RISK FACTORS

         Investors should be aware that this offering involves certain risks, including those described below, which could adversely affect the value of our common stock. We do not make, nor have we authorized any other person to make, any representation about the future market value of our common stock. In addition to the other information contained in this prospectus, the following factors should be considered carefully in evaluating an investment in our securities.

Risks Relating to Vanguard

We have a limited operating history and we may never be profitable.

        We have been in operation for less than a year. The first well we drilled began producing in January 2011. We face all of the risks inherent in a new business, including:

•

the risk that we will be unable to implement our business plan and achieve our expected financial results; and



•

the risk that, as a small business, we will be subject to market, environmental, regulatory and other developments that we cannot either foresee or control as well as larger or more established businesses.

There can be no assurance that we can implement our business plan, that our operations will ultimately generate a profit, or that the securities sold in this offering will have any value.

        If we have not made adequate allowances for the costs and risks associated with our expansion or if our systems, procedures or controls are not adequate to support our operations, our business could be harmed.

Our drilling program in the Batson Dome Field relies heavily on preliminary drilling results from four wells.

        As of the date of this prospectus, we have successfully drilled and completed four wells which indicate the presence of proved reserves in the Batson Dome Field. There is no assurance that the additional wells we plan to drill in this field will encounter commercially productive reserves. Our future performance over the next twelve months will be affected by the results of our drilling in the Batson Dome Field.

Our lack of diversification will increase the risk of an investment in our securities.

        Our current focus involves a limited number of acres in the Batson Dome Field. In the past, some wells drilled in the Batson Dome Field have experienced problems due to sand and water incursions. Larger companies have the ability to manage their risk by diversification. However, we currently lack diversification, in terms of both the nature and geographic scope of our business. As a result, we will likely be impacted more acutely by factors affecting our industry or the region in which we operate than we would if our business was more diversified.

We may be unable to pay our outstanding convertible notes.

        In November and December 2010, we sold convertible notes in the principal amount of $3,400,000. The notes bear interest at 8% per year and mature on October 31, 2012. The notes are secured by the oil and gas leases acquired, and any oil or gas wells drilled on the leases, with the proceeds from the sale of the notes. If our drilling program is not successful, or we are unable to raise additional capital, we will be unable to make interest or principal payments on the notes.

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Our failure to obtain capital may significantly restrict our proposed operations.

        We may need to raise more capital to expand our business. Future sources of capital may not be available to us when we need it or may be available only on unacceptable terms.

        Any future sale of our equity securities would dilute the ownership of existing stockholders. Our inability to obtain the capital that we need may slow the implementation or result in the failure of our business plan. There can be no assurance that we will be able to obtain any capital which we will need.

The loss of any of our executive officers could adversely affect our business .

        We depend to a large extent on the efforts and continued employment of our executive officers and the loss of the services of any of our executive officers could adversely affect our business. We do not carry keyman life insurance on any of our executive officers.

Since some of our officers plan to devote only a portion of their time to our business, our chances of being profitable will be less than if we had full-time management.

        As of the date of this prospectus, we had four officers. Three of these officers are employed at other companies and their other responsibilities could take precedence over their duties to us.

Rapid growth may place significant demands on our resources.

        We expect significant expansion of our operations. Our anticipated future growth will place a significant demand on our managerial, operational and financial resources due to:

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the need to manage relationships with various strategic partners and other third parties;



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difficulties in hiring and retaining skilled personnel necessary to support our business;



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the need to train and manage new employees; and



•

pressures for the continued development of our financial and information management systems.

Risks Relating to the Oil and Gas Industry

A substantial decrease in oil prices would have a material impact on us.

        Our future financial condition and results of operations are affected by the prices we receive for our oil production. Oil prices historically have been volatile and likely will continue to be volatile in the future. This price volatility may also affect the prices of our securities. We cannot predict oil prices, and prices may decline in the future. The following factors have an influence on oil prices:

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worldwide and domestic supplies of oil;



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actions taken by foreign oil-producing nations;



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political conditions and events (including instability or armed conflict) in oil-producing regions;



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the level of global and domestic oil inventories;



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the price and level of foreign imports;



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the level of consumer demand;



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the price and availability of alternative fuels;



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the availability of pipeline or other takeaway capacity;



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weather conditions;

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•

terrorist activity;



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domestic and foreign governmental regulations and taxes; and



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the overall worldwide and domestic economic environment.

