Income Taxes ------------ The Company provides for income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires the use of the asset and liability method and recognizes deferred income taxes for the consequences of "temporary differences" by applying enacted statutory tax rate applicable to future years differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities. Related Party Transactions -------------------------- From time to time, a shareholder of the Company Advances money to the Company for operations. All amounts owed to the shareholders are non-interest bearing ($236,009 at 03/31/01). In addition to advances, the Company accrued salaries payable to the shareholder totaling $30,000 and $30,000 for the quarter ended March 31, 2001 and 2000, respectively. All amounts owed to the shareholders are payable on demand. -11- ValCom, Inc. ------------- Notes to Consolidated Financial Statements -------------------------------------------- Unaudited March 31, 2001 And December 31, 2000 ---------------------------- Note 1 Summary of Significant Account Policies (cont'd) ------------------------------------------------------- Stock-Based Compensation ------------------------ As provided for in SFAS #123, the Company elected to apply APBO #25 and related interpretations whereby the fair value of stock given is determined at the grant date. Impairment of Long-Lived Assets ------------------------------- Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on as estimate of undisclosed future cash flows resulting from the use of the asset and its eventual disposition. Measurement of an impairment loss for long-lived assets is based on the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less costs to sell. Revenue Recognition ------------------- Revenues from licensing of television programming is recorded when the material is available for telecasting by the licensee and when certain other conditions are met. Rental revenue is recognized monthly pursuant to written contracts. Note 2 Property and Equipment ----------------------------- Property and equipment consists of the following:
March 31, December 31, 2001 2000 --------- ---------- Land $ 7,392,292 $ 7,392,292 Building 4,028,785 4,028,785 Building Improvements 1,244,431 1,240,070 Office Furniture and equipment 56,190 39,500 Production equipment 669,737 519,737 ------------ ----------- $13,391,435 $13,220,384 Less: Accumulated depreciation ( 1,516,275) ( 1,469,697) ------------ ------------- Net Book Value $11,875,160 $11,750,687 ============ ============= -12- VALCOM, INC AND SUBSIDIARIES ---------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ Unaudited March 31, 2001 And December 31, 2000 --------------------------- NOTE 3 BUSINESS ACQUSISTION --------------------------- In March 2001, the company acquired 100% ownership of Half Day Video, Inc. a California corporation, for 950,000 shares of ValCom, Inc. common stock. The net book value of Half Day Video, Inc. has been determined to be the fair market value of the common stock issued. NOTE 4 INVESTMENT IN PARTNERSHIP -------------------------------- On March 30, 2001 the Company entered into a partnership with Woody Fraser Productions to produce various television productions. Under the terms of the agreement the Company will receive, after certain costs reimbursements, 75% of the net profits of the venture. This investment is beingg accounted for using the equity method. As of March 31, 2001 the Company has invested $113,523 in the partnership and the partnership has on earnings to date. NOTE 5 SUBSEQUENT EVENT ----------------------- a) The Company has listed the Piedmont Property of sale at an asking price of $4,900,000. The net book value at 12/31/2000 as included in Note #2 is #3.9 million. Management intends on using proceeds to satisfy current obligations of approximately $2.5 million. Such obligations are also subject to negotiation. b) The Company has a letter of intent from as investment firm to raise $10,000,000 subject to certain conditions including a successful $1,000,000 private placement. -13- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction ------------ Plan of Operation: ValCom, Inc. operations at present are comprised of four divisions; 1) Studio Rental, 2) Piedmont Alabama Facility - Auto Auction, 3) Studio Equipment Rental, and 4) Film Production. Studio Rental -------------- The Company owns 6 improved acres with 7 sound stages and one additional leased stage in Valencia California doing business as Valencia Entertainment International. Seven of the eights stages are leased under long term contracts to two major production companies. Rental income for the seven stages should remain constant at approximately $1,200,000 annually with only small cost of living increases. Rental income for the eighth stage should increase from the current $24,000 per month to approximately $75,000 per month in September 2001. Piedmont Alabama Facility ------------------------- The sale of the property located in Piedmont, Alabama for net proceeds of $3,940,000, pending as of June 30, 2000 was subsequently cancelled because the purchaser was unable to obtain financing under favorable terms. The Company decided to develop the property as a venue for auto and antique and collectible merchandise auction. $75,000 was spent for renovation of this property during the past year. Since the implementation of the auction business plan, this segment has not generated any significant revenues. During 2001 the Company continued, on a limited basis, the auction operation and held concerts and other entertainment events. Currently, management is in the process of seeking refinancing of the existing property in the amount of $2,500,000. The funds will be used for the payment of the existing mortgage loan which is in default and for operating capital. The Company has also executed an irrevocable offer to sell the property for $4,500,000 expiring July 2001. Management expects to sell theproperty at a substantial gain. Studio Equipment Rental ----------------------- In March 2001 the Company acquired for stock Half Day Video, Inc. a company which rents cameras and other production equipment to various production companies on a short term basis. With 5 year equipment financing the Company intends to purchase additional equipment costing approximately $350,000. A 100% return on equipment purchases is expected to take less than 6 months. Film Production --------------- Currently the Company is attempting to obtain production commitments on two series. Assuming firm commitments are obtained, production would commence in the first quarter of 