To: Ronald P. Margraf Sr. who wrote ( 1247) 11/2/2001 6:53:22 PM From: SCOOBEY-DO Read Replies (2) | Respond to of 1268 Hey Ron, KKRS issued a SEC report on 11/01/01 regarding new shares issued for consulting services. In the filing, KKRS reports that they have total O/S plus conversion shares that when combined total 279,949,611. See a portion of the report below. After the 1/20 reverse split that would equal approximately 13,997,480 total shares outstanding and convertible. What do you think of KKRS' business plan? Will it be strong enough to go though the reverse split without the price falling from around $0.40 (after the RS) back down to $0.02? I am interested in your thoughts and comments. Take care, Scoob CONVERSION OF OUR OUTSTANDING CONVERTIBLE SECURITIES COULD SUBSTANTIALLY DILUTE YOUR INVESTMENT AND CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE BECAUSE THE CONVERSION PRICE OF THOSE SECURITIES DEPENDS UPON THE MARKET PRICE OF OUR COMMON STOCK, AND THERE IS NO CEILING ON THE NUMBER OF SHARES OF OUR COMMON STOCK THAT ARE ISSUABLE UPON EXERCISE OF THOSE SECURITIES. We have issued to several security holders debentures and warrants that are convertible or exercisable at prices that are equal to the lesser of a fixed price and a variable price that is based upon a discount on the market price of our common stock. As of September 20, 2001, we had a total of 90,294,089 shares of common stock outstanding, the closing price of a share of our common stock on the OTC Bulletin Board was $0.027, and the debentures and warrants with the variable conversion and exercise prices were convertible or exercisable into approximately 189,655,522 shares of common stock. The number of shares that those debentures and warrants ultimately may be converted into or exercised for could prove to be greater than this estimate if the market price of our common stock declines. Further, to the extent the security holders convert those debentures and exercise those warrants and then sell the underlying shares of common stock into the market, the price of our common stock may decline due to the additional shares available in the market. This decline could allow the security holders to convert their remaining debentures and exercise their remaining warrants into a greater number of shares of common stock, the sale of which would further depress the stock price. You could, therefore, experience substantial dilution and a decline in the value of your investment as a result of the conversion of the debentures and exercise of the warrants. IF SECURITY HOLDERS ENGAGE IN SHORT SALES OF OUR COMMON STOCK, INCLUDING SALES OF SHARES TO BE ISSUED UPON CONVERSION OF CONVERTIBLE SECURITIES, THE PRICE OF OUR COMMON STOCK MAY DECLINE. Selling short is a technique used by a stockholder to take advantage of an anticipated decline in the price of a security. A significant number of short sales can create a downward pressure on the price of the security. If security holders sell large volumes of our common stock within a relatively short period of time, the market price of our common stock may decrease. The decrease in market price would allow holders of our debentures and warrants that have conversion or exercise prices based upon a discount on the market price of our common stock to convert their debentures and exercise their warrants into an increased number of shares of our common stock. Further sales of common stock issued upon conversion of debentures or exercise of warrants could cause even greater declines in the price of our common stock. The downward pressure on the market price caused by conversion of debentures and exercise warrants, and the sale of the underlying shares of common stock, could encourage short sales by the security holders and could further undermine the value of our common stock.