THOMAS G. BROCKINGTON
Direct Dial: (714) 641-3466
E-mail: tbrockington@rutan.com
December 2, 2004
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549-0406
Attn: Matthew Benson, Esq.
Re: Superior Galleries, Inc.
Registration Statement on Form SB-2
Commission File No. 333-119253
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Dear Mr. Benson:
We are concurrently filing Amendment No. 1 to the Registration
Statement on Form SB-2 of Superior Galleries, Inc., File No. 333-119253. This
letter is in response to your comment letter of October 22, 2004. The paragraph
numbers set forth below correspond to the paragraph numbers set forth in your
October 22, 2004 letter. The page number references in the headings below are to
the page numbers of the original Registration Statement, not this Amendment.
Registration Fee Table
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1. Regarding your comment pertaining to Rule 416, please note that the
intent of footnote 1 under the Registration Fee Table was not to
include in the Registration Statement shares issuable under a "floating
conversion rate." Instead, that language is intended to address
conventional antidilution adjustments, as described in Rule 416 and
Telephone Interpretation No. 3S included in the March 1999 Supplement
of the Telephone Interpretations Manual. The antidilution provisions
include conventional "cheap stock" protections, which provide for an
adjustment to the conversion ratio if the Company issues stock in the
future at a price less than the current conversion price, but if there
is no such issuance then no adjustment is made, other than for stock
splits, stock dividends, etc. We have modified the language of footnote
1 under the Registration Fee Table and footnote 2 under the Principal
and Selling Shareholders table on page 43 of the Prospectus in order to
clarify this issue. Please see also our additional disclosure regarding
adjustments in the conversion rate in the prospectus on pages 48 and
49.
Securities and Exchange Commission
December 2, 2004
Page 2
Cover Page
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2. We have made several changes to the cover page in response to this
comment. However, please note that Stanford Venture Capital Holdings,
Inc. does not presently intend to sell all of its shares of common
stock, as suggested in your letter. The resale of these shares is being
registered by the Company in order to comply with a contractual
requirement to do so, and in order to provide Stanford with the
flexibility to sell the shares at a future time should it wish to do
so.
3. We have updated the closing stock price to the most recent practicable
date. Please note that since this stock is very thinly traded, there
may not be a closing sale price for every trading day.
Prospectus Summary, page 3
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4. We have made the change you requested, on page 3.
5. We would like to retain the last sentence of the second paragraph under
"Our Company," on page 3, so that it is clear to the reader that in
making these references, we refer to both Superior Galleries, Inc., and
its immediate predecessor, Tangible Asset Galleries, Inc. We believe
that otherwise there is a possibility of confusion arising from the
change in name and domicile of the Company that occurred on June 30,
2003.
The Offering, page 4
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6. We have deleted the third bullet point under footnote 2 on page 4, as
it is unnecessary.
Risk Factors, page 5
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7. We have revised the risk factor subheadings, as requested.
8. We have eliminated the generic disclosures contained in the risk
factors section, as requested.
9. We have added a new risk factor on page 11 regarding the potential
adjustment of the conversion ratios for the Company's Series B
Preferred Stock and Series D Preferred Stock.
10. As requested, we have relocated the risk factor regarding Stanford
Venture Capital Holdings, Inc.'s control to page 6, as the fifth risk
factor.
Securities and Exchange Commission
December 2, 2004
Page 3
11. We have added a new risk factor regarding the Company's indebtedness on
page 6. It is not true, however, that the Company will need to incur
more indebtedness to service its indebtedness, as the Company's current
indebtedness is being serviced from cash flow from operations. Our risk
factor captioned "If we are unable to obtain additional capital..." on
page 8 discusses the possible effects of the Company's inability to
raise additional capital. With respect to the last sentence of comment
11, the Company is currently in compliance with all terms of its
indebtedness.
Our business of selling premium collectibles..., page 5
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12. We have added the requested disclosure regarding the Company's primary
competitors. See the risk factor captioned "If we are unable to compete
successfully..." on page 5.
Our success depends on our management team..., page 7
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13. The risk factor regarding the Company's management team has been
revised as requested, and now pertains only to its CEO, Silvano
DiGenova. See the risk factor captioned "The loss of the services of
our Chief Executive Officer..." on page 7.
