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End of AMA EXpos?

Old 11-14-2019, 08:29 PM
  #26  
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Originally Posted by speedracerntrixie View Post
has

Astro, if you wish to address me as a peer I will be more then happy to discuss just about anything with you. If you can't manage that then I suggest you not ask any questions of me.
Actually, I thought the question asked was very civil. Let me paraphrase it for you:
If a hobby shop owner is only grossing 25 to 30% over cost of product, how is he supposed to:
  • pay for staff
  • pay rent
  • pay for utilities
  • stay in business
Now, let me add in the following:
  • In King County(Seattle, Bellevue and surrounding area), a law was passed a year or two ago that REQUIRES all employees to be paid a minimum wage of at least $15 per hour.
  • Washington State REQUIRES all full time employees be offered benefits
  • Product must be shipped to retail sites, incurring shipping costs
With a 25 to 30% margin, how is the owner supposed to pay all the above and still have enough left to live on themselves?

Last edited by Hydro Junkie; 11-14-2019 at 08:33 PM.
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Old 11-14-2019, 09:19 PM
  #27  
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Hydro, I took his phrasing of the question as antagonistic. This was based on not only this interaction with Astro but past exchanges as well.

OK back to the topic. The short answer to how does a hobby shop survive with the current margins is that it does not. We have plenty of evidence in hobby shops closing at an alarming rate. When I was in the industry ( 1982-1996 ) the margins averaged 40%. We made a little less on engines and radios but made that up with making up to 50% on accessories. At one time my supplier list for one store got up to over 200 vendors, most of them were cottage industry vendors right here in the US. Almost all of them gone now. Owners of US based vendors would get to retirement age and sell to Great Planes who would mis manage the product into the ground while making an inferior product and riding the good reputation of the original manufacturer. This applies to Top Flite, Marks Models, McDanial R/C, Lanier R/C, Carl Goldberg Models and many more. The business model of Great Planes competing with the hobby shops that they sold product to forced many shops out of business. Great Planes used to be run by guys who were modelers themselves, then they adopted corporate policies, make money as quickly as possible. They disregarded the health of the hobby shops and as a result, sales of hobby goods dropped. Great Planes is now gone because they couldn't see how undercutting their own customers ( hobby shops ) was going to lower volumes for everyone. Horizon has the same business model and we will all eventually suffer their fate. As Silent said earlier, getting back to where the hobby is supplied by cottage industry and not large corporations is what has the potential to breathe new life into the hobby. I think we are at the beginning of that now, we have several small companies laser cutting kits now. I even manage to produce a competitive pattern airplane and sell one every 6 to 8 weeks. I think eventually the hobby will recover, my hope at least.
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Old 11-14-2019, 11:28 PM
  #28  
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I know how you took his phrasing and that's the reason I re-asked the question, adding my own touches.
Having said that and just to make a point, had you posted the above at post 13, rather than placing the post you did, it wouldn't have taken one clarification(mine) and 13 antagonistic posts before everyone could to read your answer. You have to remember, it takes at least two to fight. You had the choice to initiate a confrontation or answer the question and we all know what you chose to do. The previous 14 posts, before your reply to mine, were all on you, whether you want to admit it or not.
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Old 11-15-2019, 06:30 AM
  #29  
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For clarifications' sake I am here to engage in beneficial discussion of topics that affect the hobby we all love. At least we all still have that in common (I think).
Many do not like my style of discussion. I cannot be responsible for how you react to my words. Read my words, they challenge one to discussion, but they are neutral, and are not disrespectful.
It is my belief that everyone is entitled to their own opinions and may voice them freely. BUT, if they CHOOSE to voice them on a public forum, they become responsible to answer to those opinions, not just hide behind them. I find it absolutely in poor taste and disrespectful to the entire membership of said forum to post one's opinions (many times stated as facts!) and then fail to answer to them if questioned. It just does not lead to any kind of positive dialogue.

I will re-post my original questions in a very neutral way and see if Speed will clarify and/or support his position, or if he is the one that just wants to have an internet podium on which to alleviate his hot air.