        Significant declines in oil prices for an extended period may have the following effects on our business:

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adversely affect our financial condition, liquidity, ability to finance planned capital expenditures and results of operations;



•

cause us to delay or postpone some of our capital projects;



•

reduce our revenues, operating income and cash flow; and



•

limit our access to sources of capital.

Increased oil prices may result in difficulty in obtaining equipment and services.

        Higher oil prices and increased oil drilling activity, such as those currently experienced in the oil industry, generally stimulate demand and result in increased prices and unavailability of drilling rigs, crews, associated supplies, equipment and services. Shortages could result in increased costs, delays in timing of anticipated development or cause interests in our oil leases to lapse. We cannot be certain that we will be able to implement our drilling plans at costs that we have estimated or which will be acceptable to us.

The potential profitability of oil properties depends upon factors beyond our control.

        The potential profitability of our oil properties is dependent upon many factors beyond our control. For instance, world prices and markets for oil are unpredictable, highly volatile, potentially subject to governmental fixing, pegging, controls or any combination of these and other factors, and respond to changes in domestic, international, political, social and economic environments. Additionally, due to worldwide economic uncertainty, the availability and cost of funds for production and other expenses have become increasingly difficult, if not impossible, to project. These changes and events may materially affect our financial performance. In addition, a productive well may become commercially unproductive in the event that water or other deleterious substances are encountered which impair or prevent the production of oil from the well. In addition, production from any well may be unmarketable if it is impregnated with water or other deleterious substances. These factors cannot be accurately predicted and the combination of these factors may result in us not receiving an adequate return on invested capital.

Oil exploration is not an exact science, and involves a high degree of risk.

        The primary risk lies in the drilling of dry holes or drilling and completing wells which, though productive, do not produce oil in sufficient amounts to return the amounts expended and produce a profit. Hazards, such as unusual or unexpected formation pressures, downhole fires, blowouts, loss of circulation of drilling fluids and other conditions are involved in drilling and completing oil wells, and if such hazards are encountered, completion of any well may be substantially delayed or prevented. In addition, adverse weather conditions can hinder or delay operations, as can shortages of equipment and materials or unavailability of drilling, completion, and/or work-over rigs. Even though a well is completed and is found to be productive, water and/or other substances may be encountered in the well, which may impair or prevent production or marketing of oil from the well.

        Although the completion of oil wells is, to a certain extent, less risky than drilling for oil, the process of completing an oil well is nevertheless associated with considerable risk. In addition, even if a

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well is completed as a producer, the well for a variety of reasons may not produce sufficient oil in order to repay our investment in the well.

Competition in the oil industry is intense, and we are smaller and have a more limited operating history than many of our competitors.

        We compete with major integrated oil and gas companies and independent oil and gas companies in all areas of our operation. In particular, we compete for property acquisitions and for the equipment and labor required to operate and develop our properties. Many of our competitors have substantially greater financial and other resources than we have. In addition, larger competitors may be able to absorb the burden of any changes in federal, state and local laws and regulations more easily than we can, which would adversely affect our competitive position. These competitors may be able to pay more for exploratory prospects and may be able to define, evaluate, bid for and purchase a greater number of properties and prospects than we are capable of. Further, our competitors may have technological advantages and may be able to implement new technologies more rapidly than we can. Our ability to explore oil prospects and to acquire additional properties in the future will depend on our ability to conduct operations, to evaluate and select suitable properties and to consummate transactions in this highly competitive environment. In addition, most of our competitors have operated for a much longer time than we have and have demonstrated the ability to operate through industry cycles.

Interests that we may acquire in oil properties may be subject to royalty and overriding royalty interests, liens incident to operating agreements, liens for current taxes and other burdens and encumbrances, easements and other restrictions, any of which may subject us to future undetermined expenses.