Our quarterly operating results may vary..., page 7
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14. The risk factor regarding variations in operating results has been
revised to more clearly describe the risks we face. See the risk factor
captioned "Our quarterly operating results may vary..." on pages 7-8.
Shares of our common stock eligible or to become eligible..., page 10
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15. This risk factor has been revised to explain the volume limitations and
other requirements of Rule 144. See the first risk factor on page 10.
Our common stock price is subject to significant volatility..., page 11
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16. As requested, we have deleted the reference to securities analysts and
the class action litigation from this risk factor. The disclosure
regarding the reasons for potential volatility in our stock price have
also been revised. See the risk factor captioned "Our common stock
price is potentially..." on page 10.
Special Note Regarding Forward-Looking Statements, page 12
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17. As requested, we have deleted the word "will" from the list of words
appearing in the first sentence of the second paragraph under "Special
Note Regarding Forward-Looking Statements."
Securities and Exchange Commission
December 2, 2004
Page 4
Price Range of Common Stock, page 14
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18. We have deleted the reference to "NASD," as requested.
Management's Discussion and Analysis, page 17
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19. Please refer to the substantial additional disclosure in the text
regarding known trends and uncertainties. This disclosure appears in
the Management's Discussion and Analysis section under "Trends and
Uncertainties."
20. Please note that the Company is no longer an issuer of penny stock,
since it has had average revenue of more than $6 million for the last
three years, and thus is excluded from the definition of "penny stock"
under Securities Exchange Act Rule 3a51-1(g)(2).
21. We have added a discussion of a critical accounting policy relating to
inventory valuation. See "Critical Accounting Policies; Inventory
Valuation" on page 18. We have added Schedule II - Valuation and
Qualifying Accounts, as requested.
Years Ended June 30, 2004 and 2003, page 19
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22. We have added a definition of "hammer prices realized" in the first
full paragraph under the table on page 19. This is the first reference
in the prospectus to this term.
23. We have added a discussion of the seasonal aspects that affect the
Company's results of operations, on page 22 in the last paragraph under
"Years Ended June 30, 2004 and 2003; Total Revenue."
24. As requested, we have added information relating to the reasons for
material changes in revenues, costs of sales and selling, general and
administrative costs. Please be advised, however, that the Company is
unable to quantify the cost benefits realized from its operational
consolidation efforts, as these efforts have resulted in reductions in
some fixed expenses, but increases in other fixed expenses and in
variable expenses. Although there were cost savings resulting from the
consolidation efforts, the Company's operations were simultaneously
expanding due to a significant increase in its sales during that same
period. It is not possible to separately quantify the cost savings
achieved when the operations were growing at the same time. We have
added disclosure regarding the impact of additional auction and
customer advances on the Company's business under "Total Revenue."
25. We have revised the disclosure relating to factors that affect the
Company's gross margins on pages 19, 21 and 22 under "Cost of Sales"
and "Gross Profit." However, the Company is unable to specifically
quantify the amounts of the various factors that affect gross margin.
Securities and Exchange Commission
December 2, 2004
Page 5
Gross margin analyses for this company are inherently unquantifiable
because they are dependent on the Company's exposure over the relevant
periods of time to opportunities to purchase rare coins at or below
market value. These opportunities are unpredictable.
Impairment of Goodwill, page 20
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26. We have identified the SGBH auction unit as "Superior Galleries Beverly
Hills," under "Impairment of Goodwill" on page 22.
Liquidity and Capital Resources, page 21
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Financing Activities, page 21
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27. We have provided the requested disclosure relating to the $2,500,000
loan from a private investor, including the absence of any accrued
interest, the status of negotiations with the lender, a discussion of
the associated risk factors and the effect on the Company's financial
condition if this line of credit is called. See the fourth and eighth
paragraphs under "Financing Activities--Debt."
28. We have provided the requested disclosure regarding the Company's
subordinated note payable to its CEO. This discussion does not include
a discussion of the effect of the Company's liquidity if the CEO were
to request payment of the note, as the Company has already received a
commitment from the CEO to extend the term of this note, as described
in this new disclosure.
29. We have incorporated the Commercial Loan and Security Agreement as a
material exhibit, as referred to in Exhibit 10.7. A discussion of the
risks related to this loan agreement appears under "Risk Factors - The
high level of our debt..." and "--if we are unable to pay our secured
debt..." on page 6.
