TWST: Give us a brief history of Attronica Computers and an overview of what you do.

Mr. Tucker: Our company is about 21 years old. We were founded in September 1983. We started out in those days as a retail computer store in the Washington DC area. Personal computers were very new in those days and people didn't know a keyboard from a hard drive. We had great fun creating and building that business. As a few years went by, we realized more and more that the commercial applications of the PCs and associated accessories and hardware were more in line with business use than personal use and we shifted our business toward business clients, some toward government clients and we started growing from there. But mostly, unlike other companies in the Washington metro area, we have focused on the commercial marketplace. What we do, basically, is this: we supply major customers with their personal computing needs, their networks, their servers, associated software and associated services like installations, support and whenever they need services for transitions into newer and upgraded platforms, associated engineering manpower, and break/fix services.

TWST: As advanced as technology and as sophisticated as many of the companies are getting, what services would you provide that are different from what they can do by hiring their own personnel?

Mr. Tucker: First of all, there is an issue of cost. Many times, hiring their own personnel is more expensive than outsourcing it to a company like ours. That's one. The second thing is, when you have your own personnel, they may not be well versed in different technologies. They could be well versed in the technology that the company itself uses, but when they hire a company like Attronica, we have people who have experience with different platforms and different equipment from a variety of different customers that we service, and also a variety of certifications that we hold, whether that's from Microsoft, IBM, Lotus, Novell or Citrix. The customer is getting a knowledge base. Thirdly, the customer may not need those people on their staff full-time for the next 10 years. Many times, for example, if you have to do a technology refresh that project may last three to six months depending on the size of the organization. Then they don't need those people. Or they may need a staff of maybe one person to maintain the system. They come to a company like Attronica and get that support.

TWST: Typically, how long does your contract run and is it something that is renewed constantly?

Mr. Tucker: It is something that is renewed constantly. We specialize in a non-contract contract. In other words, we do a shake-hand deal with many of these customers and in fact most of our customers. The benefit of that to the customer is that we have to earn their trust and we have to maintain their trust and there is no contractual language to hide behind such as, 'I have a two-year contract or a five-year contract.' I have to earn every purchase order from the customer and the customer knows that if we are not servicing them correctly and appropriately, then they can go somewhere else because there's absolutely nothing stopping them from doing that.

TWST: You suggested that you're unusual in the Washington, DC area because you service mostly commercial clients. Do you have any government clients?

Mr. Tucker: We really do not have any federal government clients. We have a few state government clients in the State of Virginia, and they're mostly universities. But most of the companies that do business similar to ours in the Washington metro area, very often known as Beltway Bandits, consulting companies, etc., live off the federal government and the associated industries. We don't.

TWST: Generally, when you provide your services are they integrated services that include procurement as well as consulting?

Mr. Tucker: It is generally an integrated service, but again, it varies from customer to customer. No two customers are alike. Everyone has a different set of staff on hand. They have different sorts of needs, and these customers pick and choose from a smorgasbord of offerings that we have.

TWST: Within the commercial space, is there any particular size that you're well versed for?

Mr. Tucker: We are well versed for what is known as a medium-sized business, which is typically defined as between 100-1,000 seats. But we do service clients larger than that, as well.

TWST: What impact are the current macro-economic circumstances having on your state of business?

Mr. Tucker: We had great difficulty with our business after the 9/11 attacks. We suffered a significant decline in our business. That was not because we lost any customers. I have really not lost a single customer, but those customers stopped buying. It has been pretty rough for the last three years. Business started picking up from Q2 of 2004 and all those customers have budgets, they're expanding and they're doing technology refresh that they really should have done in 2003. After Y2K, when they changed their technology over but they were still using those old computers in 2003. That technology refresh is finally happening in Q2 and Q3 of 2004. I think it will continue for the rest of this year and into next year.

TWST: Why is technology spending in your niche lagging behind the re- instituting of technology spending that started a year, a year and a half ago? Is there a particular reason?

Mr. Tucker: I think on the part of the customers it was some sort of selective need. We are into more of the routine computing equipment. It's certainly routine these days, it wasn't in 1983. In that sense, the customers have said, 'I can live with my old stuff for another year or so until I'm forced to change because I have now changed the software.' It was an issue of priorities. What started happening last year was, they started upgrading things that they needed to upgrade desperately. With the kind of nuts and bolts that we are into, I think that took a second seat.

TWST: After coming out of the downturn, what significant changes are you seeing on the part of the potential customers at this point in time, and how are you adapting to it?

Mr. Tucker: One of the changes that we're seeing is that some of our customers who, in the past, had thought that they were going to go away and go into more of ordering by the Web directly from the manufacturers have completely rethought that. They are coming back to us. They have realized that this entire aspect of ordering computing equipment and associated services for the corporate needs directly from the Web and then handling it themselves is not as simple and easy as it was made out to be. They do need resellers like Attronica to support them and to actually guide them and help them not make the mistakes that they would make if they did it themselves. In other words, they are outsourcing this expertise instead of going out and hiring that themselves.

TWST: This is a very competitive field. Is your business mostly regional? What makes you unique?

