April 30,2009

                        EXPLANATION

About the decision No 1/09, p.8 of the meeting of shareholders of   

       JSC  „VEF Radiotehnikas RRR”, dated April 28, 2009

The main activities of the company are:

-         manufacture of speaker systems;

-         manufacture of speaker cabinets for a client in Italy;

-         manufacture of electronic units and parts;

-         manufacture of printed circuit boards

Due to the economic crisis the Italian customer has cancelled their orders for speaker cabinets therefore production has stopped and from January till April  2009 30% of the workers have been laid off.

At present negotiations with the Italian customer are going on about gradual renewal of prders starting from May. The order for May 2009 has already been received. With the increase of order volume the number of workers will be gradually increased.

Other productions of the company are working without any changes.

Due to the fact that the financial institutions do not issue credits for turnover capital, in order to secure stable work of the company and renewal of production of speaker cabinets, it is necessary to supplement turnover capital of the company. Therefore the Board has been instructed to sell one of the obsolete properties  belonging to the company, which is not used for production needs.