30. As requested, we have identified the purchasers of the Company's Series
B Preferred Stock and Series D Preferred Stock. See "Financing
Activities--Equity" on page 26.
31. As requested, we have disclosed that the Company is currently in
compliance with all of its financial covenants in the last paragraph
under "Financing Activities--Debt" on page 26.
Contractual Obligations Table, page 24
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32. We have revised the table regarding contractual obligations on page 27
to provide additional information in the footnotes regarding the
interest requirements of the debt that has been identified. Please note
Securities and Exchange Commission
December 2, 2004
Page 6
that we are unable to provide meaningful estimates of future interest
that will be payable because the principal amount of this debt is
likely to fluctuate significantly. Please also note that we believe the
table need not meet the technical requirements of Regulation S-K, Item
303(a)(5), as the Company is a small business issuer and its disclosure
is governed by Regulation S-B. As requested, we confirm that the table
includes all the required categories of the Company's contractual
obligations.
With respect to your question regarding the Guaranteed Liquidity and
Buyback at Grade Warranty, note that we have added footnote 4 to this
table, which describes why we do not include any estimate of future
payments under this warranty.
Business, page 25
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Background of the Coin and Collectibles Industry, page 26
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33. As requested, we have deleted several phrases which may be considered
"promotional."
34. As requested, we have deleted the reference to Sotheby's Holdings and
its stock symbol.
Auction Operations, page 28
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35. While the Company believes that the statement regarding the relative
size of Superior Galleries is true, we have deleted it from the
disclosure, nonetheless.
Competition, page 29
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36. As requested, we have described in further detail the methods of
competition used by the Company. See "Business--Competition" on page
32. Please note that the disclosure pertains to the Company's methods
of competition, which may apply equally to the Company's competitors.
We do not believe that this disclosure implies that the Company is the
only competitor that engages in these competitive activities, but only
that these are the more important methods of competition that apply to
the industry generally.
Regulation, page 29
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37. We have added additional disclosure regarding the possible
ramifications from the potential adoption of new regulations, as
described in the "Regulation" section. The new disclosure appears on
pages 32 and 33, under "Business - Regulation."
Securities and Exchange Commission
December 2, 2004
Page 7
Management, page 32
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38. Under "Management - Directors and Executive Officers," we have revised
Mr. DiGenova's biography as requested.
39. Similarly, we have modified the biography for Mr. Wolfe.
40. As requested, we have modified the biography of Mr. Biberkraut.
41. As requested, we have also modified the biography of Mr. Ittner.
Employment Agreements, page 34
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42. Under "Management; Executive Compensation - Employment Agreements," we
have deleted the references to Mr. DiGenova's potential bonuses. Mr.
DiGenova has now waived his rights to those bonuses.
Certain Relationships and Related Transactions, page 36
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43. The disclosure regarding the reduction in the exercise price in certain
outstanding warrants has been extensively revised, as requested. See
"Certain Relationships and Related Transactions" on page 40.
44. You are advised that the Company's shareholders did not approve the
issuance of preferred securities to Stanford. No such approval was
required under Nevada law (which governed the Company at the time) or
under any applicable OTC Bulletin Board rules. The transactions were
approved by the disinterested members of the Board of Directors.
45. As requested, we have filed the Consulting Agreement with Stanford
Venture Capital Holdings, Inc., as Exhibit 10.16. We have added
disclosure indicating that the fees paid in connection with this
Agreement are comparable to or less than those that could have been
obtained through an unrelated third party. See the third paragraph on
page 40.
46. The disclosure relating to the sublease of the Newport Beach facility
to our CEO has been modified to make it clear that the sublease has
already terminated. See the last sentence under "Certain Relationships
and Related Transactions."
47. We have added disclosure regarding the terms of the working capital
advance from our CEO, on page 40. With respect to your comment
regarding the terms for the purchase price of the art inventory, please
Securities and Exchange Commission
December 2, 2004
Page 8
note that the disclosure indicates that the Company received bids from
unrelated third parties, and the bid received from the CEO was the
highest.
Principal and Selling Shareholders, page 37
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48. We have identified the natural persons who have the voting and
investment control for the entities set forth in the Principal and
Selling Shareholder chart.
49. You are advised that Stanford Venture Capital Holdings, Inc., is
affiliated with Stanford Group Company, a broker dealer. Footnote
number 9 to the Principal and Selling Shareholders table now discloses
this fact.