Originally Posted by speedracerntrixie
Hobby King will be gone soon enough,

You state this as a fact. Is it? If so, what evidence do you have to support that statement? Hobby King looks to be thriving as far as I can tell.
Originally Posted by speedracerntrixie
Horizon has pretty much the same business model as Great Planes, only time until they bleed out as well.
Horizon PURCHASED Great Planes and have consolidated all of the companies that fell under the Hobbico umbrella (many of which were in some form founded from the Mom and Pop, grassroots manufacturers from the 50's, 60's and 70's), MOST of the Mom and Pop Hobby stores are gone, so Horizon is now the Gorilla in the room, competing largely with Hobby King. The hobby IS in the decline, so it is a difficult environment in which to operate a business, but I do not see any evidence that Horizon or Hobby King are going under anytime soon.
What evidence do you have that would support your statement?
Originally Posted by speedracerntrixe
They need to stop trying to make as much money as possible as quickly as possible and start looking towards the long term health of the hobby.
Can you expound on this statement with some facts? What evidence do you have that says Horizon is trying to make as much money as possible as quickly as possible? And why do they, "need" to look at the long term health of the hobby? They are a privately held business, can they not run it however they want? (yes, speed, I do understand that it MAY be benficial to their long-term health to plan for the long-term, but do they, "need" to? should we appoint someone to enforce that? You?, the Government?)
Originally Posted by speedracerntrixie
IMO Horizon should start setting up hobby shop franchises and making sure the owners are able to make a decent profit.
In our, "new" economy, it has been proven that the brick and mortar business model is very difficult to operate and remain competitive (for many of the same reasons that the AMA Expo and the other Hobby Trade shows and Expos have, and are, largely going the way of the dinosaur.). It is very easy to make a simple statement like, "they should", but how do you propose that they actually do it AND, "make sure the owners are able to make a decent profit"?
Originally Posted by speedracerntrixie
On average current shop owners if they match the Horizon direct prices will only average 25% to 30% intake. Then they have to pay rent/Mortgage, payroll, insurance, inventory, utilities etc. If Horizon increased those profit margins and supported the retail industry better then we would have more hobby shops again.
Again, that is alot of words....what you are proposing is exactly why we have seen hobby stores closing....they purchasing public have proven that they will not pay the prices it takes to support a brick and mortar operation. It is the consumers that drive the business decisions of the Horizon's of the world, not the other way around.
Originally Posted by speedracerntrixie
The hobby as a whole would enjoy a higher level of enthusiasm which of course would mean higher volume of sales......everyone wins.
I don't even know where to begin with this one. I believe this statement to be complete nonsense, and I cannot imagine where one would begin to find any kind of data to support its baseless premise.
Read the words folks, there are no zingers, nuances, threats, name-calling, or any other thing that I have been accused of. Merely a call to question another's words in order that we can have a beneficial discussion. It is important that if we enjoy the freedom to publicly espouse our opinions, that we be responsible to answer to those opinions.

Regards,

Astro
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Old 11-15-2019, 04:14 PM
  #30  
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Ok I'm going to attempt to keep this a bit on the short side if I can. First and formost this is an R/C forum. It is not a court of law. As such comments made are purely opinion. If you do not agree with any of my opinions that is your prerogative, I owe no further explanations. If I offer to add to any discussion it is because I have made that choice, not because you or anyone else is entitled to me explaining anything.


My views are based on both Horizon and Great Planes competing with the very hobby shops that they supplied. They also purchased mom and pop cottage industry suppliers and then cherry picked what products they would continue to have manufactured. As they continued to accumulate they grew to the point where each and every US hobby shop had to do business with both Horizon and Great Planes in order to offer a diversified inventory.

