ITEM 1.

FINANCIAL STATEMENTS

AZZURRA HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

 

		March 31, 2007				December 31, 2006
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	2,190			$	1,849
Accounts receivable			254				391
Inventory			4				4
Note receivable			426				426
Total current assets			2,874				2,670
SPEEDLAN automated test equipment			16				16
Goodwill			100				100
Total assets		$	2,990			$	2,786
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable		$	134			$	408
Accounts payable subject to compromise			1,191				1,191
Other accrued liabilities			50				589
Other accrued liabilities subject to compromise			2,126				1,812
Deferred revenue subject to compromise			1,322				1,322
Derivative liability for excess shares subject to compromise			30				30
Current maturities of long-term debt subject to compromise			3,379				3,319
Total current liabilities and total liabilities			8,232				8,671
Commitments and contingencies (Note 8)			-				-
Stockholders' deficit:
Series E Preferred Stock			332				332
Series G Preferred Stock			3,224				3,224
Series J and J-1 Preferred Stock			16,824				16,824
Common stock, par value $0.0001 per share; 250 million shares authorized; 75,111 shares issued; 75,081 shares outstanding			8				8
Treasury stock, at cost; 30 shares			(74	)			(74	)
Additional paid-in capital			391,660				391,660
Accumulated deficit			(417,216	)			(417,859	)
Total stockholders' deficit			(5,242	)			(5,885	)
Total liabilities and stockholders' deficit		$	2,990			$	2,786

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

AZZURRA HOLDING CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 (In thousands, except per share data)

(UNAUDITED)

		FOR THE THREE MONTHS
		ENDED MARCH 31,
		2007				2006
Sales		$	323			$	448
Cost of sales			58				220
Gross profit			265				228
Operating expense:
Research and development			-				534
Selling and marketing			-				488
General and administrative			237				487
Bankruptcy expenses			126				-
Total operating expenses			363				1,509
Loss from operations			(98	)			(1,281	)
Other income (expenses):
Interest expense			(373	)			(9,507	)
Gain on settlement of accrued liabilities			556				-
Other income, net			558				-
Income (loss) before discontinued operations			643				(10,788	)
Loss from discontinued operations			-				(12	)
Net income (loss) attributable to common stockholders		$	643			$	(10,800	)
Basic and diluted loss per common share
Income (loss) from continuing operations		$	0.01			$	(0.00	)
Income (loss) from discontinued operations		$	0.00			$	(0.45	)
Basic and diluted loss per common share		$	0.01			$	(0.45	)
Weighted average number of common shares outstanding, basic and diluted			75,111				23,774

The accompanying notes are an integral part of these condensed consolidated financial statements.

1.    BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-QSB.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results of operations and for the periods presented have been included.  Operating results for the three months ended March 31, 2007 and 2006 are not necessarily indicative of the results that may be expected for the fiscal year.  The balance sheet at December 31, 2006 has been derived from the audited financial statements at that date, but does not included all of the information and footnotes required by GAAP for complete financial statements.

You should read these consolidated financial statements together with the historical consolidated financial statements for the Company for the years ended December 31, 2006 and 2005, included in our Annual report on Form 10-KSB for the year ended December 31, 2006, filed with the Securities and Exchange Commission (“SEC”) on December 27, 2007 (the “Annual Report”).

2.    PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

Bankruptcy Proceedings and Accounting

On October 31, 2006 (“Petition Date”), Azzurra Holding Corporation, formerly known as Wave Wireless Corporation (the “Company”), filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code (the “Code”) in the United States Bankruptcy Court for the District of Delaware (“Court”) (the “Bankruptcy Petition”).  The Company’s significant operating losses, working capital deficit, defaults on certain outstanding debentures, together with the significant cash required to maintain operations, delays in commercializing next-generation products, and the loss of a key executive, precipitated the need to seek protection under Chapter 11 of the Code.