50. As requested, this will confirm that Stanford Venture Capital Holdings,
Inc., has represented that it purchased the securities for investment
and that it did not purchase them with a view towards distribution.
Stanford further represented that at the time of purchase, it did not
have any agreements or understandings, directly or indirectly, with any
person to distribute the securities.
51. As discussed in our response to comment no. 2 above, we have been
advised by Stanford that it does not have a present intent to dispose
of all of its securities that are included in the Registration
Statement. Instead, the filing of the Registration Statement is to
permit Superior Galleries to comply with a contractual requirement to
file this Registration Statement and in order to provide Stanford with
flexibility in selling its shares, should it subsequently elect to do
so.
52. The material relationships between the Company and the selling
stockholders are described in footnotes 9, 12 and 13 on page 43. With
respect to your inquiry regarding the manner in which the selling
shareholders acquired their securities: (a) Stanford purchased them in
private transactions from Superior Galleries; (b) Daniel Bogar, William
Fusselmann, Osvaldo Pi and Ronald M. Stein, all of whom are affiliates
of Stanford, received theirs through the exercise of warrants
originally issued to Stanford, which assigned the warrants to them; (c)
Coffin Partners, LLC, received their shares in a private transaction in
consideration of services rendered to the Company; and (d) Cisneros
Capital Group, Inc., acquired its shares in open market transactions
and in private transactions from Messrs. Bogar, Fusselmann, Pi and
Stein.
53. As requested, we have separately identified the holdings of our
officers and directors in the Principal and Selling Shareholders table.
Securities and Exchange Commission
December 2, 2004
Page 9
Plan of Distribution, page 39
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54. As requested, this will confirm the Company's awareness that prior to
any involvement of a broker dealer in the offering, the broker dealer
must seek and obtain clearance of the underwriting compensation and
arrangements from the NASD Corporate Finance Department.
55. As requested, we have provided additional information regarding Rule
144 on pages 44 and 45.
Series B $1.00 Convertible Preferred Stock, page 42
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56. Under "Description of Capital Stock - Series B $1.00 Convertible
Preferred Stock" and "- Series D $1.00 Convertible Preferred Stock," we
have added additional language regarding the adjustment provisions
relating to the conversion ratio.
Where You Can Find More Information, page 47
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57. We have revised "Where You Can Find More Information" as requested.
Financial Statements for the year ended June 30, 2004
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Independent Auditors' Consent
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58. We have filed with this Amendment both the Financial Statement Schedule
(see page F-38) and the Report of Singer Lewak Greenbaum & Goldstein,
LLP thereon (see page F-37).
Note 1. Summary of Significant Accounting Policies, page F-13
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Revenue Recognition, page F-15
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59. In footnote 1, under "Revenue Recognition," we have added disclosure
relating to the timing for revenue recognition. With respect to your
inquiry regarding the nature of the "retail sales," you are advised
that the Company's retail sales are a combination of mail-order sales
and transactions at trade shows, although there are limited
point-of-sale transactions at the Company's Beverly Hills store. The
only other return policy that the Company has is that it will
repurchase the coin if the customer can demonstrate that the coin is
not authentic or that there was an error in the description of a graded
coin. Additional disclosure relating to this policy has been added
under "Revenue Recognition" on page F-15. The only other recourse that
a buyer has is to offer the coin for sale to the Company, but the
Company is not obligated to accept this offer.
Securities and Exchange Commission
December 2, 2004
Page 10
Stock Based Compensation, page F-18
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60. Regarding your comment pertaining to "stock based compensation," note
that the second chart on page F-17, under the 2004 column, discloses
the employee compensation expense for that year relating to option
issues. There was no similar expense in 2003 because no options were
issued that year.