        Although we normally obtain title reports for oil leases we acquire, we have not in the past obtained, and we may not in the future obtain, title opinions pertaining to leases. It is possible that at some point we will have to undertake title work involving substantial costs and we may suffer title failures resulting in significant losses.

Our operations involve risks and uncertainties associated with drilling for, and production and transportation of oil, all of which can affect our operating results.

        Our operations may be materially curtailed, delayed or canceled as a result of numerous factors, including:

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the presence of unanticipated pressure or irregularities in formations;



•

accidents;



•

title problems;



•

weather conditions;



•

compliance with governmental requirements; and



•

shortages or delays in the delivery of equipment.

        Also, our ability to market oil production depends upon numerous factors, many of which are beyond our control, including:

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effect of federal and state production regulations; and



•

changes in supply of and demand for oil.

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We do not insure against all potential losses and could be materially impacted by uninsured losses.

        Our operations are subject to the risks inherent in the oil and natural gas industry, including the risks of fire, explosions, blow-outs, pipe failure, abnormally pressured formations and environmental accidents, such as oil spills, gas leaks, salt water spills and leaks, ruptures or discharges of toxic gases. If any of these risks occur in our operations, we could experience substantial losses due to:

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injury or loss of life;



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severe damage to or destruction of property, natural resources and equipment;



•

pollution or other environmental damage;



•

clean-up responsibilities;



•

regulatory investigation and penalties; and



•

other losses resulting in suspension of our operations.

        In accordance with customary industry practice, we maintain insurance against some, but not all, of the risks described above with a general liability limit of $1,000,000. We do not maintain insurance for damages arising out of exposure to radioactive material. Even in the case of risks against which we are insured, our policies are subject to limitations and exceptions that could cause us to be unprotected against some or all of the risks involved in our business. The occurrence of an uninsured loss could have a material adverse effect on our financial condition or results of operations.

Unless we successfully replace the reserves that we produce, our reserves will decline, resulting eventually in a decrease in oil production and lower revenues and cash flows from operations.

        The business of exploring for, developing or acquiring reserves is capital intensive. We may not be able to make the necessary capital investment to maintain or expand our oil reserves if cash flows from operations are reduced, due to lower oil prices or otherwise, or if external sources of capital become limited or unavailable. In addition, our drilling activities are subject to numerous risks, including the risk that no commercially productive oil reserves will be encountered. We also expect that we will continue to acquire oil and gas leases. We cannot assure you that we can successfully acquire any new leases, that we will be able to acquire producing oil properties that contain economically recoverable reserves or that any future acquisition will be profitably integrated into our operations.

Our operations will be affected from time to time and in varying degrees by political developments and federal and state laws and regulations regarding the development, production and sale of crude oil and natural gas.

        These regulations require permits for drilling of wells and also cover the spacing of wells, the prevention of waste, and other matters. Rates of production of oil and gas have for many years been subject to federal and state conservation laws and regulations and the petroleum industry is subject to federal tax laws. In addition, the production of oil or gas may be interrupted or terminated by governmental authorities due to ecological and other considerations. Compliance with these regulations may require a significant capital commitment by and expense to us and may delay or otherwise adversely affect our proposed operations.

        From time to time legislation has been proposed relating to various conservation and other measures designed to decrease dependence on foreign oil. No prediction can be made as to what additional legislation may be proposed or enacted. Oil and gas producers may face increasingly stringent regulation in the years ahead and a general hostility towards the oil and gas industry on the part of a portion of the public and of some public officials. Future regulation will probably be determined by a number of economic and political factors beyond our control or the oil and gas industry.

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Our activities will be subject to existing federal and state laws and regulations governing environmental quality and pollution control.

        Compliance with environmental requirements and reclamation laws imposed by federal, state, and local governmental authorities may necessitate significant capital outlays and may materially affect our earnings. It is impossible to predict the impact of environmental legislation and regulations (including regulations restricting access and surface use) on our operations in the future although compliance may necessitate significant capital outlays, materially affect our earning power or cause material changes in our intended business. In addition, we may be exposed to potential liability for pollution and other damages.