On April 5, 2007, the Company and the Committee of Unsecured Creditors (“Creditors Committee”) filed a Joint Plan of Reorganization with the Court (“Joint Plan”), which Joint Plan was amended and restated and filed with the Court on May 2, 2007.  The Joint Plan was confirmed by the Court on June 14, 2007.  Under the terms and conditions of the Joint Plan, as confirmed by the Court, holders of our equity interests as of the effective date of the Joint Plan, June 28, 2007, have terminated.  The Joint Plan contained the following additional major provisions:

SDS Capital Group SPC, Ltd. ("SDS") became the owner of 80% of the issued and outstanding shares of common stock, which includes 70% received under the terms of the Joint Plan, and an additional 10% as a result of SDS’ participation in the Equity Financing, described below.   In addition, all priority unsecured claims and administrative claims were paid in full, through either: (i) payment on the effective date of the Joint Plan; (ii) payment through an escrow account established with a Plan Administration Trust (“Trust”); or (iii) payment from the reorganized Company following the allowance of a claim. The initial funding for the Trust was $250,000. less certain professional fees and other charges set forth in more detail in the Joint Plan. This initial funding was provided from funds that were otherwise distributable to SDS. The Trust is responsible for, among other things, objecting to general unsecured claims and making distributions, as appropriate, to holders of general unsecured claims. The Joint Plan also permitted general unsecured claimants and preferred stockholders to participate in an equity financing ("Equity Financing"), pursuant to which each party was permitted to purchase a portion of 30,000 shares of new common stock at $1.00 per share, based upon the terms and conditions set forth in the Joint Plan. As a result of the Equity Financing, three preferred stockholders each acquired 10,000 shares of common stock.

The Joint Plan required that the Company issue a Contingent Promissory Note in favor of the trust (“Contingent Note”). The Contingent Note provides for a further recovery to the Trust under the terms of the Joint Plan in the event SDS receives a distribution under the Joint Plan that exceeds $2,476,658, plus all fees and expenses accrued under the Contingent Note (the “Maximum Amount”). Under the terms of the Contingent Note, if SDS receives an amount in excess of the Maximum Amount, the Company will pay to the Trust an amount equal to 50% of any cash that remains or has accrued after (i) satisfying the Maximum Amount and all other distributions or dividends required under the Joint Plan, (ii) reserving cash sufficient to satisfy, in full, all obligations of, and claims against, the Company that have accrued during the one year period following the effective date of the Joint Plan, and (iii) reserving reasonably sufficient cash, in the Company's sole discretion, to fund ongoing business operations. The Contingent Note terminates on June 28, 2008.  As of August 20, 2007, SDS has received $1.7 million under the terms of the Joint Plan.  No amounts have been borrowed under this SDS Note.

In connection with the confirmation of the Joint Plan, the Company and SDS executed a Secured Promissory Note payable by the Company to SDS in the amount of $100,000 (the “SDS Note”). The SDS Note is held by the Company and will only be issued in the event the Company deems it necessary to provide for its working capital requirements. Any amounts due and payable SDS are secured by all assets of the Company under the terms of a Security Agreement.

As a result of the confirmation of the Joint Plan and emergence from bankruptcy, the amounts reported in subsequent financial statements will materially change due to the restructuring of the Company’s assets and liabilities as a result of the plan of reorganization and the application of the provisions of Statement of Position 90-7, “Financial Reporting by Entities in Reorganization under the Bankruptcy Code,” (SOP 90-7), with respect to reporting upon emergence from Chapter 11.  Changes in accounting principles required under U.S. generally accepted accounting principles within 12 months of emerging from bankruptcy are required to be adopted at the date of emergence.  Additionally, the Company may choose to make changes in accounting practices and policies at that time.  For all of these reasons, financial statements for periods subsequent to confirmation of the Joint Plan and emergence from Chapter 11 will not be comparable with those of prior periods.

