In our quarterly report on Form 10-QSB for the quarter ended September 30, 2005, we reported that during our evaluation of disclosure controls and procedures for such period and in connection with our ongoing efforts to improve our internal control over financial reporting, certain deficiencies in our disclosure controls and procedures came to management’s attention. These deficiencies, which include a need to improve the timeliness of the dissemination of information received from one of our third party service providers and ascertaining expense and related liabilities incurred by certain limited partnerships with which we have production and distribution relationships are being addressed through implementing greater controls in our relationships with these limited partnerships. Although management did not uncover additional deficiencies in its evaluation for this Annual Report, we are continuing our efforts to improve both our disclosure controls and procedures and our internal control over financial reporting.

Internal Controls

In connection with the merger of Power Marketing and TAG USA in November 2004, we adopted and implemented numerous measures in connection with its ongoing efforts to improve control processes and corporate governance. These changes are required to effect our transition from a privately-held corporation to a public company that files periodic reports under the Securities Exchange Act of 1934, as amended. As a private company, TAG USA was not required to adopt the types of internal control procedures that a public company must adopt and maintain. Accordingly, since the merger, we have taken numerous steps to enhance existing policies, or implement new ones, so as to have an effective system of internal controls over financial reporting. Measures we have taken during the 2005 fiscal year which either have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting, include the following:

	•	Increasing the membership of the board of directors to consist of six persons, four of whom are independent, as such term is defined in the Marketplace Rules of the Nasdaq Stock Market. However, as previously reported, we are seeking to fill the vacancies created by the recent resignation of two board members.

	•	Determining to hire an individual to serve as Chief Financial Officer on a full-time basis.

	•	Adopting a Code of Ethics and Business Conduct. The Code of Ethics is designed to promote ethical conduct and full, fair and accurate disclosure in its periodic reports. We have re-emphasized to our finance and accounting personnel the importance of these requirements.

	•	Recruiting new personnel to the finance function who have expertise in financial controls and reporting, including a corporate controller, and made other changes in finance personnel to improve the overall quality and level of experience of the finance organization.

	•	Reorganizing our finance and general and administrative functions to improve financial oversight.

	•	Implementing changes in our organizational structure to provide a clearer segregation of responsibilities in connection with account reconciliations, manual journal entries, and the preparation and review of documentation to support the preparation of quarterly and annual financial statements.

	•	Adopting and implementing standard financial policies and procedures on a comprehensive basis. These policies provide finance and accounting guidance and include process documentation designed to ensure consistent application of policies and procedures.

We continue to implement additional measures in response to specific accounting and reporting weaknesses, including personnel and organizational changes to improve supervision and increased training for finance and accounting personnel. We will continue to develop new policies and procedures and educate and train employees on existing policies and procedures in an effort to continuously improve internal controls and the control environment.

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