We may incur write-downs of the net book values of our oil properties which would adversely affect our shareholders' equity and earnings.

        The full cost method of accounting, which we follow, requires that we periodically compare the net book value of our oil properties, less related deferred income taxes, to a calculated "ceiling". The ceiling is the estimated after-tax present value of the future net revenues from proved reserves using a 10% annual discount rate and using constant prices and costs. Any excess of net book value of oil properties is written off as an expense and may not be reversed in subsequent periods even though higher oil and gas prices may have increased the ceiling in these future periods. A write-off constitutes a charge to earnings and reduces shareholders' equity, but does not impact our cash flows from operating activities. Future write-offs may occur which would have a material adverse effect on our net income in the period taken, but would not affect our cash flows. Even though such write-offs do not affect cash flow, they can be expected to have an adverse effect on the price of our publicly traded securities.

Risks Related to this Offering and Our Securities

There is no public market for our units, common stock or public warrants, and an active market may not develop or be maintained, which could limit your ability to sell our securities.

        Before this offering, there has not been a public market for our units, common stock or public warrants. Our securities are expected to be quoted on the OTC Bulletin Board, but an active public market for our securities may not develop or be sustained after this offering. The initial public offering price will be determined by negotiations between the underwriters and us and may not be representative of the market price at which our units will be quoted after this offering. In particular, we cannot assure you that you will be able to resell our units or the common stock and public warrants that are a component of the units at or above the initial public offering price.

Management will retain a significant interest in our company after this offering and may have interests that differ from our other stockholders.

        Upon completion of this offering, and assuming the underwriters do not exercise their over-allotment option to purchase additional units, our officers and directors will own 3,675,000 shares (assuming none of the options which they hold are exercised), or approximately 25%, of our outstanding common stock. Management could, for the foreseeable future, have significant influence over our management and affairs and may be able to control virtually all matters requiring stockholder approval, including the election of directors and significant corporate transactions such as mergers or other sales of our company or assets. In addition, the concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

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If we do not maintain an effective registration statement or comply with applicable state securities laws, our warrantholders may not be able to exercise the public warrants.

        For the holders of our public warrants to be able to exercise their warrants, the shares of our common stock to be issued upon exercise of those warrants must be covered by an effective and current registration statement and qualify or be exempt under the securities laws of the state or other jurisdiction in which the warrantholders reside. We can give no assurance that we will be able to continue to maintain a current registration statement relating to the shares of our common stock underlying the public warrants or that an exemption from registration or qualification will be available throughout their term. This may have an adverse effect on demand for the public warrants and the prices that can be obtained from reselling them. In addition, this potential inability to exercise the public warrants because we do not have a current and effective registration statement could result in purchasers of units in this offering paying full price for the units solely to acquire the underlying two shares of common stock.

While the public warrants are outstanding, it may be more difficult to raise additional equity capital.

        During the term that the public warrants are outstanding, the holders of the public warrants will be given the opportunity to profit from a rise in the market price of our common stock. We may find it more difficult to raise additional equity capital while these public warrants are outstanding. At any time during which these public warrants are likely to be exercised, we may be able to obtain additional equity capital on more favorable terms from other sources.

The redemption of the public warrants issued in this offering may require potential investors to sell or exercise the public warrants at a time that may be disadvantageous for them.

        At any time beginning six months after the date of this prospectus, provided that our common stock has closed at a price at least equal to 250% of the initial public offering price of the units for at least five consecutive trading days, we may redeem the outstanding public warrants, in whole or in part, upon not less than 30 days' notice, at a price of $0.25 per warrant. The terms of our warrants prohibit us from redeeming them unless we have a current and effective registration statement available covering the exercise of the warrants. If we exercise our right to redeem the public warrants, they will be exercisable until the close of business on the date fixed for redemption in such notice. If any warrant called for redemption is not exercised by such time, it will cease to be exercisable, and the holder thereof will be entitled only to the redemption price of $0.25 per warrant. Notice of redemption of the public warrants could force holders to exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous for them to do so or to sell the warrants at the current market price when they might otherwise wish to hold the warrants or accept the redemption price, which is likely to be substantially less than the market value of the warrants at the time of redemption.