In accordance with SOP 90-7, the following represents the pro-forma impact of fresh start accounting on the March 31, 2007 balance sheet of the confirmation of the Joint Plan as if it had occurred on March 31, 2007:

			(000’s)
Cash		$	2,190	(1)
Other current assets			684
Total current assets			2,874
Goodwill and other assets			116
Total assets		$	2,990
Current and total liabilities		$	928	(2)(3)
Common stock			1	(4)
Additional paid-in capital			2,061
Total liabilities and stockholders’ equity		$	2,990

(1)	This amount does not reflect subsequent cash receipts or any distributions under the Joint Plan, including the $1.7 million paid to SDS and $250,000 to the Trust.

(2)

Included in this amount is $543,296 in liabilities reflected in the Company's financial statements as uninvoiced payables which may be subject to compromise and/or discharge by the Bankruptcy Court following proper notice to the applicable debtors and/or receipt of evidence necessary to support termination of such payables.

(3)	Included in this amount are the accrued liabilities in the amount of $250,000 subsequently paid by the Trust.

(4)	Common stock, par value $0.01 per share; 250,000 shares authorized; 100,000 shares issued and outstanding.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business.  Accordingly, all pre-petition liabilities subject to compromise have been segregated in the balance sheet and classified as liabilities subject to compromise, at the estimated amount of allowable claims.  As discussed below in “Discontinued Operations” and in Note 9 “Sale of Speedlan Product Line”, the Company has discontinued all of its operations as of August 2007.  Additionally, as previously discussed in “Bankruptcy Proceedings and Accounting’, substantially all of the Company’s assets at March 31,2 007 have or are expected to be used in connection with the payment of obligations associated with the Joint Plan.  Management is currently exploring opportunities to effect an acquisition of the Company by merger, exchange or issuance of securities or similar business combination.

Discontinued Operations

As a result of the sale by WaveRider Communications, Inc. (“WaveRider”), a wholly-owned subsidiary of the Company, of substantially all of its operating businesses, WaveRider has no continuing operations other than distributing its remaining cash for the benefit of its creditors.  In addition, the Company disposed of its repair and maintenance business (“RMA Business”).  The operations of these entities and business units have been segregated and shown as discontinued operations.

Following is a summary of Discontinued Operations for the three months ended March 31, 2007 and 2006 (in thousands):

		March 31,
		2007				2006
Revenue		$	-			$	1,541
Cost of Sales			-				1,368
Gross Profit			-				173
Operating Expenses			-				185
Net Loss		$	-			$	(12	)

Accounting Estimates

In preparing the financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expense during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainties in Income Taxes, an interpretation of FASB Statement No. 109 (FIN 48), on February 1, 2007.  Adoption of FIN 48 did not have any impact on the Company’s financial statements.

The Company would recognize interest and penalties related to a liability for uncertain tax positions in income tax expense.

3.    NET (LOSS) PER SHARE

Basic and diluted earnings (loss) per common share are computed by dividing the net income (loss) by the weighted average common shares outstanding.  No options or warrants with an exercise price below market were outstanding for either period.

The product, personnel and other synergies resulting from the WaveRider Merger were intended to lower operating and other costs, and increase revenue in each company’s respective product lines.  Following consummation of the WaveRider Merger, the Company experienced far longer sales cycles for new products than were expected, certain product availability issues in connection with its 900 MHz non-line-of-sight products, and continuing delays in commercializing new mesh products, resulting in substantially lower revenue in each of these product lines than expected.  Due to the recognition of lower than anticipated revenue during the quarter ended September 30, 2006, the Company was required to use a significant amount of its cash resources to satisfy certain legacy obligations, and the costs incurred in connection with consummation of the WaveRider Merger.  As a result of these factors, and the Company’s deteriorating cash position, management entered into discussions to sell certain non-core assets in order to satisfy its working capital requirements.