2002. In March 2001 the Company entered into a joint venture with Woody Fraser Productions to produce various television productions. Under the terms of the agreement the Company will receive, after certain cost reimbursements, 75% of the net profits of the venture. In March 2001 the venture signed contracts to produce a series of 13 episodes and a pilot episode for a cable TV station. Revenue to be earned under these contracts during 2001 will be $2,800,000. ValCom's percentage of the net income from these productions is estimated at $400,000. Follow-on contracts and additional productions are under consideration. -14- Results of Operation -------------------- March 31, 2001 and 2000 Comparison As of March 31, 2001 the Company had working capital of $676,354. As of the prior year working capital was $1,074,031. The change was due primarily to increase in accruals. Total assets were $16,344,428 at March 31, 2001 versus $16,164,691 at December 31, 2000 and additionally total liabilities were $9,450,366 and $9,002,190 respectively. The changes in total assets and liabilities are substantially accounted for by above described changes in current assets and liabilities. For quarer ended March 31, 2001 the Company had revenue of $649,372, operating expenses of $1,453,932 and a net loss of ($885,937). The loss before depreciation and interest for the quarter was ($757,981). Revenue increased $154,079 from the previous quarter or 31.1%. This increase was a result of an increase in production revenues, largely, equipment rental. Although marketing efforts continued during the quarter for two film production properties, the Company was unable to negotiate any significant sales distribution contracts. No revenue was generated from the on-site merchandise and auto auction at the Piedmont facility. The auction website in development for years was not launched until March 2001 an still is not fully operational. Production costs for the quarter ended March 31, 2001 compared with the prior quarter have increased from $123,955 to $198,172 or a 59.9% increase. Marketing costs and costs related to the increased production revenue accounted for most of the production costs in the first quarter 2001. Management reviews capitalized production costs on a quarterly basis and records write-offs as needed. Selling and promotion costs increased $45,202 from 2000 to 2001. These costs generally were incurred to promote ValCom's common stock valuation Depreciation expense decreased $9,252 due to the fully depreciated status of certain assets. For the quarter ended March 31, 2001 administrative and general costs expenses increased by $829,118 or 353% from 2000 amounts. Significant increases were in the following subcategories. 2001 2000 ------ ------ Legal and accounting $157,836 $ 23,400 Management consulting 218,750 -0- Other costs 229,509 113,643 Salaries 318,022 97,818 Taxes 31,165 -0- Rent 108,697 -0- ------------------------------ Total $1,063,979 $234,861 ============================== -15- Following are reasons for the increase in subcategories of administrative and general expenses for the quarter ended March 31, 2001 compared with the quarter ended March 31, 2000. The $134,436 increase in legal and accounting was due to performance of audits and preparation of agreements and other legal matters related to the merger. The $218,750 increase in management consulting was due costs incurred for reorganization and planning re the newly merged company. The $215,866 increase in other costs consist of numerous relatively small changes in a variety of categories. The $31,165 increase in taxes and licenses was due to prior period under accrual of taxes due. The $ 108,697 increase in rent was due to the lease in 2000 of additional studio space adjacent to the Valencia property. Interest expense increased $37,190 between the two quarters was due to increased borrowings. ValCom did not record any tax expense for either quarter due to taxable loss or tax loss carry forwards. The Company's tax loss carryforwards available balance at the end of fiscal 2000 was in excess of $11 million. Trends events of uncertainties : ------------------------------- The Screen Actors Guild and may go on strike starting July 2001. While not materially affecting the studio operation of ValCom because of its long-term rental contracts, the strike may affect the Company's plans for its own productions which could have a material affect on income for 2001 and 2002. Capital Resources ----------------- Internal and external source of funding: ---------------------------------------- The Company has obtained lines of credit from City National Bank for $400,000 and projects positive cash flow from its studio division. ValCom may issued stock for services as a means of maintaining working capital. ValCom has sufficient funds to operate for the next 12 months through its use of the credit facility, common stock issues and projected positive cash flow from its operation of business. The Company is in the process of refinancing the Piedmont property for $2,500,000. The Company has also executed an irrevocable offer to sell the property and equipment for $4,500,000. Statement Re Computation of Earnings Per Share ---------------------------------------------- See Notes To Consolidated Financial Statements included elsewhere in this filing for a description of the Company's calculation of earnings per share. -16- PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NONE ITEM 2. CHANGES IN SECURITIES In January the company issued 1,500,000 shares of common stock for services. Also in February the company issued 410,000 shares of common stock for cash. In March the Company issued 331,664 shares of common stock to individuals for the retirement of a debt in the amount of $150,000 and interest. In March the Company issued 950,000 shares of common stock to individuals for the acquisition of Half-Day Video. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION CHANGE IN MANAGEMENT. NONE ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K EXHIBITS AND REPORTS ON FORM 8-K (A) EXHIBITS: EXHIBITS DESCRIPTION 11 Statement re: computation of per share earnings 27 Financial data schedule (B) REPORTS ON FORM 8-K: Filed on Edgar February 1 - Change of address February 12 - Change of Control and acquisition of Valencia Complete March 19 - Acquisition of Half-Day Complete -17- SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ValCom, Inc. Date: May 18, 2001 By: /s/Vince Vellardita ------------------------------------- Vince Vellardita Chairman of the Board and Chief Executive Officer (principal executive officer) -18-