OK here's some info that maybe helpful. William will absorb this hole report and spit out the good stuff!
WE HEAVILY DEPEND ON OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER, DAVID WALTERS, WHO HAS A VERY LIMITED TIME COMMITMENT TO US
The success of the Company heavily depends upon the personal efforts and abilities of David Walters, our Chairman, Chief Executive Officer and Chief Financial Officer. Mr. Walters serves as an executive officer and/or board member of several other companies as well as a principal of a FINRA registered broker dealer and a corporate services consulting firm. Accordingly, we estimate that Mr. Walters will devote no more than 20-25 hours per month to activities for our Company.
If Mr. Walters were to leave unexpectedly; we may not be able to execute our business plan. Our future performance depends in significant part upon the continued service of Mr. Walters as he has acquired specialized knowledge and skills with respect to our business. Additionally, because we have a relatively small number of employees when compared to the leading companies in the same industry, our dependence on maintaining our relationship with Mr. Walters is particularly significant. We cannot be certain that we will be able to retain Mr. Walters in the future. The loss of Mr. Walters could have a material adverse effect on our business and operations and cause us to expend significant resources in finding a replacement, which could cause the value of our Common Stock to decline or become worthless.
WE HEAVILY DEPEND ON OUR RELATIONSHIPS WITH ENTITIES OWNED BY OUR CHAIRMAN AND CHIEF EXECUTIVE OFFICER
We depend on relationships with entities controlled by Mr. Walters for outsourced financial management, administrative, investment banking and other services. Accordingly, the success of the Company heavily depends upon our relationships with, and the performance of, these entities. Any failure to perform adequately the outsourced services could have a material adverse effect on our business and operations and cause us to expend significant resources in finding replacement providers, which could cause the value of our Common Stock to decline or become worthless
DESCRIPTION OF PROPERTY
Our corporate offices are located at 30950 Rancho Viejo Rd #120, San Juan Capistrano, California 92675 in a shared office space with Strands Management Company, LLC (“Strands”). David Walters, our Chairman and Chief Executive Officer, is a managing member, and 50% owner, of Strands. We were not assessed any rental charges for the use of this space through April 2007. Effective May, 2007, Strands charges us a facilities and administrative fee of $2,000 per month for use of the space and related headquarters office support services. See “CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS”.
In addition, STI currently occupies leased office space in located in Solana Beach, California. We occupy approximately 4,000 square feet of floor space in this facility. This facility includes STI’s operations, marketing, research and development, sales and technical support personnel. The lease requires monthly payments of $3,800 for this facility and extends through December 2008.
On May 1, 2007, we entered into a Support Services Agreement with Strands. Under the Support Services Agreement, Strands will provide us with financial management services, facilities and administrative services, business development services, creditor resolution services and other services as agreed by the parties. As a retainer for the services provided by Strands under the Support Services Agreement, we issued to Strands 5,000 shares of our Series A Preferred Stock. We will also pay to Strands monthly cash fees of $22,000 for the services. In addition, Strands will receive fees equal to (a) 6% of the revenue generated from any business development transaction with a customer or partner introduced to the Company by Strands and (b) 20% of the savings to the Company from any creditor debt reduction resolved by Strands on our behalf. The initial term of the Support Services Agreement expires May 1, 2008. We incurred $176,000 under the terms of the agreement for the year ended December 31, 2007. No amounts were outstanding under this agreement as of December 31, 2007. We believe that the cost of obtaining services from Strands under the agreement is less than the cost of our maintaining internal resources to perform such services. The terms of the Support Services Agreement were approved by the sole disinterested member of our Board of Directors.
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