This started out as such an exciting year economically only to be driven into turmoil, not only in the U.S., but around the world as well. And, the fallout is not complete. We want you to know that we intend to be supportive and help guide you through any readjustments you may have to undertake. We are still here for you.

In addition to the world turmoil, most of you are aware that a myriad of new rules and/or guidelines went into effect this year via several authorities. On February 15, 2008, the SEC revamped the Rule 144 laws and took away the ability of any company that had ever been a shell or blank-check company to now have legends removed under Rule 144 unless they started filing a Form 10. This negatively impacted many “pink sheet” companies who had become a publicly traded entity via a reverse merger. The PinkSheets started categorizing companies according to the amount and quality of public information made available. Without adequate published financial information you risk having a “Yield” or “Stop” sign placed on the display showing the trading of your shares to prospective investors. FINRA (the NASDAQ with NYSE regulatory agency) has solidified requirements for the provision of chronological documentation before a corporate action is granted. In the most recent Emergency Bail-Out Bill, a law defining the requirement to provide a verifiable cost basis to the IRS for any security acquisitions starting January 1, 2011, was passed.

There are additional movements within the industry that have not gone into effect yet but are being worked on. These movements are concerned with correcting the over-voting of proxies (not a problem with us but is a big problem through Broadridge and the “street”), allowing for close-outs of fractional shares in dividend reinvestment programs, making corrections in the escheatment of assets to the states of residence for lost security-holders, and for us, the SEC is diligently working on new transfer agent rules for the first time in 10-15 years. These new rules will change how much of the current processing is performed.

In early October, I was part of a small group allowed to meet with SEC officials in Washington and view a “sneak peak” of the first section of the prospective new transfer agent rules. This first group of rules should be out the middle of next year and will deal directly with processing. According to the proposed new rules, there will no longer be categories of routine and non-routine transactions (of which the restriction removals are currently part of the non-routine.) Instead, there will be categories of “in good order”, “not in good order”, “ordinary”, and “non-ordinary”. Whether the presented item is already free-trading or restricted, if all the appropriate paperwork and payment are presented correctly to the transfer agent, the item will be considered “in good order” and must be completed within two days. Issuers will no longer be able to have much discretion about the removal of a legend if the number and type of accompanying documentation is presented in good order. As it is now, if the quality of the legal opinion does not address all of the issues the issuer deems important or the opinion reflects erroneous information, the issuer (if this service was requested) has time to review the opinion and advise us to reject the presentment. Under the new rules, there will be too little time for review. With this in mind, please start now to choose for your shareholders, attorneys who you feel comfortable will write a thorough legal opinion.

Another piece of the new transfer agent rules deals with a requirement that each Issuer, trading in any public market, must send out annual statements to each of their shareholders at years’ end. So, whether your company is issuing and trading in certificated or in book-entry shares, whether your company is trading on the NYSE or in PinkSheets, your company’s transfer agency will be required to send each of your registered shareholders an annual statement of their holdings. This appears to be a solidly decided issue on the part of the SEC set in place with a goal of mitigating possible issuance problems on a timely basis. As such, each Issuer will have expenses incurred with this annual mailing. Please allow for this within your budgets.

One last item the SEC is stressing is for transfer agents to have thorough contracts with their issuers. We have re-written our contract and have included one for you in this package. Please take a few moments to read through it, sign it and return it to us. It only supersedes the existing one we have for you in the file if you sign and return it to us. Otherwise the previous contract stays in effect.

The Depository Trust & Clearing Corporation has now started to regularly recognize smaller transfer agents and the needs we have to address the problems of our specific issuers. Because many of the problems between DTC and the smaller transfer agent industry are now worked out, the time is right and many more smaller cap companies are entering into FAST/DWAC and DRS Profile book-entry share processing. We are recommending that, if you have not already done so, it is now time. We have restructured our Fee Schedule and offer savings to you if you want to start this type of processing now. Please take a look at the four different types of monthly fee plans we are offering. If you choose the Premium Total Package, you will receive certificate processing, book-entry (FAST/DWAC) processing, DRS Profile accounts for your shareholders, and internet access to be able to follow your company’s activity for a fee of $400 per month which is lower than if you choose all of the services separately. (Of course there still is the one-time set-up fees to apply for the services at DTC.) If you want the Premium Total Package, please call your representative to be set up right away. (As a side point of interest some countries are now actually OUTLAWING certificate issuances!)

We have two wonderful pieces of good news. The first is that we are moving to beautiful new offices more centrally located to both downtown Phoenix and the “upscale” Camelback Corridor. Please make a note of the new address that will become effective on February 1, 2009. The address and a picture of our new “digs” are on the next page.

The second piece of great news is that we have a wonderful addition to our staff. Barry Widelitz comes to us directly from the Depository Trust & Clearing Corporation where he supervised staff in the Underwriting Department. Prior to his time with DTC, he was with J.P. Morgan and with Lehman Brothers as a Vice President in their Syndication and Underwriting Departments. So he comes to us with a plethora of knowledge and experience, a very positive attitude (especially about the weather here!) and a wonderful sense of humor. We are very blessed to have him with us.

In closing, we wish all of you wonderful holidays, healthy families, and fruitful endeavors in all you choose to undertake over the coming year. May we all go forth in peace.

Salli Marinov
President/CEO
First American Stock Transfer, Inc.