Management of WaveRider’s Australian subsidiary, WaveRider Communications (Australia) Pty Ltd. (“WaveRider Australia”) had approached it on a number of occasions about the possibility of a management buy-out of WaveRider Australia.  On June 19, 2006, the Company’s Board of Directors determined that, as a non-core asset, the sale of the WaveRider Australia should be considered and directed management to enter into formal negotiations.  On June 30, 2006, the Company sold WaveRider Australia for cash consideration of $370,000 plus contingent consideration calculated at 15% of revenue for the following 12 months, payable quarterly in arrears.  On January 25, 2007, WaveRider and WaveRider Australia agreed to a lump-sum payment of $438,000 which is included in Other income, net in the accompanying condensed consolidated statements of operations, to WaveRider, thereby terminating all further payment obligations of WaveRider Australia to WaveRider.  As a result of this payment, WaveRider received a total of approximately $953,000 from the sale of WaveRider Australia.

On June 1, 2006, following informal discussions between the two companies, representatives of VCom Inc. (“VCom”) approached the Company about the possibility of acquiring the Canadian operations of WaveRider.  Upon receipt of a tentative Letter of Offer, the Company’s Board of Directors, at their June 19, 2006 meeting, directed management to enter into formal negotiations.  On July 1, 2006, the Company sold WaveRider Communications (USA) Inc., Avendo Wireless Corporation and WaveRider Communications (Canada) Inc., including its wholly owned subsidiary, JetStream Internet Services Inc., to VCom (the "VCom Transaction").

The sale of the former WaveRider subsidiaries in connection with the VCom Transaction, while generating much needed short-term working capital, resulted in the disposition of substantially all of WaveRider’s international businesses.  The Company retained WaveRider’s intellectual property and its North American operations.

During the quarter ended September 30, 2006, Charles Brown, the Company’s then President and Chief Executive Officer, unexpectedly tendered his resignation.  Mr. Brown's resignation materially impacted the Company's ability to continue to address the ongoing poor operating results in the Company’s principal business units and the Company’s continuing deteriorating working capital position.  Following Mr. Brown’s resignation, the Company’s Board of Directors met to consider alternatives available to the Company in order to continue as a going concern.

On October 17, 2006, the Company sold WaveRider’s remaining operating and related assets associated with its 900 MHz product line to VCom, for the amount of $1,250,000. The purchase price was determined based on the acquisition of trade accounts receivable, in the amount of $592,000, inventory, in the amount of $467,000, capital assets, valued at $190,999, and goodwill and other intangibles at $1. The purchase price was adjusted for the change in the value of the accounts receivable and the inventory from the original valuation date and September 30, 2006, in the amount of $377,000. VCom also assumed responsibility for the cost of warranty support of WaveRider’s existing 900 MHz customer base and for certain WaveRider employees, related to the business.  The purchase price was paid and satisfied first in repayment to VCom of all amounts owing by the Company or its affiliates pursuant to the supply agreement between VCom and WaveRider, which amount was approximately $1.6 million.  As a result of this payment, and other reconciliations following consummation of the VCom Transaction, WaveRider received $426,000, which amount was received during the quarter ended June 30, 2007.

In order to provide for its immediate working capital needs, and in light of the Board’s determination that additional equity or debt financing would likely be unavailable to the Company, the Board of Directors directed management to explore the sale of certain or all remaining product lines and business units. These efforts failed to generate sufficient interest to address the Company’s ongoing working capital needs.  As a result, the Board determined to seek protection from its creditors, and to reorganize under Chapter 11 of the Code, focused on the sale of the SPEEDLAN product line.  The Company filed a voluntary petition under Chapter 11 of the Code on October 31, 2006.

On November 2, 2006, the Court ordered the conduct of an auction to sell the Company’s RMA Business.  As a result of the auction, which was held on November 13, 2006, we sold the RMA Business for approximately $406,000 in cash, plus the assumption of certain liabilities.  Also pursuant to a Court order entered on November 13, 2006, we sold certain de minimus assets totaling less than $100,000.  As a result of these sales, our continued operations while under the protection of Chapter 11 of the Code consisted of the marketing and sale of our SPEEDLAN product line, which was sold subsequent to the confirmation of the Joint Plan, on August 10, 2007, for approximately $100,000.