Neither Horizon or Great Planes started out selling coustomer direct. Horizon actually started out as Circus Hobbies owned by Bill Bennet ( Circus Circus Hotel, Sahara Hotel, Co founder of TOC ). They at the time were exclusive distributors for Webra Engines, JR radios, IM products kits, Kalt helicopters. They then sold out and became Hobby Dynamics and then Horizon Hobbies. Horizon was originally based in Paso Robles California. Great Planes started out as Great Planes Model Manufacturing. One fo their first accusation was Bridi Hobby Enterprises. They eventually formed Tower to sell customer direct. When Tower was formed I was managing the R/C Department at a hobby shop in Palo Alto California. While at the Chicago model show that year the shop owner and a few more of us decided to take a drive to Champagne and express our concerns about Tower. We were told that Tower would not affect our margins and that they would not undersell us. That held true for a couple years. Then they started offering free shipping, then volume discounts, then the Tower club. The end result was that they were in fact underselling the hobby shops ( their other customers ). The one that I hated the most is that I would have a customer that wanted me to place a special order for an item that I didn't normally stock. It could have been an OS Hanno Special, An OS Pegasus engine or even the Futaba PCM radio when it first came out. My order would come back as that item being out of stock but if the customer ordered direct from Tower the item was available. On many new items it was like that, my customers were able to purchase new items before I was. Then when the initial interest had died down I was suddenly available for wholesale purchase.

Horizon wasn't quite as bad but their customer direct pricing reduced margins and theynplaybthe same game with wanting to sell new products customer direct first then wholesale to shops secondly.

The bottom line is that IMO because of both companies competing with the hobby shops that relied on their products to survive, forced many shops to close their doors. Of course internet sales and Chinese products are in this mix as well. It's also my belief that the hobby shops helped keep the enthusiasm level of the hobby alive. Walking into a well stocked hobby shop is an amazing experience IMO. We Americans love to shop and impulse buy. A drive by your local shopping mall on a weekend is all the proof you would need of that. Car dealerships are another great example. All those nice new shiny cars parked on acres of parking lot. Think of how much it costs to maintain all that inventory. They do it because they know people want to see, touch, feel what they are buying. Sporting goods stores are another great example. Why would it be any different when buying hobby goods?

If you have had experience with Hobby King you will notice that their inventory has been shrinking as of late. Their website is horrible and many of the items are on backorder status. Very similar to what we saw with Tower their final year. There are also rumors that they are having issues paying their vendors.

Please do not come back and accuse me of presenting any of this as fact, there are factual examples presented to support my overall opinion, nothing more. Having said that my opinion is based on 43 years of R/C modeling, 15 of those years working in the industry.

Last edited by speedracerntrixie; 11-15-2019 at 04:21 PM.
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Old 11-15-2019, 04:58 PM
  #31  
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Originally Posted by speedracerntrixie View Post
Please do not come back and accuse me of presenting any of this as fact, there are factual examples presented to support my overall opinion, nothing more. Having said that my opinion is based on 43 years of R/C modeling, 15 of those years working in the industry.
you are correct, you don't owe the forum anything. And you delivered.

Astro
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Old 11-15-2019, 08:25 PM
  #32  
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Speed, I have only one thing to say about your last post:
THANK YOU!!!
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Old 11-16-2019, 07:00 AM
  #33  
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Back to the original topic- Expos served a purpose in a pre-internet economy and society. They were the most efficient way to see new products, learn about them, buy some things, and get a feel for the overall state of the hobby. They are not the most efficient way anymore. We live in a 12 hour news cycle information economy, so why would companies think an annual expo to promote new products would work? Don't get me wrong, walking around all that shiny new gear is true joy. It can't be replaced by online ads. But expos aren't NEEDED anymore like they used to be.
As for the side topic of the LHS, I think the only way any brick and mortar business is going to survive is if it can offer something that online vendors can't. A couple of successful shops where I live offer building and repair services, which bring in a decent amount of cash. Their bread and butter is fuel, accessories, and repair parts One has stopped carrying engines because they can't compete with the internet. That's a smart move. The days of the LHS, or any other non-essential business, surviving simply because they have merchandise are long gone. Service, personal relationships, and the customer experience will be what keeps them open going forward.
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Old 11-16-2019, 05:47 PM
  #34  
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Speedracertrixie and Jester s1, I think you guys hit it perfectly. Our local hobby shop has been in business about 40 years and is on it’s second owner who purchased it from the founder’s family after his passing.

The current owners are young fellows, by comparison to my years, who are active R/Cers in the airplane, helicopter and car genre. The bulk of their sales is RC/cars and trucks and the related service department that keeps a couple of employees very busy. Frankly I am appalled at today’s customers who can’t turn a wrench or screwdriver but, hey, the service department has a 4-5 day backlog with some hefty hourly rates. Great for the daily cash flow.