Segment Reporting, page F-19
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61. The Company believes that it meets the aggregation tests set forth in
SFAS 131, paragraph 17. With respect to the nature of its products and
services, please note that the Company sells rare coins to other
dealers, collectors or the general public through various channels,
including point of sale, internet, live auctions, mail order and trade
shows. Whether a customer is classified as wholesale, retail or
auction, they are all offered the same products through the same
distribution channels. With respect to the production process, this
does not apply to the Company as it does not "produce" goods. With
respect to the characteristics of our customers, there is no clear
distinction between wholesale, retail and auction customers. "Wholesale
revenue" could include customers that were previously treated as
"retail," but due to their sophistication, knowledge and buying power,
will receive the pricing that a more traditional wholesale customer
would receive. Auction commission revenue is received from both
wholesale and retail customers. These customers bid against each other
at auctions, and therefore receive the same pricing and terms. The
difference in gross profit percentage between a "wholesale" and
"retail" sale is not solely dependent on their type, but on the type of
coin they buy and the Company's ability to purchase at a favorable
price. There is no distinction between the types of coins sold, based
on a particular customer type. With regard to distribution methods, all
of the Company's customers are able to buy and are marketed to in the
same venues, including point of sale, internet, live auctions, mail
order and trade shows. The Company's advertising is directed to all
classes of customers and many publications that have readerships that
are both "dealer" and "collector" oriented. With regard to art, fine
collectibles and other revenue, it did not at any time represent more
than 10% of the Company's revenue, net income or loss and thus was
aggregated into the collectibles segment. Finally, as indicated in our
response to comment 63, the Company does not operate in foreign
countries, although many of its customers are abroad. The disclosure
that previously indicated that the Company "operated" in foreign
countries has been changed accordingly.
General
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62. Regarding your question concerning shipping and handling costs, please
note that the coins in many of the Company's transactions are
hand-delivered, and therefore there are no shipping costs associated
Securities and Exchange Commission
December 2, 2004
Page 11
with these transactions. In those cases where there are shipping costs,
they are not material because rare coins are small in size and weight.
When shipped to the customer, they are typically sent via certified
mail.
63. The references to operations in foreign countries have been removed.
While the Company has some customers in foreign countries, it has no
operations outside of the United States. All of the Company's
transactions are in United States dollars.
64. The Company does not believe that an accounting policy note regarding
the costs included in inventories is appropriate, because the Company
does not allocate any indirect costs to its inventory. Its operations
more closely resemble those of a distributor, since the coins are not
"processed" like manufactured goods.
Note 2. Inventories, page F-21
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65. Regarding the footnote relating to "Inventories," on page F-20, we have
changed the word "appropriate" to read "proportional." The Company
records only its proportional share of the inventory that is subject to
the joint ventures or purchase financing arrangements.
Note 5. Auction and Customer Advances, page F-22
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66. We have added additional disclosure in footnote 5, "Auction and
Customer Advances," relating to the terms of those advances.
Note 7. Lines-of-Credit, page 24
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67. Footnote 7, "Lines-of-Credit," has been supplemented to add disclosure
regarding the balance of the Auction Line of Credit on June 30, 2003.
Since there was no balance at that date, it is not reflected in the
Company's June 30, 2003 balance sheet.
Note 11. Equity, page F-30
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Sale and Redemption of Series A Convertible Preferred Stock
- -----------------------------------------------------------
68. The expense associated with the issuance of a warrant to purchase 6,250
common shares, as reflected on page F-29, was recorded in the fiscal
year ended June 30, 2002. Disclosure to this effect has been added on
page F-29. This expense was very minimal because the warrants had very
little value at that time.
69. Regarding the required redemption of the Company's Series A Preferred
Stock, you are advised that the $343,750 of the redemption price that
is classified as a long-term liability was so classified because it is
Securities and Exchange Commission
December 2, 2004
Page 12
not payable until after fiscal 2005. The terms of the redemption
requirements state that the redemption payments are to be made in ten
equal quarterly installments commencing June 30, 2004. Accordingly,
there are five payments due in the current year (June 30, September 30
and December 31, 2004, and March 31 and June 30, 2005), and the balance
due after that time. Additional disclosure has been added on page F-29
to this effect.
Series B Convertible Preferred Stock
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70. We have added disclosure in footnote 11, under "Series B Convertible
Preferred Stock," as requested relating to the issuance of the Series B
Preferred Stock. Similar information has also been added on page 48,
under "Series B $1.00 Convertible Preferred Stock."
Stock Options
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71. We have added the additional required disclosure in Note 11.
72. The staffing agency used by the Company, Administaff, is a professional
employer organization that provides payroll and human resources
services. In order for the Company's employees to participate in the
benefits provided by Administaff, they must be employees of both
Administaff and Superior Galleries. Superior Galleries, however, is
responsible for the hiring, firing and daily supervision of those
employees. These employees devote 100% of their working time to
Superior Galleries, Inc. Administaff has no involvement in any issues
pertaining to the control of the employees.