As a result of the forgoing actions, the Company has no operating business.  WaveRider, the Company’s wholly-owned subsidiary, similarly has no operating businesses or assets, and its remaining cash is being used to satisfy its remaining obligations.  As a result, our management and Board of Directors are exploring opportunities to effect an acquisition of the Company by merger, exchange or issuance of securities or similar business combination.

On August 20, 2007, we changed the name of the Company to Azzurra Holding Corporation.

Critical Accounting Policies

MANAGEMENT'S USE OF ESTIMATES AND ASSUMPTIONS. The preparation of financial statements in accordance with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates, and such differences could be material and affect the results of operations reported in future periods.

Revenue Recognition

Revenue from product sales is recognized upon transfer of title and risk of loss, which is upon shipment of the product, provided no significant obligations remain and collection is probable. Provisions for estimated warranty repairs, returns and other allowances are recorded at the time revenue is recognized.  In management’s opinion, at March 31, 2007 all receivables were deemed to be fully collectible.

Allowance for Doubtful Accounts

We maintain an allowance for doubtful accounts for estimated losses from the inability of our customers to make required payments. We evaluate our allowance for doubtful accounts based on the aging of our accounts receivable, the financial condition of our customers and their payment history, our historical write-off experience and other assumptions. In order to limit our credit exposure, we require irrevocable letters of credit and even prepayment from certain of our customers before commencing production.  In management’s opinion, at March 31, 2007 all receivables were deemed to be fully collectible.

Inventory

 Inventory is stated at the lower of cost or market, cost being determined on a first-in, first-out basis. We assess our inventory carrying value and reduce it if necessary, to its net realizable value based on customer orders on hand, and internal demand forecasts using management's best estimate given the information currently available. Our customers' demand is highly unpredictable, and can fluctuate significantly, caused by factors beyond the control of the Company. Our inventories include parts and components that are specialized in nature or subject to rapid technological obsolescence. We maintain an allowance for inventories for potentially excess and obsolete inventories and gross inventory levels that are carried at costs that are higher than their market values. If we determine that market conditions are less favorable that those projected by management, such as an unanticipated decline in demand not meeting our expectations, additional inventory write-downs may be required.

Property and Equipment

 Property and equipment are stated at cost and include tooling and test equipment, computer equipment, furniture, land and buildings, and construction-in-progress. Depreciation is computed using the straight-line method based upon the useful lives of the assets ranging from three to seven years. Leasehold improvements are amortized using the straight-line method based upon the shorter of the estimated useful lives or the lease term of the respective assets.

Impairment of Long-Lived Assets

 In the event that facts and circumstances indicate that the long-lived assets may be impaired, an evaluation of recoverability would be performed. If an evaluation were required, the estimated future undiscounted cash flows associated with the asset would be compared to the asset's carrying amount to determine if a write-down is required.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash equivalents and trade accounts receivable. The Company places its cash equivalents in a variety of financial instruments such as market rate accounts and U.S. Government agency debt securities. The Company, by policy, limits the amount of credit exposure to any one financial institution or commercial issuer.

The Company performs on-going credit evaluations of its customers' financial condition to determine the customer's credit worthiness. Sales are then generally made either on 30 to 60 day payment terms, COD or letters of credit. The Company extends credit terms to international customers for up to 90 days, which is consistent with prevailing business practices.

At March 31, 2007, there was no significant concentration of trade accounts receivable.

RESULTS OF OPERATIONS

Sales

For the three months ended March 31, 2007, sales were approximately $323,000 as compared to $448,000 in the comparable period in the prior year.  The Company continued to sell and support its SPEEDLAN product line during the quarter ended March 31, 2007, principally to existing customers whose purchase decision was largely based on concerns regarding product availability following the filing of the Bankruptcy Petition.  The Company has seen continuing declines in revenue from new customers as a result of its financial condition and the termination of its sales force in connection with the filing of the Bankruptcy Petition, and sales to existing customers declined significantly following the quarter ended March 31, 2007.