One owner and one additional employee are heavy into airplanes and helicopters so ample knowledge and experience is there for the asking. All personnel are friendly, knowledgeable, helpful and can literally solve anyone’s purchase or service needs.

As far as margins the RTR cars, ARF airplanes and helicopters are pretty narrow. Parts and accessories is where the profit (along with service) is made. Horizon is the big gorilla in the room and they don’t give much slack unless ordering large quantities. They also control the advertised prices (MAP) which limits competitive pricing, especially online. After the purchase of Tower Hobbies they killed off numerous excellent products never to be seen again since Horizon owns the copyrights, patents and product names.

So hobby shops can still make it in today’s marketplace but they must be creative with personnel, sales and service. It isn’t easy but some do it very well
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Old 11-17-2019, 08:32 AM
  #35  
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Dick, I always felt that customer service was the key. Back then your hobby shop clerk was more times then not the first point of contact for a new enthusiast. Being a club member, I would always invite these potential customers to meet up with me at the club field, I would show them around, introduce them to other members and one of the club instructors if they happened to be out that day. Back in the shop I would show them the different options for their trainer, let them know they could always come in for advise. We had a policy of test running their engine for them if they had the need. I would test fly helicopters at no charge. The only thing asked was that when we did these free services that all the equipment was purchased through us. It was pretty much a win win for everyone. When mail order came into play guys realized they could save a few bucks but that personal customer service went away. We still had plenty of customers to flourish as a business as most guys still placed value on our customer service. I left the industry prior to internet buying but beleive that internet buying virtually eliminated the customer service aspect of the hobby. I think it is no coincidence that the hobby has seen a steady decline as customer service has gone away. Today's perspective hobbyists have been raised on internet sales. They want it now and delivered to their door. Traditional R/C flying just does not fit that mold. IMO, if we want to bring the hobby back to its former glory days we need to get back to the formula that worked. That was walk in hobby shops with knowledgeable staff that offer customer service that the online shops don't offer. Horizon with their monopoly on wholesale hobby goods is the key here. Are they going to continue the current business model or are they going to support what few hobby shops we have left and maybe facilitate the opening of more shops? Only time will tell.
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Old 11-30-2019, 11:42 AM
  #36  
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Horizon Hobby is, in a way, providing customer service offering after purchase flight instruction. RC Flight School HorizonHobby

Although it is quite pricey, but it's a start for a member of the industry. If some haven't signed up to be a "coach" already, perhaps you should. Like they say, the longest journey starts with the first step. Maybe it's time for more industry members to participate like Horizon. Maybe someone else could follow suit, but iron out some of Horizon's wrinkles to make it easier to sign up more new customers.

Last edited by fliers1; 11-30-2019 at 11:50 AM.
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Old 11-30-2019, 04:53 PM
  #37  
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Originally Posted by fliers1 View Post
Horizon Hobby is, in a way, providing customer service offering after purchase flight instruction. RC Flight School HorizonHobby

Although it is quite pricey, but it's a start for a member of the industry. If some haven't signed up to be a "coach" already, perhaps you should. Like they say, the longest journey starts with the first step. Maybe it's time for more industry members to participate like Horizon. Maybe someone else could follow suit, but iron out some of Horizon's wrinkles to make it easier to sign up more new customers.
Nice you can only participate if you buy one of our products and for that we will put you in touch with a local club. Why not just visit the local club and purchase a trainer of your choice. LOL talk about pure self promotion.

Dennis
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Old 12-01-2019, 06:01 AM
  #38  
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A person doesn't have to buy a Horizon product, although it's getting to the point where it would be hard to do this hobby without occasionally doing so. But even if they did, so what? Horizon has good stuff at fair prices. They aren't mistreating anybody.
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Old 12-01-2019, 06:13 AM
  #39  
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Originally Posted by jester_s1 View Post
Horizon has good stuff at fair prices. They aren't mistreating anybody.
There are some here that would say otherwise.....

Astro
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Old 12-01-2019, 06:35 AM
  #40  
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I ran a small hobby shop several years ago and some customers would come in, waste 30 minutes of my time asking questions about a certain airplane, helicopter or rc car, and then buy from mail order, not only that, they would come in my shop and expect free advice for setting up and repair. Horizon Hobby is simply attempting to avoid the same thing happening to them. They and AMA (cya litigation protection) are providing a means to finding a flight instructor (coach) and not necessarily a club.