Mr. Tucker: Our business is somewhat regional. We are heavy in the mid- Atlantic area, which is Maryland, Pennsylvania, DC, Virginia and West Virginia, but I do have customers that are national. I have customers in Texas, California, Ohio and Michigan and Indiana. Some of it happens because the customers are headquartered here and they have offices in those areas, but I have a couple of large customers that are not headquartered in our region and they still purchase from us. What makes our business unique is the personalized service that we provide. We have a unique sense of customer loyalty. By that I mean that we have managed to keep many of these customers for a very long time, many of them for 10 years or more. We do the same with our employees. That longevity is extremely important to us. Our customers stay loyal to us. We try and give them the very best prices. We try not to cheat them as far as the current market pricing is concerned, like some companies try to do. And we keep them up to date about what is going on in the marketplace in terms of technology. They may come to us and say, 'I heard when I went to such-and-such conference that I need to do this, this and that. Or I need to upgrade to this latest and greatest software.' We tend to be conservative in that regard. We say, 'That is the latest and the greatest, but it's too new and the bugs haven't been ironed out from that and the revisions are still coming in. Why don't you wait and let it settle down before you go to the next system?' That kind of advice that we give to the customer as a way to help them save money is what makes them come back to us.

TWST: As business is picking up and as demand for your services improves, what is your strategy for success as you look ahead?

Mr. Tucker: My strategy is very simple, and in fact from 1995, we tried many different experiments in expanding our business. I need to go into a little bit of our history to explain this. When we got into the commercial space in the late 1980s, we found in those days that we were particularly good with one brand of computers and that was AT&T. We were selling the entire line of AT&T products, all the way from their smallest laptop to their largest servers. We became specialists in that particular manufacturer to the extent that we did not sell any other brand and we reached close to $70 million in revenue by 1995. At that time, AT&T decided to split up into three companies: Lucent, NCR and AT&T. The computer business went with NCR and at that time, NCR decided that they didn't need resellers like us. Our business, which was basically exclusive to AT&T, kind of went away. We had no manufacturer to rely on; nor did we have any other relationship. So we started building relationships with other companies like Compaq, HP, IBM, etc. We did that over the next few years. But we also at that point started expanding into different arenas. We got into IT training. We got into IT staffing. We got into Oracle consulting, we got into software development and telecommunications and 10 other things. I'm not ashamed to say that we did not do well with any of those things. What is happening now, as of mid-June when I spun off my training division and sold it to the management that was operating it, is that Attronica is back to its pre-1995 days where we're back to our core competency, the core business that we do so very well, and that's the one that I described to you at the very beginning. That's the business that we are moving forward with. A lot of people think that is old business. It may not sound sexy enough to people who always want the newest in technology and such, but the Home Depots of the world are surviving selling nuts and bolts and actually doing very well. So will we.

TWST: As a private company, do you divulge your revenue stream earnings?

Mr. Tucker: Yes, we do.

TWST: Could you share with us what they are?

Mr. Tucker: Our revenues last year were $40 million.

TWST: Are you a profitable company?

Mr. Tucker: Yes.

TWST: What worries you the most at this point in time and what's your biggest challenge?

Mr. Tucker: What worries me the most at this point in time is the macro economic situation. Things are improving, as I said, and our customers are buying. But an event like 9/11 (and I'm not necessarily saying a terrorist attack) but any economic event that the government does not manage well would lose the confidence of business customers and they'd stop buying. That's the part that worries me the most. We're more nimble today than we were three years ago. We had 107 employees then and we're down to 47. We're able to maneuver much better now, but that is something that I worry about the most. The challenge is the declining margins in this business. The challenge is for customers to recognize that services are not for free. When the margins go down, if they want to pay a few percentage points for the hardware and if they want us to do a lot of other things that go along with that, they need to pay for that, whether they pay for it in the form of additional margin or whether they pay for it on an event basis or hourly basis. They need to pay for it one way or the other. That's been challenging, but they're learning. It's improving.

TWST: In terms of the challenges to the customers that you deal with, what is their response, generally?

Mr. Tucker: I think the customers have come around, at this point. Their response, though, tends to be very often the procurement department type of response. They think, 'I'm going to put it out for bid and see what I get.' There's always somebody in the marketplace who will drop their pants and go below cost in order to earn something later. But our customers have figured that out and they realize that when they buy from such places, they get stuck with poor service.

TWST: What would you consider to be the strengths and advantages of the management team at your company?

Mr. Tucker: The strength that we have, number one, is longevity. The company has been in business for more than 20 years. The founders (that's myself, my brother Neil and my partner Carol Cornwell) still own and manage the company on a day-to-day basis. I have my top staff that's been with the company for a very, very long time. They are well versed in technology. We have a simple philosophy within the company and that is that we try to talk straight. We just give it to the customers and others as it is. We steer them in the right direction. Many times it's not very sophisticated or sexy, but it's probably a better thing. Many of our customers love that.

TWST: Give us your vision as to where you see your company two or three years down the road.

Mr. Tucker: My vision is very simple. We are expecting steady growth in the same core competency that I described earlier. I expect our sales this year to be in the range of $42-$44 million and profitable. I expect to see steady 10% growth in the same business that we're doing, adding some customers similar to the customer base that I have today. Those customers will then become loyal, long-term customers.

TWST: Are there any other points of discussion you wish to bring in that I may have left out?

Mr. Tucker: I'd just like to emphasize one thing. We are extremely unique. We are not the mold in terms of the typical value-added resellers that are out there. We are extremely customer-centric. A lot of people ask me, 'What technology does Attronica sell? What do you do?' I want to start with, 'We find and retain and grow customers over a long period of time.' We are totally customer-centric. I even joke about it, that if a customer that's buying a lot of IT equipment and services from me requires that on every Wednesday we need to deliver pizzas for their staff, then we would do that because that's part of being customer- centric ' not that I'm in the pizza business. In the same way, we are also employee focused. We have employees who have been with the company for the long term and they see this vision and work with us and the customers in making that happen.

TWST: Thank you. (WT)

ATUL TUCKER President and CEO Attronica Computers, Inc. 15867 Gaither Drive Gaithersburg, MD 20877 (301) 417-0070 (301) 212-5899 - FAX

Copyright 2004 The Wall Street Transcript Corporation All Rights Reserved