Gross Profit (Loss)

Gross profit for the three months ended March 31, 2007 and 2006, was $265,000 and $228,000, respectively, or 82% and 51% of sales in each of the respective quarters.  Gross margins improved due to limited discounting on the remaining revenue levels.  Gross margins in both periods were positively impacted by the sale of inventory that was written down in prior periods.

Research and Development

For the three months ended March 31, 2007, we did not incur any research and development expenses (“R&D”), which were approximately $534,000 during the comparable quarter in 2006. The Company eliminated all R&D spending as a result of the filing of the Bankruptcy Petition, and does not expect to incur R&D costs in the near future.

Selling and Marketing

For the three months ended March 31, 2007, we did not incur any selling and marketing expenses, which were approximately $488,000 in 2006.  During the third quarter of 2006, the Company cut substantially all selling and marketing expenditures.

General and Administrative

For the three months ended March 31, 2007 and 2006, general and administrative expenses were approximately $237,000 and $487,000.  The decrease in general and administrative expenses in the three months ended March 31, 2007 relate to winding down administrative operations including decreases in payrolls, consulting and other administrative expenses.  At March 31, 2007, we retained a small staff to provide administrative and other services to support sales of the SPEEDLAN product line.

Bankruptcy Expenses

During the three months ended March 31, 2007, the Company incurred $126,000 in expenses related to the Joint Plan.  These expenses included the cost to extend the Company’s current directors and officers liability insurance policy.

Interest Expense

For the three months ended March 31, 2007 and 2006, interest expense was approximately $373,000 and $9.5 million.  Interest expense during the three months ended March 31, 2007, consists primarily of penalty interest expense due to the Company’s failure to file a registration statement for the shares underlying the Company’s Series J and J-1 Convertible Preferred Stock.  The majority of interest expense for the prior year comparable period relates to non-cash charges associated with conversion of promissory notes and debt to Series J Convertible Preferred Stock, the issuance of Series J Convertible Preferred Stock to consultants in connection with the Company’s promissory note financing, the accretion to the value o f the promissory notes and amortization of deferred financing charges.

Gain on Settlement of Accrued Liabilities

For the three months ended March 31, 2007, the Company settled accounts payable and accrued liabilities for amounts lower than originally invoiced or accrued, resulting in a gain of approximately $556,000.

Other Income

For the three months ended March 31, 2007, other income consisted of the following:

		Amount
Settlement of contract with Wave Rider Australia		$	438,000
Collection of amounts previously considered bad debts			61,000
Interest income			21,000
Proceeds from the sale of office equipment, with no book value			13,000
Other income			25,000
Total		$	558,000

Loss from Discontinued Operations

For the three months ended March 31, 2007 and 2006, the loss from discontinued operations was $0 and $12,000, respectively.  The Company sold its operating subsidiary in Australia effective June 30, 2006 and the North American subsidiaries of WaveRider Communications Inc. on July 1, 2006, the 900 MHz operation on October 18, 2006 and the RMA business on November 15, 2006.

LIQUIDITY AND CAPITAL RESOURCES

Cash Used In Operations

During the three month period ended March 31, 2007, cash provided by operating activities was approximately $328,000, primarily as a result of net changes in accounts receivable and accrued liabilities during the three month period.  In addition, during the three months ended March 31, 2007, we received proceeds of $438,000 from the settlement of the contract with WaveRider Australia, and recorded non-cash interest expense of $373,000 and non-cash gains of $556,000 from the settlement of accrued liabilities.

Current Liquidity

As of March 31, 2007, our principal sources of liquidity consisted of approximately $2,190,000 of cash and cash equivalents, compared to approximately $1,849,000 in cash and cash equivalents at December 31, 2006.  Since filing under Chapter 11 of the Code, the Company’s principal source of liquidity has been existing cash, cash generated from the sale of assets, and cash from the sale of its SPEEDLAN product line.

ITEM 3.

CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended. The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America. The Company's management assessed the effectiveness of our internal control over financial reporting as of May 30, 2008. In making the assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework . Based upon this assessment, management identified the following material weakness in the Company's internal control over financial reporting.