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Over nearly a decade, the Company or its predecessor, Lynch Corporation (collectively, the "Company") were involved in 12 auctions conducted by the Federal Communications Commission ("FCC"). The sole function of the Company in these auctions was to provide bidding and administrative services to certain participating bidders, in some of which it had invested capital. Both the Company and the entities that participated in these FCC auctions consulted closely with their FCC counsel, one of the largest law firms in the United States. As widely reported in the press, the FCC's 1996 "C Block" auction (Auction 5) of PCS licenses resulted in massive defaults by the community of winning bidders. Indeed, before the due date of the first interest payment to the FCC, the three largest license holders had filed for protection under chapter 11 of the Bankruptcy Code. After extensive notice and hearing, by 1998 the FCC offered the industry an amnesty program that permitted formerly winning bidders to return licenses to the FCC in return for a release from liability. While an affiliate of the Company was one of the few C Block license holders that had not defaulted on its loan from the FCC, as previously reported to Company shareholders, the Company's affiliate participated in the FCC'sMario J. Gabelli, the Chairman of the Company's Board, noted amnesty program, returning, in whole or in part, 31 licenses to the FCC and receiving releases from the FCC, including the release from $194 million of license-related debt, representing less than 2% of the dollar amount of FCC licenses and license-related debt. Again, the participation of the Company's affiliate in the amnesty program was done in close consultation with FCC counsel. "I speak for the entire Board when I say that we will continue to benefit from Paul's insightful observations about the Company and the telecom industry generally. Over his eighteen years' of affiliation with the Company and its predecessors, as president and later as a director, I have grown to value his wise counsel and level-headed approach to problems. I know Paul had long wanted to reduce his outside commitments, but I was pleased and grateful to him for staying on the Board long enough to see us well along the way on several fundamental changes we have implemented." To summarize: the Company believes that at all times it was compliant with the law and FCC regulations; an affiliate of the Company retained three licenses in and around the Florida Panhandle, for which the highest bid was paid to the FCC; and through an amnesty program sponsored by the FCC, the FCC recovered 31 licenses from an affiliate of the Company with no economic harm to the FCC and correspondingly released the Company's affiliate from any and all liability to the FCC. Accordingly, Lanny Breuer, attorney for the defendants, reported "The plaintiff's claims are without merit, as shown by the fact that the entrepreneur-defendants are supported by the expert reports of three former FCC Commissioners, including a former FCC Chairman." For further elaboration on this issue, please see the Company's press releases at www.lynchinteractivecorp.com.