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Re: analogdog post# 2

Tuesday, 05/20/2008 6:44:47 PM

Tuesday, May 20, 2008 6:44:47 PM

Post# of 40
Outstanding shares as of March 11, 2008, 30,375,618

Daniel Zeff 3,036,216 Shares

Craig Gregory L Chief Executive Officer 694,200 Shares

PERKINS ROBERT C Director 260,000 Shares

BAYLESS CHARLES E Director 232,000 Shares

We are an independent marketer of retail electricity and natural gas to residential, commercial, industrial and institutional end-use customers. Commerce is licensed by the Federal Energy Regulatory Commission, or FERC, and by state regulatory agencies as an unregulated retail marketer of electricity and natural gas.

We were founded in 1997 as a retail electricity marketer in California. As of January 31, 2008, we delivered electricity to approximately 126,000 customers in California, Maryland, Michigan, New Jersey, Pennsylvania and Texas; and natural gas to approximately 49,000 customers in California, Florida, Georgia, Maryland, Nevada, Ohio and Pennsylvania.

The electricity and natural gas we sell to our customers is purchased from third-party suppliers under both short-term and long-term contracts. We do not own electricity generation or delivery facilities, natural gas producing properties or pipelines. The electricity and natural gas we sell is generally metered and always delivered to our customers by the local utilities. The local utilities also provide billing and collection services for many of our customers on our behalf. Additionally, to facilitate load shaping and demand balancing for our customers, we buy and sell surplus electricity and natural gas to and from other market participants. We utilize third-party facilities for the storage of natural gas.

The growth of our business depends upon a number of factors, including the degree of deregulation in each state, our ability to acquire new and retain existing customers, our ability to access additional capital, and our ability to acquire energy for our customers at competitive prices and on reasonable credit terms.

Bad debt expense was a significant expense for the Company again for the second quarter. Bad debt expense increased as the Company added customers in key markets and did not upgrade its back office systems rapidly enough to make collection calls to customers within a short period of the balance becoming delinquent, require deposits for customers with low credit scores and strengthen electronic data interfaces (“EDI”) to efficiently process larger transaction volumes. Bad debt expense increased as the Company’s accounts receivable agings deteriorated reaching $3,700 and $6,200 in the first and second quarter of fiscal 2008, respectively.

The Company’s new senior management team is focused on implementing solutions to reduce bad debt expense and believes that a number of remedies were implemented in the 2008 second quarter. Accordingly, we anticipate future bad debt expense will trend toward historical levels, with the third and fourth quarters of fiscal 2008 still projected to be generally higher than average amounts. However, there can be no assurance that future bad debt expense will not fluctuate due to regulatory conditions, general economic conditions, or other unforeseen events.

As we had no long-term debt outstanding at January 31, 2008, our only exposure to interest rate risks is limited to short-term borrowings and our investment of excess cash balances in interest-bearing instruments. As our borrowings are only short-term and are adjusted to market rates on a recurring basis, we do not believe we have interest rate risk on these borrowings. We generally invest cash equivalents in short-term credit instruments consisting primarily of high credit quality, short-term money market funds and insured, re-marketable government agency securities with interest rate reset maturities of 90 days or less. We do not expect any material loss from our investments and we believe that our potential interest rate exposure is not material. As our practice has been, and currently continues to be, to only invest in high-quality debt instruments with maturities or remarketing dates of 90 days or less, we currently are not materially susceptible to interest rate risk on our investments.



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