When I had a flight school decades ago, most (100s) of my customers belonged to clubs and for whatever reason, some traveled hundreds of miles to pay me to train them to solo status.
So, the idea of just finding a club didn't work for them. Ask Dave Scott, owner of The First US RC Flight School, he wrote in MA of the same situation. So, HH is the first member of the industry to offer something that no other industry member has offered. It's a start. Maybe others might do the same. Come next year, when FAA makes testing a reality, who knows how many members will drop out?
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Old 12-01-2019, 07:59 AM
  #41  
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Originally Posted by jester_s1 View Post
A person doesn't have to buy a Horizon product, although it's getting to the point where it would be hard to do this hobby without occasionally doing so. But even if they did, so what? Horizon has good stuff at fair prices. They aren't mistreating anybody.
If you read the blurb it says you must use only certain models to use the service. Surprise surprise those are sold by Horizon LOL!!!!
On the other hand every club I have had the pleasure of knowing will train you on just about anything you show up with as long as they are suitable. A club doesn't require you buy from one source though they may have a recommendation or two. Many times they know of used equipment at a big savings something Horizon would not accept because there is nothing in it for them. Pad your own pocket under the guise of promoting the hobby LOL!!!!

Last edited by Propworn; 12-01-2019 at 08:06 AM.
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Old 12-01-2019, 08:13 AM
  #42  
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Those of us that have been involved with the FAA as private pilots or work or have worked in the industry as professional pilots or mechanics, etc. may see all this in a different light. There was the AMA for those that flew models for fun. There was mainly line of sight flight and it wasn`t on the FAA radar. But things have changed pretty drastically with the multi-rotors and all the advanced electronics, coupled with the irresponsible pilots who scoff at safety and it`s made for some scary situations. I guess it stands to reason that those who fly model aircraft for fun or profit will have to be brought in to the FAA fold. I think it will all get ironed out eventually with the resultant resurgence in the hobby as a whole. Maybe the expos will make a comeback as there will be much more to offer in the way of products. I know, I know. Dream on, right?
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Old 12-01-2019, 08:33 AM
  #43  
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Training has always been an issue. Club trainers have always been a volunteer position that offered no additional benifits. If there were an AMA approved training system and guys that qualified to be instructors would get something for their efforts then the situation may improve. The clubs could offer discount memberships to their instructors, the hobby shops could offer the instructors a slight discount as well. Things can be done to attract more quality instructors but sadly are not. It could be that there are a lack of quality students. It's much more enjoyable to teach someone something when they truly want to learn. It seems to me these days that people have the mindset to resist learning anything new. Take some of these forums for example. My number one thing I like to do on the forums is teach guys about building techniques and airplane setup and trimming. Yet I receive pushback on most occasions, to the point where I don't offer advise anywhere near as much as I used to. The very same thing could easily be said about club instructors, are they feeling like they are wasting their time trying to teach to people who don't go into it with an open mind and the will to learn properly?
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Old 12-01-2019, 09:34 AM
  #44  
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Originally Posted by Propworn View Post
Nice you can only participate if you buy one of our products and for that we will put you in touch with a local club. Why not just visit the local club and purchase a trainer of your choice. LOL talk about pure self promotion.

Dennis
I've signed up with Horizon Hobby's RC Flight School and even though others may go strictly by HH's rules, I don't demand that anyone who comes to me has to buy HH's products. I explained this to HH and they signed me up anyway. But we have a hobby shop locally that carries mostly HH foam aircraft. I have used equipment, but I point everyone I teach to that hobby shop. When someone comes to me with a HH trainer, I have them fly their airplane and while it's charging, I have them fly my LT-40 trainer for 30 minutes per flight. I imagine other HH instructor have the option of doing the same. We have thousands of acres of open land in this part of the country. So, HH customers has the choice of joining a club and AMA, many do, or flying on their own 50 acre property. This results is large number of sales of HH products. Win-win.

Last edited by fliers1; 12-01-2019 at 09:37 AM.
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