Future sales or the potential for future sales of shares of our common stock may cause the price of our common stock and public warrants to decline and could impair our ability to raise capital through subsequent equity offerings.

        Approximately 53% of our outstanding common stock will be held by our current stockholders following this offering (approximately 49% if the over-allotment option is exercised in full). If our existing stockholders sell a large number of shares of our common stock following this offering, the market price of our common stock could decline significantly. This decline could, in turn, have a negative impact on the market price of our warrants. In addition, the perception in the public market that our existing stockholders might sell shares of common stock could depress the market price of our common stock, regardless of the actual plans of our existing stockholders. These sales could also make it more difficult for us to sell shares of our common stock or equity-related securities in the future.

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        Following this offering, 14,865,822 shares of our common stock will be outstanding, or 15,915,822 shares if the underwriters' over-allotment option is exercised in full. All of the shares (3,675,000) held by our officers and directors are subject to a lock-up agreement restricting the sale of those shares for a period ending upon the earlier to occur of (i) one year from the effective date of the registration statement of which this prospectus is a part, or (ii) the date on which the price for our common stock equals or exceeds $3.00 for a period of ten consecutive days of quotation on the OTC Bulletin Board. However, the underwriters may waive this restriction and allow the stockholders to sell shares at any time.

        After this offering, we intend to register up to 1,500,000 shares of common stock that will be reserved for issuance under our non-qualified stock option plan. Once we register these shares, they can be sold in the public market upon issuance, subject to restrictions under the securities laws applicable to resales by affiliates.

Anti-takeover provisions and our right to issue preferred stock could make a third-party acquisition of us difficult.

        Our articles of incorporation contain provisions that would make it more difficult for a third party to acquire control of us, including a provision that our board of directors may issue preferred stock without stockholder approval. In addition, certain anti-takeover provisions of Colorado law could make it more difficult for a third party to acquire control of us, even if such change in control would be beneficial to our stockholders.

The value of our common stock and public warrants could be volatile.

        The overall market and the price of our common stock and public warrants may fluctuate greatly. The price of our common stock and public warrants may be significantly affected by various factors, including:

•

economic status and trends in the oil industry;



•

quarterly fluctuations in our operating results;



•

termination of lock-up agreements or other restrictions on the ability of our existing stockholders to sell their shares after this offering;



•

our ability to meet the earnings estimates and other performance expectations of investors or financial analysts (at such time as analysts begin following our company);



•

fluctuations in the stock prices of our peer companies or in stock markets in general; and



•

general economic or political conditions.

We have issued options to purchase common stock to our directors and employees that could dilute your interest in us.

        We have an aggregate of 1,500,000 shares of common stock reserved under our non-qualified stock option plan for issuance of grants and awards to our directors, executive officers, employees and consultants. As of the date of this prospectus, we have issued options to purchase an aggregate of 850,000 shares of our common stock, and options or awards to purchase up to 650,000 additional shares remain available for grant without further action by our stockholders. Issuances of common stock pursuant to the exercise of stock options or other stock grants or awards under our equity incentive plan will dilute your interest in us.

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Purchasers in this offering will experience immediate and substantial dilution in net tangible book value.

        The initial public offering price per share is expected to be substantially higher than the net tangible book value per share of our outstanding common stock. Purchasers of shares in this offering will experience immediate dilution in the net tangible book value of their shares. Based on the initial public offering price of $1.35 per unit, dilution per share in this offering is $0.80 per share (or approximately 59% of the assumed per share price of shares to be sold in the unit). Further, if we issue additional equity securities to raise additional capital, your ownership interest in our company may be diluted and the value of your investment may be reduced.

We do not expect to pay any dividends for the foreseeable future.

        We do not anticipate paying any dividends to our stockholders for the foreseeable future. Accordingly, you may have to sell some or all of your common stock in order to generate cash flow from your investment. You may not receive a gain on your investment when you sell our common stock and may lose some or all of the amount of your investment. Any determination to pay dividends in the future will be made at the discretion of our board of directors and will depend on our results of operations, financial condition, contractual restrictions, restrictions imposed by applicable law and other factors our board of directors deems relevant.

