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                    <p align="justify"><font size="2">The Preferred Stock is a hybrid financial instrument that embodies the risks and rewards typically associated with both equity and debt instruments. Accordingly, the Company is required to evaluate the features of this contract to determine its nature as either an equity-type contract or a debt-type contract. The Company’s preliminary conclusions are that the Preferred Stock is generally more akin to a debt-type contract, principally
                    due to its redemption features. As a result, the embedded conversion feature and those other features that have risks associated with debt require bifurcation and classification in liabilities as a compound embedded derivative financial instrument. The principal accounting concept requires bifurcation in these instances when the embedded feature and the host contracts have risks that are not clearly and closely related. Certain exemptions to this rule, such as the
                    traditional conventional convertible exemption and the common-indexed exemption were not available to the Company because the Preferred Stock is not indexed, as that term is defined, to the Company’s common stock. Accordingly, the conversion feature, along with certain other features that have risks of equity, will require bifurcation and classification in liabilities as a compound embedded derivative financial instrument. Derivative financial instruments are required
                    to be measured at fair value both at inception and an ongoing basis. While the Company has not yet completed the valuation of the compound embedded derivative, the Company intends to utilize the Monte Carlo Simulation technique, because that model affords the flexibility to incorporate all of the assumptions that market participants would likely consider in determining the value for purposes of trading the hybrid contract. Further, due to the redemption feature, the Company
                    will be required to carry the host Preferred Stock outside of stockholders’ equity; generally referred to as the mezzanine and any discount resulting from the initial allocation will require accretion through charges to retained earnings, using the effective method, over the period from issuance to the redemption date.</font></p>
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                    <p align="justify"><font size="2">The Company has preliminarily concluded that the Warrants require classification in stockholders’ equity. The principal concepts underlying accounting for warrants provide a series of conditions, related to the potential for net cash settlement, which must be met in order to achieve equity classification. The Company’s preliminary conclusion is that the Warrants meet the conditions for equity classification. Notwithstanding, the
                    Company will be required to measure the fair value of the Warrants on the inception date to provide a basis for allocating the net proceeds to the various financial instruments issued in the financing. The Company currently intends to utilize the Black-Scholes-Merton valuation technique, because that method embodies, in the Company’s view, all of the assumptions that market participants would consider in determining the fair value of the contract for purposes of a sale
                    or exchange.</font></p>
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                    <p align="justify"><font size="2">The Company’s accounting will require an allocation of the proceeds to the individual financial instruments comprising the financing. As it relates to the Management Buyers, the Company will be required to recognize as compensation expense the amount that the fair value of the share-linked financial instruments (i.e. Preferred Stock and Warrants) exceeds the proceeds that the Company received. Those financial instruments subject to
                    allocation are preliminarily identified as the Secured Notes, Preferred Stock, Compound Embedded Derivative and the Warrants. Other than the compensatory amounts, current accounting concepts generally provide that the allocation is, first, to those instruments that are required to be recorded at fair value; that is, the Compound Embedded Derivative, and the remainder based upon relative fair values. Discounts to the face value of the Secured Notes and redemption amounts of
                    the Preferred Stock require amortization to interest expense and accretion to retained earnings, respectfully, using the effective method over the related term.</font></p>
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<p><font>The Preferred Stock is a hybrid financial instrument that embodies the risks and rewards typically associated with both equity and debt instruments. Accordingly, the Company is required to evaluate the features of this contract to determine its nature as either an equity-type contract or a debt-type contract. The Company’s preliminary conclusions are that the Preferred Stock is generally more akin to a debt-type contract, principally
                    due to its redemption features. As a result, the embedded conversion feature and those other features that have risks associated with debt require bifurcation and classification in liabilities as a compound embedded derivative financial instrument. The principal accounting concept requires bifurcation in these instances when the embedded feature and the host contracts have risks that are not clearly and closely related. Certain exemptions to this rule, such as the
                    traditional conventional convertible exemption and the common-indexed exemption were not available to the Company because the Preferred Stock is not indexed, as that term is defined, to the Company’s common stock. Accordingly, the conversion feature, along with certain other features that have risks of equity, will require bifurcation and classification in liabilities as a compound embedded derivative financial instrument. Derivative financial instruments are required
                    to be measured at fair value both at inception and an ongoing basis. While the Company has not yet completed the valuation of the compound embedded derivative, the Company intends to utilize the Monte Carlo Simulation technique, because that model affords the flexibility to incorporate all of the assumptions that market participants would likely consider in determining the value for purposes of trading the hybrid contract. Further, due to the redemption feature, the Company
                    will be required to carry the host Preferred Stock outside of stockholders’ equity; generally referred to as the mezzanine and any discount resulting from the initial allocation will require accretion through charges to retained earnings, using the effective method, over the period from issuance to the redemption date.</font></p>
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<p><font>The Company has preliminarily concluded that the Warrants require classification in stockholders’ equity. The principal concepts underlying accounting for warrants provide a series of conditions, related to the potential for net cash settlement, which must be met in order to achieve equity classification. The Company’s preliminary conclusion is that the Warrants meet the conditions for equity classification. Notwithstanding, the
                    Company will be required to measure the fair value of the Warrants on the inception date to provide a basis for allocating the net proceeds to the various financial instruments issued in the financing. The Company currently intends to utilize the Black-Scholes-Merton valuation technique, because that method embodies, in the Company’s view, all of the assumptions that market participants would consider in determining the fair value of the contract for purposes of a sale
                    or exchange.</font></p>
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<p><font>The Company’s accounting will require an allocation of the proceeds to the individual financial instruments comprising the financing. As it relates to the Management Buyers, the Company will be required to recognize as compensation expense the amount that the fair value of the share-linked financial instruments (i.e. Preferred Stock and Warrants) exceeds the proceeds that the Company received. Those financial instruments subject to
                    allocation are preliminarily identified as the Secured Notes, Preferred Stock, Compound Embedded Derivative and the Warrants. Other than the compensatory amounts, current accounting concepts generally provide that the allocation is, first, to those instruments that are required to be recorded at fair value; that is, the Compound Embedded Derivative, and the remainder based upon relative fair values. Discounts to the face value of the Secured Notes and redemption amounts of
                    the Preferred Stock require amortization to interest expense and accretion to retained earnings, respectfully, using the effective method over the related term.</font></p>
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