Chairman's Letter

December 31 , 2007

 

Annual Letter to Shareholders

Debating the Need for Speed

To those who bought our shares back in 2000 and have watched, horrified, at its decline in value and those recent buyers, who look to the success of an emerging company to gain large profits, the decision to make spot decisions leaves little room for procrastination.

On the one hand, I have felt the ire from shareholders with little patience looking for immediate profits, as though I had a direct link to the almighty and could wave my magic wand.. And on the other, I have felt the kindness from those who understood the series of events that management took to save the company.   All of this is not the subject of this communication since it is spelled out in black and white in public filings over the 11 years of our history.  I doubt that anyone cares to go over the past.  What is important is where are we heading and the speed with which we are determined to get there.

We have made no secret about our cash position and the limits we placed on our advertising programs.  Out of those cash concerns came a program of testing that minimized the risk of financial commitment.  In short, making sure our advertisements were targeted to the right people and provided assurance that we had the financial backing to air with frequency (a must to gain profitability) was a continuing concern.  Thus, we spent the majority of 2007.  The "big bang" never came and we spent much of the year re-making and raising capital.and, oh yes, completing R&D on Fab U LustT.

Recognizing the need for speed in a show of accomplishment, the launch of several of our products is scheduled for the first quarter in TV ads, print ads and Internet ads. No medium has been left out. We [do] expect a growing revenue stream and we [do] expect to have some big winners.

I believe our major decisions will center on reinvesting our cash into additional advertising to increase revenue or to reduce debt and dilution. This decision will no doubt cause more ire amongst shareholders, it will not matter which way we go.   With certainty you can bet on this, our only goal is to build a strong financially sound company.

To those shareholders who remain after the sell-off in December, I can promise you that no one in management will be enriched by further losses.   We have kept our word about a reverse and you have voted, overwhelmingly to allow us to issue the shares necessary to honor our commitment to our financial support group.   A vote "no" would have forced a share reverse.   Using any valuation method available to you, I still believe that our shares are very much undervalued.  Yet, while there is no denying that value is based more upon perception than reality in stocks like ours, I intend to work hard to bring our valuation more in line with reality.

More than this I cannot promise.

I wish you and yours a very Healthy, Prosperous and Great 2008.

Sincerely,

Paul B. Kravitz
Chairman/CEO