Part II
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Exhibits
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73. The following additional documents have been filed as exhibits to this
Registration Statement:
Description/Title Exhibit No.
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Liquidation Preferences Agreement 4.11
Registration Rights Agreement dated 10.4
February 14, 2003
Secured Revolving Line of 10.9
Credit Agreement
Securities and Exchange Commission
December 2, 2004
Page 13
Description/Title Exhibit No.
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Renewal and Modification 10.10
Agreement
Promissory Note to Silvano DiGenova dated 10.11
February 10, 2003
Promissory Note to Silvano DiGenova dated 10.12
December 10, 2002
Promissory Note to Silvano DiGenova dated 10.13
December 13, 2002
Series D Preferred Stock Purchase and 10.14
Warrant Exercise Agreement
Share Exchange and Note Modification 10.15
Agreement dated January 31, 2003
Consulting Agreement with Stanford 10.16
Venture Capital Holdings, Inc.
Independent Contractor and Proprietary Rights Agreement 10.17
with Stephen Deeds, Inc.
As requested, this confirms that upon the filing of these documents,
the Company has filed all of its material agreements as exhibits to the
Registration Statement.
Recent Sales of Unregistered Securities
- ---------------------------------------
74. The numerous issuances of securities described in Part II of the
Registration Statement should not be integrated because they are not
part of a single plan of financing. Instead, they reflect a collection
of separate, miscellaneous issuances which were agreed to individually
and at different times in response to different business needs. This is
evidenced by the fact that there are many different kinds of
consideration received in connection with these issuances. Several of
them were for cash, such as the April 10, 2002 issuance of Series B
Preferred Stock, but others were for: (a) inducements to employees or
directors (see paragraphs 1, 13, 15 and 16 of Part II, Item 26); (b) an
Securities and Exchange Commission
December 2, 2004
Page 14
agreement to provide a guaranty for the benefit of the Company (see
paragraph 3); (c) an agreement to extend financing terms (see paragraph
2); (d) the satisfaction of contractual claims of a consultant (see
paragraph 4); (e) the satisfaction of contractual claims of a creditor
(see paragraph 6); (f) an agreement to assume obligations (see
paragraph 8); and (g) consulting and other services (see paragraphs 14
and 17).
In addition, the issuances were not made at or about the same time. The
time period in question extends from November 2001 to November 2004.
During these three years, there were two periods of more than six
months during which no issuances were made, first, from April 10, 2002
to February 14, 2003, and second, from September 2003 to April 2004.
These extended periods during which no issuances were made evidence the
fact that there was no single plan of financing.
Finally, while many of the issuances were for common stock or options
to purchase common stock, several other types of securities were also
issued. Two of the transactions involved Series B Preferred Stock and
Series D Preferred Stock, and the others involved indebtedness.
Thus, except for the fact that many of the transaction involve common
stock, there was virtually no connection between the transactions in
regards to any of the accepted indicia of an integrated offering: (a)
single plan financing; (b) transactions were at or about the same time;
(c) transactions involved the same type of consideration; and (d)
transactions were made for the same general purpose.
Undertakings
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75. We have revised this undertaking as requested.
Form 10-KSB for the Year Ended June 30, 2004
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76. This will confirm that the Company will amend its Annual Report on Form
10-KSB for the fiscal year ended June 30, 2004, to include the
disclosure changes set forth in the Registration Statement. However, we
would prefer to wait until we have received the staff's concurrence
with respect to all of the proposed changes to the Registration
Statement before actually amending the Form 10-KSB, in order to avoid
potentially having to amend the Annual Report multiple times.
Item 8A. Controls and Procedures, page 25
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77. Item 8A of the Company's Annual Report on Form 10-KSB for the year
ended June 30, 2004 will be amended as you have requested. The Company
will make these changes at the same time that it makes the changes
referred to in comment 76 above.
Securities and Exchange Commission
December 2, 2004
Page 15
78. Similarly, these additional changes to Item 8A of the Company's Annual
Report on Form 10-KSB for the year ended June 30, 2004 will be made
concurrently with the changes referred to in comments 76 and 77 above.
I look forward to discussing the foregoing with you at your
convenience. My direct phone number is (714) 641-3466.
Very truly yours,
RUTAN & TUCKER, LLP
/s/ TOM BROCKINGTON
Thomas G. Brockington
TGB:dh