We could incur increased costs as a result of being a publicly traded company.

        As a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. The Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley"), as well as rules subsequently implemented by the Securities and Exchange Commission (the "SEC"), have required changes in corporate governance practices of public companies. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time consuming and/or costly. For example, we are adopting additional internal and disclosure controls and procedures, retaining a transfer agent and adopting corporate governance policies, as well as upgrading our computer system and software. In addition, as a public company, we will incur the internal and external costs of preparing and distributing periodic public reports in compliance with our obligations under the securities laws. We also expect these new rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance. These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee, and qualified executive officers.

        Section 404 of Sarbanes-Oxley requires us to include an internal control report with our annual report on Form 10-K. That report must include management's assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year. We will be required to include this assessment beginning with our annual report on Form 10-K for the fiscal year ending September 30, 2012. In addition, if we become what is known as an accelerated filer, our independent registered public accounting firm will be required to issue a report on management's assessment of our internal control over financial reporting and a report on its evaluation of the operating effectiveness of our internal control over financial reporting in future annual reports. The material weaknesses and any other deficiencies in internal control that we may identify in the future will need to be addressed as part of the evaluation of our internal control over financial reporting and may impair our ability to comply with Section 404. If we are not able to successfully implement internal control over financial reporting, we may not be able to accurately and timely report on our financial position, results of operations or cash flows, which could adversely affect our business and investor confidence in us.

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The market price of our securities may experience volatility and could decline significantly.

        We expect that important factors affecting the price of our securities will include our drilling results, prevailing oil prices and investor perceptions about future prices. In addition to these factors, considerations unrelated to our performance may have a substantial effect on our stock price, including the following:

•

The extent of analytical coverage available to investors concerning our business may be limited if investment banks with research capabilities do not follow our securities;



•

The number and quality of market makers in our securities may affect an investor's ability to trade significant numbers of shares of common stock; and



•

The relatively small size of the public float in our common stock may limit the ability of larger institutions to invest in our securities.

        As a result of any of these or other factors, the market price of our securities at any given point in time may not accurately reflect our long-term value. Securities class action litigation often has been brought against companies following periods of volatility in the market price of their securities. We may in the future be the target of similar litigation. Securities litigation could result in substantial costs and damages and divert management's attention and resources.

Future sales of our common stock by our existing shareholders could decrease the price of our common stock and could impair our ability to raise capital through equity offerings.

        Prior to this offering, we had 7,865,822 outstanding shares of common stock. Sales of a large number of these shares in the public market, or the potential for such sales, could decrease the price of our common stock and could impair our ability to raise capital through future sales of our common stock.

Shares issuable upon the conversion of outstanding notes, or the exercise of outstanding warrants and options may substantially increase the number of shares available for sale in the public market and may depress the price of our common stock.

        We have outstanding convertible notes, options and warrants which as of the date of this prospectus allow the holders to potentially acquire up to 16,510,000 additional shares of our common stock. Until the convertible notes are paid, or the options and warrants expire, the holders will have an opportunity to profit from any increase in the price of our common stock without assuming the risks of ownership. Holders of convertible notes, options and warrants may convert or exercise these securities at a time when we could obtain additional capital on terms more favorable than those provided by the options. The conversion of the notes or the exercise of the options and warrants will dilute the voting interest of the owners of presently outstanding shares by adding a substantial number to our common stock.

Disclosure requirements pertaining to penny stocks may reduce the level of trading activity in our securities and investors may find it difficult to sell their shares or warrants.

        Trades of our securities may be subject to Rule 15g-9 of the Securities and Exchange Commission, which imposes certain requirements on broker-dealers who sell securities subject to the rule to persons other than established customers and accredited investors. For transactions covered by the rule, brokers-dealers must make a special suitability determination for purchasers of the securities and receive the purchaser's written agreement to the transaction prior to sale. The Securities and Exchange Commission also has rules that regulate broker-dealer practices in connection with transactions in "penny stocks." Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system,

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provided that current price and volume information with respect to transactions in that security is provided by the exchange or system). The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation.

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