March 24, 2006 -- The following is the current status of SOX 404 and recently drafted recommendations by the Advisory Committee on Smaller Public Companies:

Current Implementation Status for Non-accelerated Filers

On August 18, 2005 , the Advisory Committee on Smaller Public Companies (“Committee”) made a recommendation to the U.S. Securities and Exchange Commission (“ SEC ”) that the deferral date for SOX 404 implementation by non-accelerated filers be further delayed to fiscal years ending after July 15, 2007 .

The SEC adopted this recommendation in September 2005.

Proposed Recommendations by the Committee

On February 28, 2006, the Committee published a preliminary draft of its Final Report to the SEC which is available for public comment through April 3, 2006 .  This draft Final Report contains 32 recommendations by the Committee to the SEC .  It is the Committee’s intention to issue its Final Report to the SEC on April 23, 2006 .

Several of the proposed recommendations include:

1. Establishing a new system of scaled or proportional securities regulation for smaller public companies based on a stratification of such smaller companies into two groups – “Microcap” companies and “Smallcap” companies.

“Microcap” companies would consist of those public    companies whose outstanding common stock in the aggregate  comprises the lowest 1% of total US equity market capitalization. “Smallcap” companies would consist of those public companies whose outstanding common stock in the aggregate comprises the next lowest 5% of total US equity market capitalization.  Using information on total US equity market capitalization as of August 2, 2005 , public companies with equity market capitalization under $128.2 million would be in the “Microcap” category, and public companies with equity market capitalization between $128.2 million and $787.1 million would be in the “Smallcap” category.

2. Unless and until a framework for assessing internal control over financial reporting for Microcap companies is developed that recognizes the characteristics and needs of those companies, provide exemptive relief from the requirements of SOX 404 to Microcap companies with less than $125 million in annual revenue and to Smallcap companies with less than $10 million in annual revenue.

3. Unless and until a framework for assessing internal control over financial reporting for Smallcap companies is developed that recognizes the characteristics and needs of those companies, provide exemptive relief from external auditor involvement in SOX 404 to Smallcap companies with greater than $10 million and less than $250 million in revenue.

Relief granted to Microcap and Smallcap companies under recommendations #2 and #3 above would be conditioned upon such companies adhering to standards relating to audit committees in conformity with Rule 10A-3 of the Securities Exchange Act of 1934, and adoption of a code of ethics within the meaning of Item 406 of Regulation S-K.

For more information, contact Joe Beach at 215-564-1900.

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