As you will see from the attached 2010 Annual Report, we had great hopes for XSProject this year. While it would be great to provide a very upbeat report that describes lots of growth and progress, the truth is that 2011 has been a difficult year for XSProject. The struggling global economy is making its impact known across the world. One of our favorite distributors in Greece has not been able to purchase as much product from XSProject as usual because their business is being hit hard by the financial crisis in that country. Consumers are not buying as much, which means retailers can not purchase as much. This puts pressure on the entire distribution chain and has a direct negative impact on enterprises like XSProject that manufacture goods. This scenario has been playing out around the world with a number of our distributors. As a result, XSProject is running slightly in the red this fiscal year.
The good news is that thanks to the support of our donors, we are weathering the storm. The grants that we have received through GlobalGiving enabled us to end 2010 with cash reserves that are helping us through these more difficult times and keeping us in business. We remain committed to our primary goals of supporting providing jobs and supporting trash picker families. As a result, even in the months when our sales are not able to fully cover our operational costs, we still put money aside for the continued education of 35 children. And when we need to cut corners, we do it in ways that keeps our staff and outsourced sewers working. We look forward to the day our sales volumes are growing again, so we can help even more kids and can return to hiring objectives.
We also remain committed to the goals that we mentioned in the Annual Report, such as building our distribution channels. Another piece of good news is that we have started to partner with a large distribution network in the United States. A first step in the process is refining our products so they appeal even more to US consumers. If we are successful in developing a set of products that are valued by a broad base of customers, our sales volumes will not only grow but will be more predictable and have fewer month-to-month fluctations.
It is our belief that the tide will turn, for all of those that are struggling in this economy. And, we believe that through the continued support of our GlobalGiving community, we will be able to continue to transform trash and change lives. Attachments: