WESTCOTT PRODUCTS CORP (Form: 8-K, Received: 06/03/2014 15:51:42)

United States Securities and Exchange Commission

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

June 3, 2014

Date of Report

WESTCOTT PRODUCTS CORPORATION

(Exact name of Registrant as specified in its Charter)


Delaware	001-10171	80-0000245
(State or Other Jurisdiction of	(Commission File Number)	(I.R.S. Employer Identification No.)
Incorporation)

112 Loraine South, Suite 266, Midland, Texas 79701

(Address of Principal Executive Offices)

(432)695-6997

(Registrant’s Telephone Number, including area code)

8867 South Capella Way

Sandy, Utah 84093

(Former address)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see general instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

FORWARD-LOOKING STATEMENTS

This Current Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this Current Report. We cannot assure you that the forward-looking statements in this Current Report will prove to be accurate, and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. You should read this Current Report completely, and it should be read and considered with other reports filed by us with the Securities and Exchange Commission (the “SEC”). Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

NAME REFERENCES

Except as otherwise indicated by context, references to the “Company,” “we,” “our,” “us” and words of similar import refer to “Westcott Products Corporation,” a Delaware corporation, and its wholly-owned subsidiary, Dala Petroleum Corp., a Nevada corporation.

DOCUMENTS INCORPORATED HEREIN BY REFERENCE

See Item 9.01 for documents incorporated herein by reference, including our prior reports or registration statements that have been filed by us with the SEC and that contain information, as applicable, to the information required by Item 501(8) of Form 8-K.

Item 1.01 Entry into Definitive Material Agreement.

DESCRIPTION OF THE MERGER

Introduction

Westcott Products Corporation was incorporated as “Light Tech, Inc.” under the laws of the State of Nevada on May 24, 1984. A subsidiary in the name “Westcott Products Corporation” was organized by us under the laws of the State of Delaware on June 24, 1986, for the purpose of changing our name and domicile to the State of Delaware. On June 27, 1986, we merged with the Delaware subsidiary, with the survivor being Westcott Products Corporation, a Delaware corporation. All of our prior operations were conducted through Lee Building Products and T. A. Kilgore & Company, (“Kilgore”), which owned and operated a home center in League City, Texas, about 30 miles southeast of downtown Houston, Texas. During 1990, we ceased all operations, and the secured lenders took possession of all of its assets.

On March 11, 2000, our Board of Directors began the process of re-entering the development stage with the appointment of new officers and directors, and began the process of seeking the acquisition of new business opportunities, which resulted in the completion of the acquisition of Dala Petroleum Corp. that is discussed below under the heading “Merger.”

Dala has the rights to engage in oil exploration and development on approximately 300 leases in north central Kansas, with total acreage of approximately 80,000 acres (the “Property”). Dala will operate as an early-stage oil exploration company focused on the Property, which has oil potential at depths of less than 6,000 feet. Additional information on the Company’s new operations as a result of the Merger can be found in the “Business” section below.

Merger Transaction Documents

The summaries of the Merger Transaction Documents and the other agreements, documents and instruments related to the Transaction Documents or otherwise described herein and filed as Exhibits to this Current Report and which are incorporated herein by reference are believed to be complete in every material respect; however, such referenced Transaction Documents, agreements, documents and instruments that are summarized may be read in their entirety as filed “Exhibits” to our initial Current Report filed with the Securities and Exchange Commission (the “SEC”) on June 3, 2014. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them under the Merger Agreement or other instrument referenced; and in some instances, for clarity, certain Exhibits to the Merger Agreement or other instruments that are filed herewith as Exhibits are named and defined otherwise than in the Transaction Documents or in those instruments. See Item 9.01.

Merger

On June 2, 2014, Westcott Products Corp., a Delaware corporation (“Westcott”), its newly formed and wholly-owned subsidiary, Dala Acquisition Corp., a Nevada corporation (“Merger Subsidiary”), and Dala Petroleum Corp., a Nevada corporation (“Dala”), executed and delivered an Agreement and Plan of Merger (the “Merger Agreement”) and all required or necessary documentation to complete the merger (collectively, the “Transaction Documents”), whereby Merger Subsidiary merged with and into Dala, and Dala was the surviving company under the merger and became a wholly-owned subsidiary of Westcott on the closing of the merger (the “Merger”). Effective June 2, 2014, the respective Boards of Directors of Westcott and Dala, along with Westcott, as the sole stockholder of Merger Subsidiary, and Dala’s sole stockholder Chisholm Partners II, LLC, a Louisiana limited liability company (“Chisholm II”) owning 100% of the outstanding voting securities of Dala approved the Merger by written consent, and the Articles of Merger were filed with the Secretary of State of the State of Nevada on such date, which was the effective date of the Merger. Accordingly, Westcott will issue 10,000,000 shares of its common stock in exchange for all of the outstanding shares of common stock of Dala, to be distributed to Dala Petroleum’s sole shareholder that will immediately distribute the shares on a pro rata basis to its members. Dala had no other outstanding stock options, warrants, preferred stock or securities on the closing of the Merger. There will then be 12,500,000 outstanding shares of Westcott common stock. Current Westcott stockholders will own 2,500,000 of these shares or approximately 20% of the outstanding voting securities of Westcott; and Dala stockholders will own approximately 10,000,000 of these shares or approximately 80% of these outstanding voting securities of Westcott. Also, see the following Capitalization Tables for additional information about the Merger, and Item 9.01, where a copy of the Merger Agreement is filed as an Exhibit.

Several conditions precedent as set forth in the Merger Agreement were completed prior to the Merger. One critical condition precedent set forth in the Merger Agreement is that Westcott would raise no less than $2,000,000 (the minimum Offering) from persons who are “accredited investors” in consideration of the issuance (or the conversion) of a minimum of 2,000 shares up to a maximum of 2,500 shares of its Series A 6% Convertible Preferred Stock at the offering price of $1,000 per Unit. As of the date of this Report, the Company sold 2, 025 Units in the Offering. Each Unit consists of one share of Series A 6% Convertible Preferred Stock that is convertible at any time at the option of the Holder into common stock at the conversion price of $0.70 per common share based on the total dollar amount invested (subject to adjustment as set forth in the Company’s Series A 6% Convertible Preferred Stock Certificate of Designation that was filed on May 30, 2014) and 1,429 warrants to purchase common shares of the Company at an exercise price of $1.35 within three years of the “Effective Date” as defined in the Stock Purchase Agreement for the Offering. The Effective Date is defined as the earliest date of the following to occur: (a) the initial registration statement required by the Offering Documents has been declared effective by the Commission, (b) all of the underlying shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year anniversary of the Closing Date provided that a holder of underlying shares is not an Affiliate of the Company, all of the underlying shares may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders a standing written unqualified opinion that re-sales may then be made by such holders of the underlying shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.

Offering Documents

The summaries of the Offering Documents and the other agreements, documents and instruments related to the Transaction Documents or otherwise described herein and filed as Exhibits to this Current Report and which are incorporated herein by reference are believed to be complete in every material respect; however, such referenced Offering Documents, agreements, documents and instruments that are summarized may be read in their entirety as filed “Exhibits” to our initial Current Report filed with the Securities and Exchange Commission (the “SEC”) on June 3, 2014. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them under the document referenced. See Item 9.01.

The Offering Documents include the following:

Private Placement Memorandum

Securities Purchase Agreement

Registration Rights Agreement

Form of Warrant

Escrow Agreement for Offering Funds

Jenson Services Escrow Agreement

Form of Lock-Up Agreement

Series A 6% Convertible Preferred Stock Certificate of Designation

Summary of the Offering


Securities Offered	$1,000 per Unit, up to 2,500 Units, each Unit consisting of one share of Series A 6% Convertible Preferred stock and 1,429 warrants for common stock at a purchase price of $1.35 that expires three years from the Effective Date (as defined in the Stock Purchase Agreement for the Offering).

Proceeds Held in Escrow	The proceeds of this Offering were deposited into our legal counsel’s escrow account and held until the minimum Offering amount was met and the Merger occurred.

Rights and Preferences of Preferred Stock	Holders of Series A 6% Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 6% per annum, payable quarterly on January 1, April 1, July 1, and October 1, in cash from legally available funds or, at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock. Each share of Series A 6% Convertible Preferred Stock is convertible at any time at the option of the Holder into common stock at the conversion price of $0.70 per common share based on the total dollar amount invested (subject to adjustment as set forth in the Series A 6% Convertible Preferred Stock Certificate of Designation) Unless waived by the Holder, at no time will the Holder be able to convert the Series A 6% Convertible Preferred Stock into common stock that is equal to more than 4.99% of the total issued and outstanding shares of common stock of the Company (the “Conversion Limitation”). If the Holder gives the Company at least 61 days’ written notice, then the Holder may convert up to 9.99% of the total issued and outstanding shares of common stock of the Company.

Minimum Investment	$100,000 per investor. The Company may reduce the minimum investment per investor in its sole discretion.


Offering Period	The Offering Period will expire on the earlier of (i) the sale of all of the Units, (ii) the date of the Merger, or (iii) June 6, 2014.

Securities of the Company Outstanding:

Before the Offering	2,500,000 shares of common stock.

After the Merger	12,500,000 shares of common stock.

After the Offering (Minimum raise)	18,814,286 shares of common stock, assuming all shares of Series A 6% Convertible Preferred Stock are converted, all stock options are exercised and all warrants are exercised.

After the Offering (Maximum raise)	20,242,858 shares of common stock, assuming all shares of Series A 6% Convertible Preferred Stock are converted, all stock options are exercised and all warrants are exercised.

Use of Proceeds	The net proceeds of this Offering will primarily be used for drilling, seismic tests, technical services, and general working capital, including general and administrative expenses.

Voting Rights	The shares of Series A 6% Convertible Preferred Stock shall not have any voting rights.

Dividend Rights	The holders of our Series A 6% Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 6% per annum, payable quarterly on January 1, April 1, July 1, and October 1, in cash from legally available funds or in common stock. The holders of our common stock are entitled to receive dividends, if any, as may be declared by our Board of Directors, in its sole discretion; however, we do not intend to pay any dividends in the foreseeable future.

Registration Rights	Within sixty days of the Closing of the Offering, the Company shall file a Registration Statement registering all Registrable Securities (as defined in the Registration Rights Agreement) including the shares of common stock issuable upon conversion of the shares of Series A 6% Convertible Preferred Stock, the warrant shares offered herein, and any shares that may be paid to the Holder as dividends on the Series A 6% Convertible Preferred Stock. The Company shall cause the Registration Statement to become effective within 180 days following the filing date (in the event of a “full review” by the SEC) or 150 days (if there is not a “full review” by the SEC). All fees associated with the Registration shall be borne by the Company. The Company may incur certain cash liquidated damages if the terms and timelines of the Registration Rights Agreement are not met.

A capitalization table of the Company’s common stock after the Merger and after the Offering is included below.

Capitalization Table

Following the Closing of the Merger, the Company will have 12,500,000 shares of common stock issued and outstanding. The following table sets forth the total ownership of our stock after the Offering, assuming that all of the Series A 6% Convertible Preferred Shares offered herein have been converted, all of the warrants offered herein have been exercised, and all of the stock options have been exercised.


	Post-Merger, Pre-Offering	Assuming Minimum Offering $2,000,000	% Ownership	Assuming Maximum Offering $2,500,000	% Ownership
Dala Petroleum	12,500,000	12,500,000	81.40%	12,500,000	77.78%
Offering - Post Conversion of Preferred Shares into Common Shares		2,857,143	18.60%	3,571,429	22.22%
SUB-TOTAL		15,357,143	100%	16,071,429	100%

Fully-Diluted
Dala Petroleum	12,500,000	12,500,000	66.44%	12,500,000	61.75%
Offering- Post Conversion of Preferred Shares into Common Shares		2,857,143	15.19%	3,571,429	17.64%
Offering Warrants		2,857,143	15.19%	3,571,429	17.64%
Employee Options	400,000	400,000	2.13%	400,000	1.98%
Director Options	200,000	200,000	1.06%	200,000	0.99%
TOTAL	13,100,00	18,814,286	100%	20,242,858	100%

Accounting Treatment of the Merger

For financial reporting purposes, the Merger represents a “reverse merger” rather than a business combination and Dala is deemed to be the accounting acquirer in the transaction. The Merger is being accounted for as a reverse-merger and recapitalization. Dala is the acquirer for financial reporting purposes and Westcott is the acquired company. Consequently, the assets and liabilities and the operations that will be reflected in the historical financial statements prior to the Share Exchange will be those of Dala and will be recorded at the historical cost basis of Dala, and the consolidated financial statements after completion of the Share Exchange will include the assets and liabilities of Dala and Westcott, and the historical operations of Dala and operations of the Company from the closing date of the Merger Agreement. Dala has not commenced any significant operations and, in accordance with ASC Topic 915, Dala is considered an exploration stage company.

Item 2.01 Completion of Acquisition or Disposition of Assets.

On June 3, 2014, Dala entered into a Master Services Agreement with Chisholm II (the “Master Services Agreement”). Pursuant to the Master Services Agreement, Chisholm II agreed to act as an independent contractor for the Company and provide services and personnel to develop, drill, operate, and maintain oil and gas wells and properties used to produce oil and gas within the State of Kansas for a period of twelve (12) months. The Company will pay Chisholm II $25,000 up front and $25,000 per month for its services and reimburse Chisholm II for any expenses directly incurred during the related operations.

On June 3, 2014, Dala also entered into an Option Participation Agreement with Chisholm II (the “Option Participation Agreement”). Pursuant to the Option Participation Agreement, Chisholm II granted Dala the option, at Dala’s own election, to participate for up to twenty-five percent (25%) of Chisholm’s share of each drilling operation in search for oil or gas in the State of Kansas undertaken by Chisholm II.

Item 3.02 Unregistered Sales of Equity Securities

During our past three fiscal years ended September 30, 2013, 2012, and 2011, and since then, we have sold the following unregistered securities:

(i)

Immediately following the Merger described in Item 1.01 above, the Company closed a private placement offering (the “Offering”) to certain accredited and sophisticated investors.

The Company offered, at a price of $1,000 per Unit, up to 2,500 Units (with the option to increase the maximum offering to 2,775 in the case of oversubscription), each Unit consisting of one share of Series A 6% Convertible Preferred Stock and 1,429 warrants for common stock at a purchase price of $1.35 per share that expire three years from the Effective Date as defined in the Stock Purchase Agreement of the Offering Documents.

Holders (the “Holder” or “Holders”) of Series A 6% Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 6% per annum, payable quarterly on January 1, April 1, July 1, and October 1, in cash from legally available funds or, at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock. Each share of Series A 6% Convertible Preferred Stock is convertible at any time at the option of the Holder into common stock at the conversion price of $0.70 per common share based on the total dollar amount invested (subject to adjustment as set forth in the Series A 6% Convertible Preferred Stock Certificate of Designation). Unless waived by the Holder, at no time will the Holder be able to convert the Series A 6% Convertible Preferred Stock into common stock that is equal to more than 4.99% of the total issued and outstanding shares of common stock of the Company. If the Holder gives the Company at least 61 days’ written notice, then the Holder may convert up to 9.99% of the total issued and outstanding shares of common stock of the Company.

Under the Offering, a total of 2,025 Units were placed and $2,025,000 was delivered by thirteen investors to the Company. The sale of the Series A 6% Convertible Preferred Stock was exempt from registration pursuant to Section 4(a)(2) of the Securities Act and Regulation D, Rule 506(b), promulgated thereunder. There was no general solicitation, and each investor is financially sophisticated.

The Company also entered into a Registration Rights Agreement with the Holders of the Series A 6% Convertible Preferred Stock through which the Company is required to register the common shares underlying the Series A 6% Convertible Preferred Stock and the warrants.

(ii)

On or about February 10, 2014, we offered and sold 1,384,200 shares of our common stock comprised of “restricted securities” in consideration of the sum of $13,842. These shares were offered and sold pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. The funds were utilized for partial payment of our expenses incurred in connection with our negotiation and due diligence activities related to the Dala Merger discussed in Item 1.01 above.

Form 10 Disclosure

BUSINESS

Corporate History

We have an authorized capital of 100,000,000 shares divided into 50,000,000 shares of common stock of a par value of $0.001 per share and 50,000,000 shares of preferred stock with a par value of $0.01, with 2,775 of the 50,000,000 shares of preferred stock being designated as our Series A 6% Convertible Preferred Stock. With the exception of the Series A 6% Convertible Preferred Stock sold under our Offering described in Item 3.02 above, no other shares of our preferred stock are outstanding. We were formed for the primary purpose of engaging in any and all lawful business.

Copies of the Certificate of Ownership and Merger and our initial Articles of Incorporation, as amended, together with our By-Laws, were filed as Exhibits to our 10-KSB Annual Report for the fiscal year ended September 30, 2003.

On or about November 28, 2006, we filed a Definitive Information Statement on Form 14C with the Securities and Exchange Commission (the “SEC”), whereby we amended our Articles of Incorporation with the State of Delaware; and we issued common stock to the members of our Board of Directors for compensation of services. The Amended Articles of Incorporation were unanimously adopted by our Board of Directors and certain shareholders owning approximately 13,800 shares of our common stock or approximately 59.7% of our outstanding voting securities to effect a re-capitalization of our outstanding common stock in the form of a pro rata 250,000 for one reverse split, with all fractional shares being rounded up to the nearest whole share, and an immediate 200 for one pro rata dividend of our outstanding common stock. All share and per share amounts have been retroactively adjusted to reflect this re-capitalization. A copy of the Amended Articles of Incorporation was filed as an Exhibit to our Definitive Information Statement on Form 14C. This re-capitalization and compensation common stock issuance became effective December 20, 2006.

Since the recapitalization, we have been seeking and investigating potential assets, property or businesses to acquire. Until the Merger, we have had no material business operations for more than 20 years.

As described in Item 1.01 above, on January 8, 2014, we entered into a Letter of Intent with Chisholm II, the sole shareholder of Dala, to complete an Agreement and Plan of Merger.

Pursuant to the Agreement and Plan of Merger, Westcott formed a new, wholly-owned Nevada subsidiary, Dala Acquisition Corp., on May 22, 2014 which merged with and into Dala on June 2, 2014, with Dala being the surviving company and therefore becoming a wholly-owned subsidiary of Westcott upon the closing of the Merger. According to the terms of the Plan of Merger, Westcott issued 10,000,000 restricted shares of its common stock to the sole shareholder of Dala in exchange for all of the outstanding shares of Dala common stock. Following the Merger, the Company had a total of 12,500,000 shares of common stock issued and outstanding.

The Post-Merger Company

Following the Merger, the Company’s operations will be those of Dala. Dala has the rights to engage in oil exploration and development on approximately 300 leases in north central Kansas with total acreage of approximately 80,000 acres (the “Property”). The cost of the 300 lease assets was $1,898,946.

Dala will operate as an early-stage oil exploration company focused on the Property, which has oil potential at depths of less than 6,000 feet. Dala was assigned the rights to explore the Property from Chisholm II, and, through a Service Agreement with Chisholm II, will utilize Chisholm II’s existing technical exploration team to further explore and develop the property.

Dala’s operations will be focused on shallow oil opportunities. Dala has a ready-to-drill inventory of seismically defined (2-D and 3-D) prospects in and around existing production in central, southern and northwest Kansas. In addition, Dala has leases to approximately 80,000 net acres along a productive trend of fields (1-17 million barrels of oil) in central Kansas, which will be explored via conventional seismic evaluation and vertical drilling. Dala has a full team of experienced (major oil company trained) technical and land personnel to support its operations. Its founders and management have a track record of creating shareholder value through early stage oil and gas ventures. In partnership with Chisholm II, an exploration and production company focused on the acquisition of Kansas oil leasehold interests and exploration and development and Dala’s sole shareholder prior to the Merger and the closing of the Offering, Dala has an inventory of drill-ready oil prospects. Most of the prospects are supported by modern seismic data and are a combination of field extensions, step out locations and offsets to existing production. The initial eight prospects estimated ultimate recovery range in potential from one hundred thousand to one-half million barrels of oil, and are expected to be drilled and tested over the next 12 months. Another eight plus prospects are currently being developed by Dala and Chisholm II. Together, the companies will continue to acquire new leases and seismic data in support of their ongoing programs. This prospect development is being conducted by two teams of geologists and geophysicists in Denver, CO. One team focuses on western Kansas, where they have 10 years of experience and a successful track record; and the second team focuses on a high potential exploration area where Dala’s 80,000 acres are located. This team has already generated two field offset prospects for Dala, using high resolution 2-D seismic data.

Dala is establishing a substantial land position over a shallow, conventional oil play in north central Kansas. The "Play" or exploration concept is located across a four county area and is geographically defined by the boundaries of the productive North American Rift System. The land position is concentrated over a lightly explored portion of the Rift, bordered immediately on the south by over 400 million barrels of rift-related oil fields, and to the north by significant new discoveries in southeast Nebraska, where per well productive rates have recently been reported. This Play concept was developed by a team of highly experienced international geologists, geophysicists and land experts, who applied regional geologic theory, proprietary geophysical data bases and high resolution seismic. Based on adjacent productive analogies, the expected field target size in this exploration area is from 1-17 million barrels of recoverable oil, with individual per well rates estimated to be from 200-800 barrels of oil per day, depending upon the reservoir.

Business Strategy

Our business strategy is to create value for our shareholders by growing reserves, production and cash flow on a cost-efficient basis. Key elements of our business strategy will include:

Development and exploration of our existing oil and gas leases in the North American Rift System is our primary objective. Our current acreage position consists of 100% working interest and will require the Company to register as a licensed Oil and Gas Operator within the state of Kansas;

To selectively participate, on a non-operated basis, in seismically driven prospects that correspond geologically with our existing footprint within the state of Kansas;

Our goal is to remain financially strong, yet flexible, through the prudent management of our current limited cash resources;

To complement our organic growth strategy, we will seek to aggregate existing production in order to accelerate the Company’s production and reserve profile;

Once the Company has reached a set level of daily production, we will seek to use a variety of derivatives to lock in current value and hedge against any potential downturn in crude pricing;

Retaining qualified personnel to carry out the Company’s growth strategy.

Industry Operating Environment

The oil and natural gas industry is affected by many factors that we generally cannot control. Government regulations, particularly in the areas of taxation, energy, climate change and the environment, can have a significant impact on operations and profitability. Significant factors that will impact oil prices in the current fiscal year and future periods include: political and social developments in the Middle East; demand in Asian and European markets; and the extent to which members of OPEC and other oil exporting nations manage oil supply through export quotas. Additionally, natural gas prices continue to be under pressure due to concerns over excess supply of natural gas due to the high productivity of emerging shale development in the United States and continued lower product demand caused by a weakened economy. Natural gas prices are generally determined by North American supply and demand and are also affected by imports of liquefied natural gas. Weather also has a significant impact on demand for natural gas since it is a primary heating source.

Development

We will primarily engage in oil and natural gas exploration and production singly on the Property using a technical exploration team to further explore and develop the Property. Dala has a full team of experienced (major oil company trained) technical and land personnel to support its operations, which is provided under the Chisholm II Master Service Agreement. Dala has an inventory of drill-ready oil prospects. Most of the prospects are supported by modern seismic data and are a combination of field extensions, step out locations and offsets to existing production. The initial eight prospects estimated ultimate recovery range in potential from one hundred thousand to one-half million barrels of oil, and are expected to be drilled and tested over the next 12 months. Another eight plus prospects are currently being developed by Dala and Chisholm II. Together, the companies will continue to acquire new leases and seismic data in support of their ongoing programs. This prospect development is being conducted by two teams of geologists and geophysicists in Denver, CO. One team focuses on western Kansas, where they have 10 years of experience and a successful track record; and the second team focuses on a high potential exploration area where Dala’s 80,000 acres are located. This team has already generated two field offset prospects for Dala, using high resolution 2-D seismic data.

Dala is assembling a substantial land position over a shallow, conventional oil play in north central Kansas. The "Play" or exploration concept is located across a four county area and is geographically defined by the boundaries of the productive North American Rift System. The land position is concentrated over a lightly explored portion of the Rift, bordered immediately on the south by over 400 million barrels of rift-related oil fields, and to the north by significant new discoveries in southeast Nebraska, where per well productive rates of 400-600 barrels per day have recently been reported. This Play concept was developed by a team of highly experienced international geologists, geophysicists and land experts, who applied regional geologic theory, proprietary geophysical data bases and high resolution seismic. Based on adjacent productive analogies, the expected field target size in this exploration area is from 1-17 million barrels of recoverable oil, with individual per well rates estimated to be from 200-800 barrels of oil per day, depending upon the reservoir.

[WSPD8K052914002.GIF]

Competition

The oil and natural gas industry is intensely competitive, and we will be competing with numerous other oil and natural gas exploration and production companies. Most of these companies have substantially greater resources than we have. Not only do they explore for and produce oil and natural gas, but also many carry on midstream and refining operations and market petroleum and other products on a regional, national or worldwide basis. The operations of other companies will be able to pay more for exploratory prospects and productive oil and natural gas properties. They will also have substantially more resources to define, evaluate, bid for and purchase a greater number of properties and prospects than our limited financial or human resources permit.

Our larger or integrated competitors will have the resources to be better able to absorb the burden of existing, and any changes to federal, state, and local laws and regulations more easily than we can, which will adversely affect our competitive position. Our ability to discover reserves and acquire additional properties in the future will be dependent upon our ability and resources to evaluate and select suitable properties and to consummate transactions in this highly competitive environment. In addition, we will be at a disadvantage in producing oil and natural gas properties and bidding for exploratory prospects, because we have substantially fewer financial and human resources than other companies in our industry. Should a larger and better financed company decide to directly compete with us, and be successful in its efforts, our business model and any business operations could be adversely affected.

Marketing and Customers

The market for oil and natural gas that may be produced from our properties depends on factors beyond our control, including the extent of domestic production and imports of oil and natural gas, the proximity and capacity of natural gas pipelines and other transportation facilities, demand for oil and natural gas, the marketing of competitive fuels and the effects of state and federal regulation. The oil and natural gas industry also competes with other industries in supplying the energy and fuel requirements of industrial, commercial and individual consumers.

Our oil production, if any, is expected to be sold at prices tied to the spot oil markets. Our natural gas production, if any, is expected to be sold under short-term contracts and priced based on first of the month index prices or on daily spot market prices. We will rely on any operating partners to market and sell our production, where we contract with such operators in drilling prospects. We currently have a Management Services Agreement with Chisholm II and an Option Participation Agreement with Chisholm II.

Principal Agreements Affecting Our Ordinary Business

We do not own any physical real estate, but, instead, our acreage is comprised of leasehold interests subject to the terms and provisions of lease agreements that provide us the right to explore and develop the Property in specific geographic areas. All lease arrangements that comprise our current acreage positions are established using industry-standard terms that have been established and used in the oil and natural gas industry for many years, and our leases are with the State of Kansas. All of our current leases were assigned to us by Chisholm II, our majority shareholder, that obtained the original leasehold interest prior to the assignment.

We have entered into a Master Services Agreement with Chisholm. Pursuant to the Master Service Agreement, Chisholm agreed to act as an independent contractor for the Company and provide services and personnel to develop, drill, operate, and maintain oil and gas wells and properties used to produce oil and gas within the State of Kansas for a period of twelve (12) months. The Company will pay Chisholm $25,000 per month for its services and reimburse Chisholm for any expenses directly incurred during the related operations.

We have also entered into an Option Participation Agreement with Chisholm. Pursuant to the Option Participation Agreement, Chisholm granted Dala the option, at Dala’s own election, to participate for up to twenty-five percent (25%) of Chisholm’s share of each drilling operation in search for oil or gas in the State of Kansas undertaken by Chisholm.

In general, our current lease agreements have a term of five years from the effective date with an option to extend for an additional three years. The effective dates of the leases vary lease to lease. The oldest effective date is October 3, 2011, and the most recent effective date is March 13, 2013. There are over 300 lease agreements that have been assigned to Dala by Chisholm II. Royalty rates will be negotiated on a case-by-case basis consistent with industry standard pricing. Once a well is drilled and production established, the leased acreage in the applicable spacing unit is customarily considered developed acreage and is held by production. Other locations within the drilling unit created for a well may also be drilled at any time with no time limit as long as the lease is held by production. We do not believe lease expiration issues will materially affect our current leasehold acreage position.

Governmental Regulation and Environmental Matters

Our operations are subject to various rules, regulations and limitations impacting the oil and natural gas exploration and production industry as whole.

Regulation of Oil and Natural Gas Production

Oil and natural gas exploration, production and related operations, when developed, are subject to extensive rules and regulations promulgated by federal, state, tribal and local authorities and agencies. For example, Kansas requires permits for drilling operations, drilling bonds and reports concerning operations and imposes other requirements relating to the exploration and production of oil and natural gas. Kansas may also have statutes or regulations addressing conservation matters, including provisions for the unitization or pooling of oil and natural gas properties, the establishment of maximum rates of production from wells, and the regulation of spacing, plugging and abandonment of such wells. Failure to comply with any such rules and regulations can result in substantial penalties. The regulatory burden on the oil and natural gas industry will most likely increase our cost of doing business and may affect our profitability. Although we believe we are currently in substantial compliance with all applicable laws and regulations, because such rules and regulations are frequently amended or reinterpreted, we are unable to predict the future cost or impact of complying with such laws. Significant expenditures may be required to comply with governmental laws and regulations and may have a material adverse effect on our financial condition and results of operations.

Environmental Matters

Our operations and properties are subject to extensive and changing federal, state and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to safety and health. The recent trend in environmental legislation and regulation generally is toward stricter standards, and this trend will likely continue. These laws and regulations may:

require the acquisition of a permit or other authorization before construction or drilling commences and for certain other activities;

limit or prohibit construction, drilling and other activities on certain lands lying within wilderness and other protected areas; and

impose substantial liabilities for pollution resulting from such operations.

The permits required for our operations may be subject to revocation, modification and renewal by issuing authorities. Governmental authorities have the power to enforce their regulations, and violations are subject to fines or injunctions, or both. In the opinion of management, we anticipate that we will be in substantial compliance with current applicable environmental laws and regulations, and we have no material commitments for capital expenditures to comply with existing environmental requirements. Nevertheless, changes in existing environmental laws and regulations or in interpretations thereof could have a significant impact on us, as well as the oil and natural gas industry in general.

The Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”) and comparable state statutes impose strict, joint and several liability on owners and operators of sites and on persons who have disposed of or have arranged for the disposal of “hazardous substances” found at such sites. It is not uncommon for the neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes govern the disposal of “solid waste” and “hazardous waste” and authorize the imposition of substantial fines and penalties for noncompliance. Although CERCLA currently excludes petroleum from its definition of “hazardous substance,” state laws affecting our operations may impose clean-up liability relating to petroleum and petroleum related products. In addition, although RCRA classifies certain oil field wastes as “non-hazardous,” such exploration and production wastes could be reclassified as hazardous wastes thereby making such wastes subject to more stringent handling and disposal requirements.

The Endangered Species Act (“ESA”) seeks to ensure that activities do not jeopardize endangered or threatened animal, fish and plant species, nor destroy or modify the critical habitat of such species. Under ESA, exploration and production operations, as well as actions by federal agencies, may not significantly impair or jeopardize the species or its habitat. ESA provides for criminal penalties for willful violations of ESA. Other statutes that provide protection to animal and plant species and that may apply to our operations include, but are not necessarily limited to, the Fish and Wildlife Coordination Act, the Fishery Conservation and Management Act, the Migratory Bird Treaty Act and the National Historic Preservation Act. Although we believe that our operations will be in substantial compliance with such statutes, any change in these statutes or any reclassification of a species as endangered could subject us (directly or indirectly through any operating partners) to significant expenses to modify our operations or could force discontinuation of certain operations altogether.

On April 17, 2012, EPA finalized rules proposed on July 28, 2011, which establish new air emission controls for oil and natural gas production and natural gas processing operations. Specifically, the EPA’s rule package includes New Source Performance Standards to address emissions of sulfur dioxide and volatile organic compounds (“VOCs”) and a separate set of emission standards to address hazardous air pollutants frequently associated with oil and natural gas production and processing activities. The rules establish specific new requirements regarding emissions from compressors, dehydrators, storage tanks and other production equipment. In addition, the rules revise leak detection requirements for natural gas processing plants. These rules may require a number of modifications to our planned operations and those of any of our potential third-party operating partners, including the installation of new equipment to control emissions from compressors. Although we cannot predict the cost to comply with these new requirements at this point, compliance with these new rules could result in significant costs, including increased capital expenditures and operating costs, and could adversely impact our business.

These new regulations and proposals and any other new regulations requiring the installation of more sophisticated pollution control equipment could have a material adverse impact on our business model and business, results of operations and financial condition.

The Federal Water Pollution Control Act of 1972, or the Clean Water Act (the “CWA”), imposes restrictions and controls on the discharge of produced waters and other pollutants into navigable waters. Permits must be obtained to discharge pollutants into state and federal waters and to conduct construction activities in waters and wetlands. The CWA and certain state regulations prohibit the discharge of produced water, sand, drilling fluids, drill cuttings, sediment and certain other substances related to the oil and gas industry into certain coastal and offshore waters without an individual or general National Pollutant Discharge Elimination System discharge permit. In addition, the Clean Water Act and analogous state laws require individual permits or coverage under general permits for discharges of storm water runoff from certain types of facilities. Some states also maintain groundwater protection programs that require permits for discharges or operations that may impact groundwater conditions. Costs may be associated with the treatment of wastewater and/or developing and implementing storm water pollution prevention plans. The CWA and comparable state statutes provide for civil, criminal and administrative penalties for unauthorized discharges of oil and other pollutants and impose liability on parties responsible for those discharges, for the costs of cleaning up any environmental damage caused by the release and for natural resource damages resulting from the release.

The underground injection of oil and natural gas wastes are regulated by the Underground Injection Control program authorized by the Safe Drinking Water Act. The primary objective of injection well operating requirements is to ensure the mechanical integrity of the injection apparatus and to prevent migration of fluids from the injection zone into underground sources of drinking water. All of leased acreage in which we have interest may be required to be developed from unconventional sources that require hydraulic fracturing as part of the completion process. Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into the formation to stimulate gas production. Legislation to amend the Safe Drinking Water Act to repeal the exemption for hydraulic fracturing from the definition of “underground injection” and require federal permitting and regulatory control of hydraulic fracturing, as well as legislative proposals to require disclosure of the chemical constituents of the fluids used in the fracturing process, were proposed in recent sessions of Congress. The U.S. Congress continues to consider legislation to amend the Safe Drinking Water Act to subject hydraulic fracturing operations to regulation under the Act’s Underground Injection Control Program to require disclosure of chemicals used in the hydraulic fracturing process.

Scrutiny of hydraulic fracturing activities continues in other ways. The federal government is currently undertaking several studies of hydraulic fracturing’s potential impact. Several states, including Kansas, where our current leased properties are located, have also proposed or adopted legislative or regulatory restrictions on hydraulic fracturing. We cannot predict whether any other legislation will ever be enacted and if so, what its provisions would be. If additional levels of regulation and permits were required through the adoption of new laws and regulations at the federal or state level, it could lead to delays, increased operating costs and process prohibitions that would materially adversely affect our revenue and results of operations.

The National Environmental Policy Act, or NEPA, establishes a national environmental policy and goals for the protection, maintenance and enhancement of the environment and provides a process for implementing these goals within federal agencies. A major federal agency action having the potential to significantly impact the environment requires review under NEPA. Many of our planned activities and those of any of our potential third-party operating partners are covered under categorical exclusions which results in a shorter NEPA review process. The Council on Environmental Quality has announced an intention to reinvigorate NEPA reviews and on March 12, 2012, issued final guidance that may result in longer review processes that could lead to delays and increased costs that could materially adversely affect our revenues and results of operations.

Climate Change

Significant studies and research have been devoted to climate change and global warming, and climate change has developed into a major political issue in the United States and globally. Certain research suggests that greenhouse gas emissions contribute to climate change and pose a threat to the environment. Recent scientific research and political debate has focused in part on carbon dioxide and methane incidental to oil and natural gas exploration and production.

In the United States, legislative and regulatory initiatives are underway to limit greenhouse gas emissions. The U.S. Congress has considered legislation that would control GHG emissions through a “cap and trade” program and several states have already implemented programs to reduce GHG emissions. The U.S. Supreme Court determined that GHG emissions fall within the federal Clean Air Act, or the CAA, definition of an “air pollutant,” and in response the EPA promulgated an endangerment finding paving the way for regulation of GHG emissions under the CAA. In 2010, the EPA issued a final rule, known as the “Tailoring Rule,” that makes certain large stationary sources and modification projects subject to permitting requirements for greenhouse gas emissions under the Clean Air Act.

In addition, in September 2009, the EPA issued a final rule requiring the reporting of GHGs from specified large GHG emission sources in the United States beginning in 2011 for emissions in 2010. On November 30, 2010, the EPA published a final rule expanding its existing GHG emissions reporting to include onshore and offshore oil and natural gas systems beginning in 2012. We and any of our potential third party operating partners are required to report their greenhouse gas emissions under these rules. Because regulation of GHG emissions is relatively new, further regulatory, legislative and judicial developments are likely to occur. Such developments may affect how these GHG initiatives will impact us. Moreover, while the U.S. Supreme Court held in its June 2011 decision American Electric Power Co. v. Connecticut that, with respect to claims concerning GHG emissions, the federal common law of nuisance was displaced by the federal Clean Air Act, the Court left open the question of whether tort claims against sources of GHG emissions alleging property damage may proceed under state common law. There thus remains some litigation risk for such claims. Due to the uncertainties surrounding the regulation of and other risks associated with GHG emissions, we cannot predict the financial impact of related developments on us.

Legislation or regulations that may be adopted to address climate change could also affect the markets for our products by making our products more or less desirable than competing sources of energy. To the extent that our products are competing with higher greenhouse gas emitting energy sources, our products would become more desirable in the market with more stringent limitations on greenhouse gas emissions. To the extent that our products are competing with lower greenhouse gas emitting energy sources such as solar and wind, our products would become less desirable in the market with more stringent limitations on greenhouse gas emissions. We cannot predict with any certainty at this time how these possibilities may affect our operations.

The majority of scientific studies on climate change suggest that stronger storms may occur in the future in the areas where we operate, although the scientific studies are not unanimous. Although operators may take steps to mitigate physical risks from storms, no assurance can be given that future storms will not have a material adverse effect on our business.

Existing and Probable Government Regulation to Our Current and Intended Business

Exchange Act

We are subject to the following regulations of the Exchange Act, and applicable securities laws, rules and regulations promulgated under the Exchange Act by the SEC. Compliance with these requirements of the Exchange Act increases our legal and accounting costs.

Smaller Reporting Company

We are subject to the reporting requirements of Section 13 of the Exchange Act, and subject to the disclosure requirements of Regulation S-K of the SEC, as a “smaller reporting company.” That designation will relieve us of some of the informational requirements of Regulation S-K.

Sarbanes/Oxley Act

We are also subject to the Sarbanes-Oxley Act of 2002 (the “Sarbanes/Oxley Act”). The Sarbanes/Oxley Act created a strong and independent accounting oversight board to oversee the conduct of auditors of public companies and strengthens auditor independence. It also requires steps to enhance the direct responsibility of senior members of management for financial reporting and for the quality of financial disclosures made by public companies; establishes clear statutory rules to limit, and to expose to public view, possible conflicts of interest affecting securities analysts; creates guidelines for audit committee members’ appointment, compensation and oversight of the work of public companies’ auditors; management assessment of our internal controls; prohibits certain insider trading during pension fund blackout periods; requires companies and auditors to evaluate internal controls and procedures; and establishes a federal crime of securities fraud, among other provisions. Compliance with the requirements of the Sarbanes/Oxley Act will substantially increase our legal and accounting costs.

Exchange Act Reporting Requirements

Section 14(a) of the Exchange Act requires all companies with securities registered pursuant to Section 12(g) of the Exchange Act like we are to comply with the rules and regulations of the SEC regarding proxy solicitations, as outlined in SEC Regulation 14A. Matters submitted to shareholders at a special or annual meeting thereof or pursuant to a written consent will require us to provide our shareholders with the information outlined in Schedules 14A (where proxies are solicited) or 14C (where consents in writing to the action have already been received or are anticipated to be received) of SEC Regulation 14, as applicable; and preliminary copies of this information must be submitted to the SEC at least 10 days prior to the date that definitive copies are forwarded to our shareholders.

We are also required to file annual reports on Form 10-K and quarterly reports on Form 10-Q with the SEC on a regular basis, and will be required to timely disclose certain material events (e.g., changes in corporate control; acquisitions or dispositions of a significant amount of assets other than in the ordinary course of business; and bankruptcy) in Current Reports on Form 8-K.

Number of Total Employees and Number of Full-Time Employees

We have one full-time employee, E. Will Gray II, our Chief Executive Officer and director.

Reports to Security Holders

You may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. You may also find all of the reports that we have filed electronically with the SEC at their Internet site www.sec.gov.

RISK FACTORS

As we are a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information under this item; however, we believe this information may be of value to our shareholders for this filing. We reserve the right not to provide risk factors in our future filings. Our primary risk factors and other considerations include:

Risks Related to the Company

You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. If any of the following risks actually occur, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

In any business venture, there are substantial risks specific to the particular enterprise which cannot be ascertained until a potential acquisition, reorganization or merger candidate has been identified ; however, at a minimum, the Company ’ s present and proposed business operations will be highly speculative and be subject to the same types of risks inherent in any new or unproven venture, and will include those types of risk factors outlined below.

Extremely Limited Assets ; No Source of Revenue

The Company has virtually no assets and has had no revenue for over the past twenty years or to the date hereof. The Company can provide no assurance that any acquired business, including the business acquired in the Merger with Dala, will produce any material revenues for the Company or its stockholders or that any such business will operate on a profitable basis.

Auditor’s ‘Going Concern’ Opinion

The Independent Auditor’s Report issued in connection with the audited financial statements of our Company for the last fiscal year expresses “substantial doubt about its ability to continue as a going concern,” due to our Company ’ s status as a start up and our lack of profitable operations.

No Established Market for Common Stock ; No Market for Shares

On June 14, 2007, our common stock was approved for trading on the OTC Bulletin Board of the NASD under the symbol “ WSPD.” Since that time, there have been few trades and a limited volume of shares sold on the OTC Bulletin Board. Since September 30, 2013 only two hundred shares have traded on the OTC Bulletin Board. There is currently no established trading market for such shares and there can be no assurance that such a market will ever develop or be maintained. Any market price for shares of common stock of our Company is likely to be very volatile, and numerous factors beyond the control of our Company may have a significant effect. In addition, the stock markets generally have experienced, and continue to experience, extreme price and volume fluctuations which have affected the market price of many small capital companies and which have often been unrelated to the operating performance of these companies. These broad market fluctuations, as well as general economic and political conditions, may adversely affect the market price of our Company’s common stock in any market that may develop. Sales of “restricted securities” under Rule 144 may also have an adverse effect on any market that may develop.

Risks of “Penny Stock”

Our Company’s common stock may be deemed to be “penny stock” as that term is defined in Section 240.3a511 of the Exchange Act. Penny stocks are stocks (i) with a price of less than five dollars per share ; (ii) that are not traded on a “ recognized ” national exchange ; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQlisted stocks must still meet requirement (i) above) ; or (iv) in issuers with net tangible assets less than $2,000,000 (if the issuer has been in continuous operation for at least three years) or $5,000,000 (if in continuous operation for less than three years), or with average revenues of less than $6,000,000 for the last three years.

Section 15(g) of the Exchange Act and Rule 15g2 of the Securities and Exchange Commission require brokerdealers dealing in penny stocks to provide potential investors with a document disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the document before effecting any transaction in a penny stock for the investor’s account. Potential investors in our Company’s common stock are urged to obtain and read such disclosure carefully before purchasing any shares that are deemed to be “penny stock.”

Moreover, Rule 15g9 of the Securities and Exchange Commission requires brokerdealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the brokerdealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives ; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions ; (iii) provide the investor with a written statement setting forth the basis on which the brokerdealer made the determination in (ii) above ; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor ’ s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for investors in our Company’s common stock to resell their shares to third parties or to otherwise dispose of them.

There has been no “established public market” for the Company’s common stock. On June 14, 2007, our Company obtained a trading symbol “WSPD” on the OTC Bulletin Board of the NASD. At such time as our Company completes a merger or acquisition transaction, if at all, we may attempt to qualify for quotation on either NASDAQ or a national securities exchange. However, at least initially, any trading in our common stock will most likely be conducted in the overthecounter market in the pink sheets, the OTCQB or the OTC Bulletin Board.

Need for any Governmental Approval of Principal Products of Services

Because our Company currently produces no products or services, we are not presently subject to any governmental regulation in this regard. However, as a result of the Merger, , we will become subject to all governmental approval requirements to which the merged or acquired entity is subject. The oil exploration industry, the industry the Company will be engaged in post-Merger, is a highly-regulated industry, and the Company will need to obtain certain government approvals for its operations.

We May Not be Able to Effectively Manage Our Growth.

Our strategy envisions growing our business. Any growth in or expansion of our business is likely to continue to place a strain on our management and administrative resources, infrastructure and systems. As with other growing businesses, we expect that we will need to further refine and expand our business development capabilities, our systems and processes and our access to financing sources. We also will need to hire, train, supervise and manage new employees. These processes are time consuming and expensive, will increase management responsibilities and will divert management attention. We cannot assure you that we will be able to:

expand our products effectively or efficiently or in a timely manner;

allocate our human resources optimally;

meet our capital needs;

identify and hire qualified employees or retain valued employees; or

incorporate effectively the components of any business or product line that we may acquire in our effort to achieve growth.

Our inability or failure to manage our growth and expansion effectively could harm our business and materially and adversely affect our operating results and financial condition.

We Will be Required to Attract and Retain Top Quality Talent to Compete in the Marketplace.

We believe our future growth and success will depend in part on our ability to attract and retain highly skilled managerial, operational, and finance personnel. There can be no assurance of success in attracting and retaining such personnel. Shortages in qualified personnel could limit our ability to drill for oil and continue the exploration of the Property.

We Will be Subject to Evolving and Expensive Corporate Governance Regulations and Requirements. Our Failure to Adequately Adhere to These Requirements or the Failure or Circumvention of Our Controls and Procedures Could Seriously Harm our Business.

As a publicly traded company, we are subject to various federal, state and other rules and regulations, including applicable requirements of the Sarbanes-Oxley Act of 2002. Compliance with these evolving regulations is costly and requires a significant diversion of management time and attention, particularly with regard to our disclosure controls and procedures and our internal control over financial reporting. Our internal controls and procedures may not be able to prevent errors or fraud in the future. Faulty judgments, simple errors or mistakes, or the failure of our personnel to adhere to established controls and procedures may make it difficult for us to ensure that the objectives of the control system are met. A failure of our controls and procedures to detect other than inconsequential errors or fraud could seriously harm our business and results of operations.

Risks Related to Our Operations Post-Merger

Oil and Gas Price Fluctuations in the Market May Adversely Affect the Results of Our Operations.

Our profitability, cash flows and the carrying value of our oil and natural gas properties are highly dependent upon the market prices of oil and natural gas. Substantially all of our sales of oil and natural gas, if any, are made in the spot market, or pursuant to contracts based on spot market prices, and not pursuant to long-term, fixed-price contracts. Accordingly, the prices received for our oil and natural gas production are dependent upon numerous factors beyond our control. These factors include the level of consumer product demand, governmental regulations and taxes, the price and availability of alternative fuels, the level of foreign imports of oil and natural gas and the overall economic environment.

Historically, the oil and natural gas markets have proven cyclical and volatile as a result of factors that are beyond our control. Any additional declines in oil and natural gas prices or any other unfavorable market conditions could have a material adverse effect on our financial condition and on the carrying value of our proved reserves.

Actual Quantities of Recoverable Oil and Gas Reserves and Future Cash Flows from those Reserves Most Likely Will Vary from Our Estimates.

Estimating accumulations of oil and gas is complex. The process relies on interpretations of available geological, geophysical, engineering and production data. The extent, quality and reliability of this data can vary. The process also requires certain economic assumptions, some of which are mandated by the SEC, such as oil and gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The accuracy of a reserve estimate is a function of:

the quality and quantity of available data;

the interpretation of that data;

the accuracy of various mandated economic assumptions; and

the judgment of the persons preparing the estimate.

Estimates of proved reserves prepared by others might differ materially from our estimates. Actual quantities of recoverable oil and gas reserves, future production, oil and gas prices, revenues, taxes, development expenditures and operating expenses most likely will vary from our estimates. Any significant variance could materially affect the quantities and net present value of our reserves. In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development and prevailing oil and gas prices. Our reserves also may be susceptible to drainage by operators on adjacent properties.

Our Operations Will Require Significant Expenditures of Capital that May Not be Recovered.

We will require significant expenditures of capital in order to locate and develop producing properties and to drill exploratory and exploitation wells. In conducting exploration, exploitation and development activities from a particular well, the presence of unanticipated pressure or irregularities in formations, miscalculations or accidents may cause our exploration, exploitation, development and production activities to be unsuccessful, potentially resulting in abandonment of the well. This could result in a total loss of our investment. In addition, the cost and timing of drilling, completing and operating wells is difficult to predict.

Compliance with, or Breach of, Environmental Laws Can be Costly and Could Limit Our Operations.

Our operations will be subject to numerous and frequently changing laws and regulations governing the discharge of materials into the environment or otherwise relating to environmental protection. Any properties we might own for the exploration and production of oil and gas and the wastes disposed on these properties may be subject to the Comprehensive Environmental Response, Compensation and Liability Act, the Oil Pollution Act of 1990, the Resource Conservation and Recovery Act, the Federal Water Pollution Control Act and analogous state laws. Under such laws, we could be required to remove or remediate previously released wastes or property contamination. Laws and regulations protecting the environment have generally become more stringent and may, in some cases, impose “strict liability” for environmental damage. Strict liability means that we may be held liable for damage without regard to whether we were negligent or otherwise at fault. Environmental laws and regulations may expose us to liability for the conduct of or conditions caused by others or for acts that were in compliance with all applicable laws at the time they were performed. Failure to comply with these laws and regulations may result in the imposition of administrative, civil and criminal penalties.

Although we believe that our operations are in substantial compliance with existing requirements of governmental bodies, our ability to conduct continued operations is subject to satisfying applicable regulatory and permitting controls. Our current permits and authorizations and ability to get future permits and authorizations may be susceptible on a going forward basis, to increased scrutiny, greater complexity resulting in increased costs, or delays in receiving appropriate authorizations.

We are Subject to Changing Laws and Regulations and Other Governmental Actions that Can Significantly and Adversely Affect Our Business.

Federal, state, local, territorial and foreign laws and regulations relating to tax increases and retroactive tax claims, disallowance of tax credits and deductions, expropriation or nationalization of property, mandatory government participation, cancellation or amendment of contract rights, and changes in import and export regulations, limitations on access to exploration and development opportunities, as well as other political developments may affect our operations.

Because of the speculative nature of oil and gas exploration, there is risk that we will not find commercially exploitable oil and gas and that our business will fail.

The search for commercial quantities of oil and natural gas as a business is extremely risky. We cannot provide investors with any assurance that any properties in which we obtain a mineral interest will contain commercially exploitable quantities of oil and/or gas. The exploration expenditures to be made by us may not result in the discovery of commercial quantities of oil and/or gas. Problems such as unusual or unexpected formations or pressures, premature declines of reservoirs, invasion of water into producing formations and other conditions involved in oil and gas exploration often result in unsuccessful exploration efforts. If we are unable to find commercially exploitable quantities of oil and gas, and/or we are unable to commercially extract such quantities, we may be forced to abandon or curtail our business plan, and as a result, any investment in us may become worthless.

We May Not Produce Any Oil or Gas.

We are an exploratory company and although the Property has been thoroughly explored and tested, we may not actually discover or produced any oil or gas.

The Oil and Gas we Produce May Not be Readily Marketable at the Time of Production.

Crude oil, natural gas, condensate and other oil and gas products are generally sold to other oil and gas companies, government agencies and other industries. The availability of ready markets for oil and gas that we might discover and the prices obtained for such oil and gas depend on many factors beyond our control, including:

the extent of local production and imports of oil and gas,

the proximity and capacity of pipelines and other transportation facilities,

fluctuating demand for oil and gas,

the marketing of competitive fuels, and

the effects of governmental regulation of oil and gas production and sales.

Natural gas associated with oil production is often not marketable due to demand or transportation limitations and is often flared at the producing well site. Pipeline facilities do not exist in certain areas of exploration and, therefore, we intend on utilizing trucks to transport any oil that is discovered.

The price of oil and natural gas has historically been volatile. If it were to decrease substantially, our projections, budgets and revenues would be adversely affected, potentially forcing us to make changes in our operations.

Our future financial condition, results of operations and the carrying value of any oil and natural gas interests we acquire will depend primarily upon the prices paid for oil and natural gas production. Oil and natural gas prices historically have been volatile and likely will continue to be volatile in the future, especially given current world geopolitical conditions. Our cash flows from operations are highly dependent on the prices that we receive for oil and natural gas. This price volatility also affects the amount of our cash flows available for capital expenditures and our ability to borrow money or raise additional capital. The prices for oil and natural gas are subject to a variety of additional factors that are beyond our control. These factors include:

the level of consumer demand for oil and natural gas;

the domestic and foreign supply of oil and natural gas;

the ability of the members of the Organization of Petroleum Exporting Countries ("OPEC") to agree to and maintain oil price and production controls;

the price of foreign oil and natural gas;

domestic governmental regulations and taxes;

the price and availability of alternative fuel sources;

weather conditions;

market uncertainty due to political conditions in oil and natural gas producing regions, including the Middle East; and

worldwide economic conditions.

These factors as well as the volatility of the energy markets generally make it extremely difficult to predict future oil and natural gas price movements with any certainty. Declines in oil and natural gas prices affect our revenues, and could reduce the amount of oil and natural gas that we can produce economically. Accordingly, such declines could have a material adverse effect on our financial condition, results of operations, oil and natural gas reserves and the carrying values of our oil and natural gas properties. If the oil and natural gas industry experiences significant price declines, we may be unable to make planned expenditures, among other things. If this were to happen, we may be forced to abandon or curtail our business operations, which would cause the value of an investment in us to decline in value, or become worthless.

Because of the inherent dangers involved in oil and gas operations, there is a risk that we may incur liability or damages as we conduct our business operations, which could force us to expend a substantial amount of money in connection with litigation and/or a settlement.

The oil and natural gas business involves a variety of operating hazards and risks such as well blowouts, pipe failures, casing collapse, explosions, uncontrollable flows of oil, natural gas or well fluids, fires, spills, pollution, releases of toxic gas and other environmental hazards and risks. These hazards and risks could result in substantial losses to us from, among other things, injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation and penalties and suspension of operations. In addition, we may be liable for environmental damages caused by previous owners of property purchased and leased by us. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce or eliminate the funds available for exploration, development or acquisitions or result in the loss of our properties and/or force us to expend substantial monies in connection with litigation or settlements. We currently have no insurance to cover such losses and liabilities, and even if insurance is obtained, there can be no assurance that it will be adequate to cover any losses or liabilities. We cannot predict the availability of insurance or the availability of insurance at premium levels that justify our purchase. The occurrence of a significant event not fully insured or indemnified against could materially and adversely affect our financial condition and operations. We may elect to self-insure if management believes that the cost of insurance, although available, is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. The occurrence of an event not fully covered by insurance could have a material adverse effect on our financial condition and results of operations, which could lead to any investment in us becoming worthless.

We May Encounter Operating Hazards that May Result in Substantial Losses.

We will be subject to operating hazards normally associated with the exploration and production of oil and gas, including hurricanes, blowouts, explosions, oil spills, cratering, pollution, earthquakes, labor disruptions and fires. The occurrence of any such operating hazards could result in substantial losses to us due to injury or loss of life and damage to or destruction of oil and gas wells, formations, production facilities or other properties. We maintain insurance coverage limiting financial loss resulting from certain of these operating hazards. We do not maintain full insurance coverage for all matters that may adversely affect our operations, including war, terrorism, nuclear reactions, government fines, treatment of waste, blowout expenses, wind damage and business interruptions. Losses and liabilities arising from uninsured or underinsured events could reduce our revenues or increase our costs. There can be no assurance that any insurance will be adequate to cover losses or liabilities associated with operational hazards. We cannot predict the continued availability of insurance, or its availability at premium levels that justify its purchase.

We Face Strong Competition From Larger Oil and Gas Companies, which Could Result in Adverse Effects on Our Business.

The exploration and production business is highly competitive. Many of our competitors have substantially larger financial resources, staffs and facilities. Our competitors in the United States include numerous major oil and gas exploration and production companies. Additionally, other companies engaged in our line of business may compete with us from time to time in obtaining capital from investors. Competitors include larger companies which, in particular, may have access to greater resources, may be more successful in the recruitment and retention of qualified employees and may conduct their own refining and petroleum marketing operations, which may give them a competitive advantage. Actual or potential competitors may be strengthened through the acquisition of additional assets and interests. Additionally, there are numerous companies focusing their resources on creating fuels and/or materials which serve the same purpose as oil and gas, but are manufactured from renewable resources.

Our estimates of the volume of reserves could have flaws, or such reserves could turn out not to be commercially extractable. As a result, our future revenues and projections could be incorrect.

Estimates of reserves and of future net revenues prepared by different petroleum engineers may vary substantially depending, in part, on the assumptions made and may be subject to adjustment either up or down in the future. Our actual amounts of production, revenue, taxes, development expenditures, operating expenses, and quantities of recoverable oil and gas reserves may vary substantially from the estimates. Oil and gas reserve estimates are necessarily inexact and involve matters of subjective engineering judgment. In addition, any estimates of our future net revenues and the present value thereof are based on assumptions derived in part from historical price and cost information, which may not reflect current and future values, and/or other assumptions made by us that only represent our best estimates. If these estimates of quantities, prices and costs prove inaccurate, we may be unsuccessful in expanding our oil and gas reserves base with our acquisitions. Additionally, if declines in and instability of oil and gas prices occur, then write downs in the capitalized costs associated with any oil and gas assets we obtain may be required. Because of the nature of the estimates of our reserves and estimates in general, we can provide no assurance that reductions to our estimated proved oil and gas reserves and estimated future net revenues will not be required in the future, and/or that our estimated reserves will be present and/or commercially extractable. If our reserve estimates are incorrect, the value of our common stock could decrease and we may be forced to write down the capitalized costs of our oil and gas properties.

Our business will suffer if we cannot obtain or maintain necessary licenses.

Our operations will require licenses, permits and in some cases renewals of licenses and permits from various governmental authorities. Our ability to obtain, sustain or renew such licenses and permits on acceptable terms is subject to change in regulations and policies and to the discretion of the applicable governments, among other factors. Our inability to obtain, or our loss of or denial of extension of, any of these licenses or permits could hamper our ability to produce revenues from our operations.

Our Operations are Subject to Various Litigation that Could Have an Adverse Effect on Our Business.

From time to time we may become a defendant in various litigation matters. The nature of our operations expose us to further possible litigation claims in the future. There is risk that any matter in litigation could be adversely decided against us regardless of our belief, opinion and position, which could have a material adverse effect on our financial condition and results of operations. Litigation is highly costly and the costs associated with defending litigation could also have a material adverse effect on our financial condition.

We May be Affected by Global Climate Change or by Legal, Regulatory, or Market Responses to Such Change.

The growing political and scientific sentiment is that increased concentrations of carbon dioxide and other greenhouse gases in the atmosphere are influencing global weather patterns. Changing weather patterns, along with the increased frequency or duration of extreme weather conditions, could impact the availability or increase the cost to produce our products. Additionally, the sale of our products can be impacted by weather conditions.

Concern over climate change, including global warming, has led to legislative and regulatory initiatives directed at limiting the greenhouse gas emissions. For example, proposals that would impose mandatory requirements on greenhouse gas emissions continue to be considered by policy makers in the territories we operate. Laws enacted that directly or indirectly affect our oil and gas production could impact our business and financial results.

Risks Related to our Securities

Our Stock Price May be Volatile, which May Result in Losses to Our Shareholders.

The stock markets have experienced significant price and trading volume fluctuations, and the market prices of companies listed on the over-the-counter Bulletin Board quotation system in which shares of our common stock are listed, have been volatile in the past and have experienced sharp share price and trading volume changes. The trading price of our common stock is likely to be volatile and could fluctuate widely in response to many factors, including the following, some of which are beyond our control:

variations in our operating results;

changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;

changes in operating and stock price performance of other companies in our industry;

additions or departures of key personnel; and

future sales of our common stock.

Domestic and international stock markets often experience significant price and volume fluctuations. These fluctuations, as well as general economic and political conditions unrelated to our performance, may adversely affect the price of our common stock.

Our Common Shares May Become Thinly Traded and You May be Unable to Sell at or Near Ask Prices, or at All.

We cannot predict the extent to which an active public market for trading our common stock will be sustained.

This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community who generate or influence sales volume. Even if we came to the attention of such persons, those persons tend to be risk-averse and may be reluctant to follow, purchase, or recommend the purchase of shares of an unproven company such as ours until such time as we become more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our common stock will develop or be sustained, or that current trading levels will be sustained.

The market price for our common stock is particularly volatile given our status as a relatively small company, which could lead to wide fluctuations in our share price. You may be unable to sell your common stock at or above your purchase price if at all, which may result in substantial losses to you.

Shareholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence of these patterns or practices could increase the volatility of our share price.

Because the SEC Imposes Additional Sales Practice Requirements on Brokers Who Deal in Shares of Penny Stocks, Some Brokers May be Unwilling to Trade Our Securities. This Means that You May have Difficulty Reselling Your Shares, which May Cause the Value of Your Investment to Decline.

Our shares are classified as penny stocks and are covered by Section 15(g) of the Exchange Act which imposes additional sales practice requirements on brokers-dealers who sell our securities. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.

Financial Industry Regulatory Authority (FINRA) Sales Practice Requirements May Limit Your Ability to Buy and Sell Our Common Stock, which Could Depress the Price of Our Shares.

FINRA rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the customer. Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status and investment objectives, among other things. Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers. Thus, FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our shares, have an adverse effect on the market for our shares, and thereby depress our share price.

Volatility in Our Common Share Price May Subject Us to Securities Litigation.

The market for our common stock is characterized by significant price volatility as compared to seasoned issuers, and we expect that our share price will continue to be more volatile than a seasoned issuer for the indefinite future. In the past, plaintiffs have often initiated securities class action litigation against a company following periods of volatility in the market price of its securities. We may, in the future, be the target of similar litigation. Securities litigation could result in substantial costs and liabilities and could divert management's attention and resources.

Our Business is Subject to Changing Regulations Related to Corporate Governance and Public Disclosure that have Increased Both Our Costs and the Risk of Noncompliance.

Because our common stock is publicly traded, we are subject to certain rules and regulations of federal, state and financial market exchange entities charged with the protection of investors and the oversight of companies whose securities are publicly traded. These entities, including the Public Company Accounting Oversight Board, the SEC and FINRA, have issued requirements and regulations and continue to develop additional regulations and requirements in response to corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley Act of 2002. Our efforts to comply with these regulations have resulted in, and are likely to continue resulting in, increased general and administrative expenses and diversion of management time and attention from revenue-generating activities to compliance activities. Because new and modified laws, regulations and standards are subject to varying interpretations in many cases due to their lack of specificity, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices.

We Will Incur Increased Costs and Compliance Risks as a Result of Becoming a Public Company.

We will incur costs associated with our public company reporting requirements. We also anticipate that we will incur costs associated with recently adopted corporate governance requirements, including certain requirements under the Sarbanes-Oxley Act of 2002, as well as new rules implemented by the SEC and FINRA. We expect these rules and regulations, in particular Section 404 of the Sarbanes-Oxley Act of 2002, to significantly increase our legal and financial compliance costs and to make some activities more time-consuming and costly. Like many smaller public companies, we face a significant impact from required compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Section 404 requires management of public companies to evaluate the effectiveness of internal control over financial reporting and the independent auditors to attest to the effectiveness of such internal controls and the evaluation performed by management. The SEC has adopted rules implementing Section 404 for public companies as well as disclosure requirements. The Public Company Accounting Oversight Board, or PCAOB, has adopted documentation and attestation standards that the independent auditors must follow in conducting its attestation under Section 404. We are currently preparing for compliance with Section 404; however, there can be no assurance that we will be able to effectively meet all of the requirements of Section 404 as currently known to us in the currently mandated timeframe. Any failure to implement effectively new or improved internal controls, or to resolve difficulties encountered in their implementation, could harm our operating results, cause us to fail to meet reporting obligations or result in management being required to give a qualified assessment of our internal controls over financial reporting or our independent auditors providing an adverse opinion regarding management’s assessment. Any such result could cause investors to lose confidence in our reported financial information, which could have a material adverse effect on our stock price.

We also expect these new rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our Board of Directors or as executive officers. We are currently evaluating and monitoring developments with respect to these new rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

Sales of Our Currently Issued and Outstanding Stock May Become Freely Tradable Pursuant to Rule 144 and May Dilute the Market for Your Shares and have a Depressive Effect on the Price of the Shares of Our Common Stock.

A majority of the outstanding shares of our common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act of 1933, as amended (the “Securities Act”) (“Rule 144”). As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Securities Act and as required under applicable state securities laws. Rule 144 provides in essence that one year following a company ceasing to be a “shell company” and filing Form 10 information with the SEC to that effect, a non-affiliate who has held restricted securities for a period of at least six months may sell their shares of common stock. Under Rule 144, affiliates who have held restricted securities for a period of at least six months may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1% of a company’s outstanding shares of common stock or the average weekly trading volume during the four calendar weeks prior to the sale (the four calendar week rule does not apply to companies quoted on the OTCQB). Pursuant to Rule 144, shareholders must wait at least one year from the date of our filing of a Form 8-K with requisite Form 10 information to avail themselves of Rule 144 unless we file a registration statement for the sale of such shares prior thereto. A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market that may develop.

FINANCIAL INFORMATION

Please see the pro-forma financial statements for Dala and Westcott as of March 31, 2014 . See Item 9.01.

PROPERTIES

Dala does not own any property but has the rights to engage in oil exploration and development on approximately 300 leases in north central Kansas with total acreage of approximately 80,000 acres (the “Property”). The cost of the 300 lease assets was $1,898,946.

For the next fiscal year, we will conduct our administrative affairs from our President’s office, at minimal cost to the Company.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

The following table sets forth certain information concerning the number of shares our common stock owned beneficially as of June 3, 2014 (after the Merger and the Offering) by: (i) our directors and executive officer; and (ii) each person or group of persons known by us to beneficially own more than 5% of our outstanding shares of common stock. Unless otherwise indicated, the shareholders listed below possess sole voting and investment power with respect to the shares they own.

5% Shareholders


Name and Address of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership ⁽¹⁾	Percent of Class after the Merger ⁽²⁾ (%)	Percent of Class after the Offering (based on $2,052,000 raised) ⁽³⁾

Orinoco Revocable Trust	Common	1,830,000	14.64%	10.01%
1010 10 ^th Street Golden, CO 80401	Series A 6% Convertible Preferred	100		1.56%

Cottman Family Trust ⁽⁴⁾	Common	1,650,000	13.2%	9.02%
1010 10 ^th Street Golden, CO 80401	Series A 6% Convertible Preferred	100		1.56%

Terry Looper	Common	1,410,000	11.28%	7.71%
11757 Katy Freeway, Suite 1400 Houston, TX 77079	Series A 6% Convertible Preferred	100		1.56%

Oil & Gas Technology Consultants	Common	960,000	7.68%	5.25%
Citco Bldg., Wickhams Cay, Road Town, Tortola, BVI	Series A 6% Convertible Preferred	100		1.56%

E. Will Gray II ⁽⁵⁾ 112 Loraine South, Suite 266, Midland, Texas 79701	Common	890,000	7.12%	4.87%

J&M Wimbish Family Trust ⁽⁶⁾	Common	800,000	6.4%	4.38%
1010 10 ^th Street Golden, CO 80401	Series A 6% Convertible Preferred	50		.78%

Management


Name and Address of Beneficial Owner	Title of Class	Amount and Nature of Beneficial Ownership ⁽¹⁾	Percent of Class after the Merger ⁽²⁾ (%)	Percent of Class after the Offering (assuming maximum is raised) ⁽³⁾
E. Will Gray II ⁽⁵⁾ 112 Loraine South, Suite 266, Midland, Texas 79701	Common	890,000	7.12%	4.53%

Jonathan S. Wimbish ⁽⁶⁾	Common	800,000	6.4%	4.07%
1010 10 ^th Street Golden, CO 80401	Series A 6% Convertible Preferred	50		.73%

Clancy Cottman ⁽⁴⁾	Common	1,650,000	13.2%	8.40%
1010 10 ^th Street Golden, CO 80401	Series A 6% Convertible Preferred	100		1.45%

Callie Jones 175 South Main Street Fifteenth Floor Salt Lake City, Utah 84111		0	0%	0%

(1)

The number and percentage of shares beneficially owned is determined under rules of the SEC and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares as to which the individual has sole or shared voting power or investment power and also any shares, which the individual has the right to acquire within 60 days through the exercise of any stock option or other right. The persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and the information contained in the footnotes to this table.

(2)

Based on 12,500,000 issued (or issuable and fully-paid) and outstanding shares of common stock as of June 3, 2014, immediately following the Merger after the issuance of 10,000,000 shares as consideration for the Merger.

(3)

Based on 18,285,714 shares, consisting of 12,500,000 shares issued (or issuable and fully-paid) and outstanding shares of common stock following the Merger, 2,892,857 shares of common stock underlying the Series A 6% Convertible Preferred Shares sold as part of the Offering (assuming the maximum Offering is met) and 2,892,857 shares underlying the warrants issued as part of the Offering (assuming the maximum Offering is met). This number does not include 867,856 shares reserved for the payment of dividends for the Series A 6% Convertible Preferred Shares that the Company can elect to pay in cash or kind.

(4)

Clancy Cottman, our director, is the trustee of the Cottman Family Trust.

(5)

E. Will Gray II is a director and the Company’s CEO.

(6)

Jonathan S. Wimbish is a director of the Company.

SEC Rule 13d-3 generally provides that beneficial owners of securities include any person who, directly or indirectly, has or shares voting power and/or investment power with respect to such securities, and any person who has the right to acquire beneficial ownership of such security within 60 days. Any securities not outstanding which are subject to such options, warrants or conversion privileges exercisable within 60 days are treated as outstanding for the purpose of computing the percentage of outstanding securities owned by that person. Such securities are not treated as outstanding for the purpose of computing the percentage of the class owned by any other person.

DIRECTORS AND EXECUTIVE OFFICERS

There have been several significant change to the Company’s Board of Directors since the filing of our last Annual Report on Form 10-K. On February 12, 2014, E. Will Gray II was elected to serve as a director of the Company. On June 3, 2014, Clancy Cottman and Jonathan S. Wimbish were appointed to the Board of Directors, and Wayne Bassham and Todd Albiston resigned from their positions as directors. On that same day, E. Will Gray II resigned as Secretary of the Company and was appointed as the Chief Executive Officer of the Company, Wayne Bassham resigned as the President of the Company, Todd Albiston resigned as the Vice President of the Company, and Callie Jones was appointed as the Secretary of the Company. The following sets forth information about our directors and executive officers as of the date of this report, immediately following the Merger.


NAME	AGE	POSITION
E. Will Gray II	39	Chief Executive Officer & Director
Clancy Cottman	57	Chairman of the Board
Jonathan S. Wimbish	43	Director
Callie Jones	32	Secretary

Background of Executive Officer and Directors

E. Will Gray II, 39, our Chief Executive Officer and Director, is a seasoned oil executive who has operated in excess of over 300+ wells within Southeastern New Mexico, West Texas, and Oklahoma. Mr. Gray was the CEO and Chairman of Cross Border Resources, Inc. (formerly Doral Energy Corp) from December 10, 2008 to May 31, 2012. While serving as the Chairman and CEO of Cross Border Resources, Mr. Gray arranged for over $80MM in credit facilities and equity financing for the Company. Additionally, Mr. Gray has been solely responsible for approximately $73MM worth of A&D transactions since 2008 comprising a mix of both operated and non-operated assets within the Permian Basin. Subsequent to Cross Border Resources, Mr. Gray served in the capacity as EVP & Head of Capital Markets and Business Development for Resaca Exploitation, a Torch Energy portfolio company headquartered in Houston, Texas. Mr. Gray received his B.S. in Business Management from Texas State University in 1998. While attending Texas State University, Mr. Gray was a member of the Men’s Varsity Golf Team on which he earned Southland Conference All-Academic honors and was a member of the 1997 Southland Conference Golf Championship Team.

Clancy Cottman, 57, is the Chairman of our Board of Directors. Mr. Cottman is a Managing Partner of Chisholm Partners, LLC. Mr. Cottman has over 30 years experience in the oil and gas industry with a focus on joint ventures, acquisitions and project development. He is Chairman and CEO of NiMin Energy. Mr. Cottman has held various senior management positions at PetroFalcon, Benton Oil and Gas Company and Sun Exploration and Production. He has negotiated numerous oil and gas contracts and arranged multiple energy debt and equity financings in North America and internationally. He holds a BA from Rochester Institute of Technology and an MBA from the University of Rhode Island. Clancy is a Certified Petroleum Landman.

Jonathan S. Wimbish, CFA, 43, will serve as a Director to the Company post-Merger. Mr. Wimbish is an advisor to Chisholm Partners II, LLC, a partner of Kensington Investment Counsel, a registered investment advisor, and CFO of NiMin Energy. Prior to these activities, Mr. Wimbish was a Portfolio Manager, Managing Director and Co-Founder of Marketus, LLC, an equity-focused hedge fund management company. He managed all energy and industrial investments from its founding in 2002. Mr. Wimbish was also a Managing Director and Portfolio Manager at ING Furman Selz Asset Management and Analyst with Husic Capital Management. He began his career at MasterCard International and held roles of increasing responsibility. He is on the selection committee for the Sharpe Fellows program at University of California at Los Angeles and is a guest lecturer at the Marshall School of Business at University of Southern California. Mr. Wimbish holds a BA in Economics from UCLA, an MBA from Columbia Business School and is a CFA Charterholder.

Callie Jones, 32, will serve as the Secretary of the Company post-Merger. Ms. Jones is a partner in Brunson Chandler & Jones, PLLC, a law firm that was established in 2013. She has been practicing law since 2006. Her practice includes advising clients on a variety of corporate matters such as securities law, mergers & acquisitions, private placements, public offerings of equity, initial public offerings, and exchange offers. She has worked with individuals, start-up companies and national corporations as well as clients located in foreign countries. She holds a BA in English from the University of Utah and a JD from the J. Reuben Clark Law School at Brigham Young University.

Director Compensation

Currently, our directors receive no annual compensation for their service on the Board of Directors. Upon acceptance of the position of Secretary and Director of the Company on February 7, 2014, Mr. Gray purchased 890,000 shares of restricted common stock of the Company through a subscription agreement.

Pursuant to the Merger, Westcott granted Mr. Gray 400,000 stock options and granted Mr. Cottman and Mr. Wimbish each 100,000 stock options.

Director Qualifications

In evaluating potential directors, we have considered the following factors, among others:

The appropriate size of our Board of Directors relative to our business;

Our needs with respect to the particular talents and experience of our directors;

The knowledge, skills and experience of directors;

Familiarity with our business;

Experience with accounting rules and practices; and

The desire to balance the benefit of continuity with the periodic injection of the fresh perspective that may be provided by new members, when an increase in the size of our Board of Director is deemed to be reasonable.

Our goal is to assemble a Board of Directors that brings together a variety of perspectives and skills derived from high quality business and professional experience. In doing so, we will also consider candidates with appropriate non-business backgrounds.

Term of Office

Directors serve until the next annual meeting of our shareholders or until their successors are elected and qualify or until the earlier occurrence of his or her death, resignation or removal by our Board of Directors or shareholders. Each of our executive officers is elected by our Board of Directors, and their terms of office are at the discretion of our Board of Directors. Our executive officers serve until the earlier occurrence of the election of his or her successor at the next annual meeting of our Board of Directors, death, resignation or removal by our Board of Directors.

Identification of Significant Employees

We have no significant employees other than E. Will Gray II, our Chief Executive Officer, and a director.

Material Relationships between Our Affiliates and Dala Petroleum Corp.

The following are the material relationships between each of our affiliates and Dala:

Mr. Gray, the Secretary of the Company immediately prior to the Merger and the Chief Executive Officer of the Company immediately following the Merger, owned approximately 890,000 shares of common stock of Westcott just prior to the closing of the Merger, which then represented approximately 35.6% of the outstanding shares of common stock of Westcott prior to the Merger and the Offering.

Family Relationships

We currently do not have any officers or directors of our Company who are related to each other.

Involvement in Certain Legal Proceedings

During the past 10 years, no director, executive officer, promoter or control person of the Company has been involved in the following:

(1)

A petition under the Federal bankruptcy laws or any state insolvency law which was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;

(2)

Such person was convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);

(3)

Such person was the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities:

Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;

ii.

Engaging in any type of business practice; or

iii.

Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;

(4)

Such person was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph (f)(3)(i) of this section, or to be associated with persons engaged in any such activity;

(5)

Such person was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;

(6)

Such person was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;

(7)

Such person was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:

Any Federal or State securities or commodities law or regulation; or

ii.

Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or

iii.

Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

(8)

Such person was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act [15 U.S.C. 78c(a)(26)], any registered entity [as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29)]), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

Audit Committee and Audit Committee Financial Expert

We do not have an audit committee or an audit committee financial expert (as defined in Item 407 of Regulation S-K) serving on our Board of Directors. With our current business model, we do not believe we presently need an audit committee, but our Board of Directors will reevaluate this determination at least annually.

Code of Ethics

Our Board of Directors has adopted a Code of Ethics that is filed as an Exhibit to this Current Report. See Item 9.01.

EXECUTIVE COMPENSATION

Our chief executive officer will be compensated according to the terms of his Employment Agreement with the Company. He will receive a salary of $175,000 annually, standard health and employment benefits, and 400,000 incentive stock options at an exercise price of $0.70 that will vest over six years.

There are no other employment contracts (except for the Employment Agreement for Mr. Gray described herein), compensatory plans or arrangements, including payments to be received from us with respect to any executive officer, that would result in payments to such person because of his or her resignation, retirement or other termination of employment with the Company, or its subsidiaries, any change in control, or a change in the person’s responsibilities following a change in control of the Company.

Outstanding Equity Awards

As part of the Merger, the Company’s newly-appointed Chief Executive Officer and Directors were granted a total of 600,000 stock options. Mr. Gray was granted 400,000 stock options at an exercise price of $0.70 that will vest over six years (unless there is a change of control of the Company or if Dala’s operations are acquired by a third party, at which time all the unvested stock options granted under the Plan will immediately vest and be exercisable). Mr. Cottman and Mr. Wimbish were each granted 100,000 stock options at an exercise price of $0.70 that will vest over six years (unless there is a change of control of the Company or if Dala’s operations are acquired by a third party, at which time all the unvested stock options granted under the Plan will immediately vest and be exercisable).

Director Compensation

Currently, our directors receive no annual compensation for their service on the Board of Directors other than their receipt of stock options granted as part of the Merger.

Compensation Committee Interlocks and Insider Participation

We currently do not have a compensation committee of our Board of Directors. Our Board of Directors, comprised presently of three people, determines executive compensation.

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Director Independence

For purposes of determining director independence, we have applied the definitions set out in NASDAQ Rule 5605(a)(2). The OTCBB, on which shares of our common stock are quoted, does not have any director independence requirements. The NASDAQ definition of “Independent Officer” means, among other considerations, a person other than an “Executive Officer” or an employee or any other individual having a relationship, which in the opinion of the Company’s Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

According to the NASDAQ definition, E. Will Gray II is not an independent director because he is also an executive officer of the Company and a director.

Related Party Transactions

Dala has entered into a service agreement with Chisholm II, giving Dala the rights to use Chisholm II’s existing technical exploration team to further explore and develop the Property.

Pacific Oil & Gas LLC, a shareholder of Chisholm II, is owned in part by Clancy Cottman, our Chairman.

LEGAL PROCEEDINGS

We know of no material, existing or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, executive officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

MARKET PRICE OF AND DIVIDEND ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

Our common stock was listed on the OTC Bulletin Board of the National Association of Securities Dealers (“NASD” [now “FINRA”] ) on June 14, 2007, under the symbol “WSPD.” There is currently no established trading market for shares of our common stock. Management does not expect any viable market to develop in our common stock unless and until we complete an acquisition or merger. In any event, no assurance can be given that any market for our common stock will develop or be maintained.

For any market that develops for our common stock, the sale of “restricted securities” (common stock) pursuant to Rule 144 of the SEC by members of management or any other person to whom any such securities may be issued in the future may have a substantial adverse impact on any such public market. For information regarding the requirements of resales under Rule 144, see the heading “Rule 144” of this item below.

The following table sets forth, for the periods indicated over the last two years, the high and low closing bid quotations, as reported by the OTC Bulletin Board, and represents prices between dealers, does not include retail markups, markdowns or commissions, and may not represent actual transactions:


	Closing Bid
	High	Low
2011
October 1 – December 31	NONE	NONE
2012
January 3 – March 30	.15	.15
April 2 – June 29	.15	.15
July 2 – September 28	.01	.01
October 1 – December 31	.0015	.0015
2013
January 2 – March 28	.0015	.0015
April 1 – June 28	.01	.0021
July 1 – September 30	.01	.01
October 1 –December 31	.0015	.0015
2014
January 2 – March 31	.0015	.0015

These prices were obtained from the National Quotation Bureau, Inc. (“NQB”) and do not necessarily reflect actual transactions, retail markups, mark downs or commissions.

Rule 144

The following is a summary of the current requirements of Rule 144:


	Affiliate or Person Selling on Behalf of an Affiliate	Non-Affiliate (and has not been an Affiliate During the Prior Three Months)

Restricted Securities of Reporting Issuers	During six-month holding period – no resales under Rule 144 Permitted. After Six-month holding period – may resell in accordance with all Rule 144 requirements including: · Current public information, · Volume limitations, · Manner of sale requirements for equity securities, and · Filing of Form 144.	During six- month holding period – no resales under Rule 144 permitted. After six-month holding period but before one year – unlimited public resales under Rule 144 except that the current public information requirement still applies. After one-year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.

Restricted Securities of Non-Reporting Issuers	During one-year holding period – no resales under Rule 144 permitted. After one-year holding period – may resell in accordance with all Rule 144 requirements including: · Current public information, · Volume limitations, · Manner of sale requirements for equity securities, and · Filing of Form 144.	During one-year holding period – no resales under Rule 144 permitted. After one-year holding period – unlimited public resales under Rule 144; need not comply with any other Rule 144 requirements.

Shell Companies

The following is an excerpt from Rule 144(i) regarding resales of securities of shell companies:

“(i) Unavailability to securities of issuers with no or nominal operations and no or nominal non-cash assets .

(1)

This section is not available for the resale of securities initially issued by an issuer defined below:

(i) An issuer, other than a business combination related shell company, as defined in §230.405, or an asset-backed issuer, as defined in Item 1101(b) of Regulation AB (§229.1101(b) of this chapter), that has:

(A)

No or nominal operations; and

(B)

Either :

(1) No or nominal assets;

(2) Assets consisting solely of cash and cash equivalents; or

(3) Assets consisting of any amount of cash and cash equivalents and nominal other assets; or

(ii)

An issuer that has been at any time previously an issuer described in paragraph (i)(1)(i).

(2)

Notwithstanding paragraph (i)(1), if the issuer of the securities previously had been an issuer described in paragraph (i)(1)(i) but has ceased to be an issuer described in paragraph (i)(1)(i); is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issue was required to file such reports and materials), other than Form 8-K reports (§249.308 of this chapter); and has filed current “Form 10 information” with the Commission reflecting its status as an entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities may be sold subject to the requirements of this section after one year has elapsed from the date that the issuer filed “Form 10 information” with the Commission.

(3)

The term “Form 10 information” means the information that is required by Form 10 or Form 20-F (§249.220f of this chapter), as applicable to the issuer of the securities, to register under the Exchange Act each class of securities being sold under this rule. The issuer may provide the Form 10 information in any filing of the issuer with the Commission. The Form 10 information is deemed filed when the initial filing is made with the Commission.”

Securities of a “shell company” cannot be publicly sold under Rule 144 in the absence of compliance with subparagraph (i) of Rule 144, though the SEC has implied that these restrictions would not be enforced respecting securities issued by a “shell company” prior to it having been determined to be a “shell company.” The filing of this Current Report is intended to satisfy the filing of the “Form 10 Information” and commence the one year holding period of Rule 144(i).

Holders

We had approximately 556 common stockholders of record as of June 3, 2014. We have 13 preferred stockholders of record as of June 3, 2014.

Warrants

We have issued 2,892,857 warrants to purchase our common stock at an exercise price of $1.35 per share within three years of the Effective Date (as defined in the Stock Purchase Agreement of the Offering Documents.) The Effective Date is defined as earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission, (b) all of the underlying shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year anniversary of the Closing Date provided that a holder of underlying shares is not an Affiliate of the Company, all of the underlying shares may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the underlying shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.

Dividends

To date, the Company has not declared or paid cash dividends on its common stock. The Company presently intends to retain all future earnings, if any, for its business and does not anticipate paying cash dividends in the foreseeable future.

The Series A 6% Convertible Preferred Stock offered as part of the Offering will pay a dividend of six percent (6%) per annum, payable quarterly in arrears, as further described in the Certificate of Designation filed on May 30, 2014.

When and as declared by the Board of Directors, holders of the outstanding shares of common stock offered hereby will be entitled to non-cumulative dividends. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon the Company’s financial condition, results of operations, capital requirements, general business conditions, and such other factors as the Board of Directors may deem relevant.

Securities Authorized for Issuance under Equity Compensation Plans

The Company has granted 600,000 incentive employee stock options to its Chief Executive Officer and Directors pursuant to the Merger Agreement.

Use of Proceeds of Offering

Pursuant to the Offering, the Company offered to certain accredited and sophisticated investors a minimum of 2,000 Units and a maximum of 2,500 Units at a price of $1,000 per Unit for minimum gross offering proceeds of $2,000,000 and maximum gross offering proceeds of $2,500,000. The following table sets forth the use of proceeds assuming all the Units offering in the Maximum Offering are sold.

Assuming Sale of Maximum Offering


	Minimum Offering		Percentage of Proceeds of Minimum Offering	Maximum Offering		Percentage of Proceeds of Maximum Offering
Gross Offering Proceeds ⁽¹⁾	$	2,000,000	100%	$	2,500,000	100%
Expense allowances, fees and offering expenses ⁽²⁾	$	240,000	12.0%	$	240,000	9.6%
Net proceeds	$	1,760,000		$	2,260,000

Drilling (Dry Hole Cost)	$	450,000	22.5%	$	450,000	18.0%
Completion Costs (est. four wells)	$	250,000	12.5%	$	250,000	10.0%
Seismic (Stage I)	$	252,000	12.6%	$	414,000	16.6%
Seismic (Stage II)	$	300,000	15.0%	$	462,000	18.5%
Technical Services	$	300,000	15.0%	$	462,000	18.5%
General and Administrative ⁽³⁾	$	208,000	10.4%	$	222,000	8.9%
Total Application of Net Proceeds	$	2,000,000	100%	$	2,500,000	100%

⁽¹⁾ The Company offered the Units on a “best efforts” basis up to the Maximum Offering and may allow for oversubscription amounts up to 2,775 units.

⁽²⁾ The Company expects to incur certain accountable expenses related to this Offering, including printing, Blue Sky fees, filing fees, escrow fees, audit preparation and review fees, printing, postage, professional fees, the assumption of certain liabilities of Westcott, and travel expenses.

⁽³⁾ Represents estimated amounts we will apply towards dividends payable pursuant to the rights and preferences of the Series A 6% Convertible Preferred shares, working capital to cover our expected operating deficits for twelve months, salaries and general and administrative expenses and our costs to be a reporting public company.

The foregoing represents our best estimate of the allocation of the proceeds of the Offering based on our present plans and business conditions. However, there can be no assurance that unforeseen events or changes in business conditions will not result in the application of proceeds of the Offering in a manner other than is described in this Memorandum. Any such reallocation of the net proceeds of this Offering would be substantially limited to the categories set forth above. We believe we will have sufficient working capital for twelve months if we sell the Maximum Offering. Pending such uses, we may invest such funds in short-term, interest-bearing securities where there is appropriate safety of principal or in interest-bearing bank accounts.

Purchases of Equity Securities by Us and Affiliated Purchasers

On February 12, 2014, E. Will Gray II (then our Secretary and Director, and currently serving as our Chief Executive Officer) purchased 890,000 shares of restricted common stock of the Company at the purchase price of $0.01 per share. With the exception of the information provided under the heading “Changes in Control” of the caption “Securities Ownership of Management and Certain Beneficial Holders,” there were no other purchases of any of our outstanding securities by us or our affiliated persons during our last two fiscal years ended September 30, 2013, and 2012.

DESCRIPTION OF REGISTRANT’S SECURITIES

We have an authorized capital of 100,000,000 shares divided into 50,000,000 shares of common stock with a par value of $0.001 per share and 50,000,000 shares of preferred stock with a par value of $0.01, with 2,775 of the 50,000,000 shares of preferred stock designated as Series A 6% Convertible Preferred Stock 2,025 of which none are outstanding.

Common Stock

Prior to the Merger, there were 2,500,000 shares of common stock of the Company issued and outstanding. As consideration for the Merger, Chisholm II, the sole shareholder of Dala, received 10,000,000 restricted shares of Westcott. Immediately following the Merger, there will be 12,500,000 shares of common stock issued and outstanding in the Company without conversion of any Series A 6% Convertible Preferred Stock (or exercise of any stock options or warrants) into common stock.

Preferred Stock

Prior to the Offering, no shares of Series A 6% Convertible Preferred Stock had been issued. Through the Offering, the Company has now issued 2,025 shares of Series A 6% Convertible Preferred Stock.

The Series A 6% Convertible Preferred Stock has been designated with certain rights, preferences and limitations. Holders of Series A 6% Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 6% per annum, payable quarterly on January 1, April 1, July 1, and October 1, in cash from legally available funds or, at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock. Each share of Series A 6% Convertible Preferred Stock is convertible at any time at the option of the Holder into common stock at the conversion price of $0.70 per common share based on the total dollar amount invested (subject to adjustment as set forth in the Series A 6% Convertible Preferred Stock Certificate of Designation) Unless waived by the Holder, at no time will the Holder be able to convert the Series A 6% Convertible Preferred Stock into common stock that is equal to more than 4.99% of the total issued and outstanding shares of common stock of the Company (the “Conversion Limitation”). If the Holder gives the Company at least 61 days’ written notice, then the Holder may convert up to 9.99% of the total issued and outstanding shares of common stock of the Company.

Within sixty days of the Closing of the Offering, the Company shall file a Registration Statement registering all Registrable Securities (as defined in the Registration Rights Agreement) including the shares of common stock issuable upon conversion of the shares of Series A 6% Convertible Preferred Stock, the warrant shares offered in the Offering, and any shares that may be paid to the Holder as dividends on the Series A 6% Convertible Preferred Stock. The Company shall cause the Registration Statement to become effective within 180 days following the filing date (in the event of a “full review” by the SEC) or 150 days (if there is not a “full review” by the SEC). All fees associated with the Registration shall be borne by the Company. The Company may incur certain cash liquidated damages if the terms and timelines of the Registration Rights Agreement are not met.

Stock Options

The Company issued incentive stock options in connection with the Merger. The Company’s newly-appointed Chief Executive Officer and Directors were granted a total of 600,000 stock options. Mr. Gray was granted 400,000 stock options at an exercise price of $0.70 that will vest over six years (unless there is a change of control of the Company or if Dala’s operations are acquired by a third party, at which time all the unvested stock options granted under the Plan will immediately vest and be exercisable). Mr. Cottman and Mr. Wimbish were each granted 100,000 stock options at an exercise price of $0.70 that will vest over six years (unless there is a change in control of the Company or if Dala’s operations are acquired by a third party, at which time all the unvested stock options granted under the Plan will immediately vest and be exercisable).

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Our directors and officers is indemnified as provided by the Delaware General Corporation Law (“Section 145”) and our bylaws. We have been advised that, in the opinion of the SEC, indemnification for liabilities arising under the Securities Act is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event of a claim for indemnification against such liabilities is asserted by one of our directors, executive officers or controlling persons, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

FINANCIAL STATEMENTS AND EXHIBITS

Please see our interim financial statements for the three months ended March 31, 2014 and our audited financial statements for the fiscal years ended September 30, 2013, and 2012, along with the “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2014, which was filed with the SEC on May 15, 2014, and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2013, which was filed with the SEC on November 27, 2013.

Additionally, please see the proforma financial statements for Dala and Westcott as of March 31, 2014. See Item 9.01.

Item 5.01 Changes in Control of the Registrant.

On June 3, 2014, after the closing of the Merger, and the completed issuance of 10 million shares to the sole shareholder of Dala (that were immediately distributed on a pro rata basis to the sole shareholder’s members), a change of control of the Company occurred.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On June 3, 2014, Clancy Cottman and Jonathan S. Wimbish were appointed to the Board of Directors, and Wayne Bassham and Todd Albiston resigned from their positions as directors. On that same day, E. Will Gray II resigned as Secretary of the Company, Wayne Bassham resigned as the President of the Company, and Todd Albiston resigned as the Vice President of the Company. E. Will Gray II was appointed as the Chief Executive Officer of the Company and Callie Jones was appointed as the Secretary of the Company. Biographical information for each of the new directors is included in the “Directors and Executive Officers” section of the Form 10 information above.

Item 5.06 Change in Shell Company Status.

Based on the Merger described in Items 2.01 and 5.01 herein, we are no longer a “shell company” as defined in subparagraph (i) of Rule 144.

Item 9.01 Financial Statements and Exhibits.

(a)

Financial Statements of Business Acquired

Filed herewith as Exhibit 99.1 are:

Consolidated financial statements of Dala Petroleum Corp. from inception (January 17, 2014) to May 21, 2014

Pro-forma financial statements for Dala Petroleum Corp. and Westcott Products Corp. as of March 31, 2014

(c)

(b) See “Documents Incorporated by Reference,” below, for reference to our interim financial statements for the six months ended March 31, 2014, and our audited financial statements for the fiscal years ended September 30, 2013, and 2012. Exhibits


Exhibit
Number	Description of Exhibit	Filing
3.1	Articles of Incorporation	Filed with the SEC on January 23, 1989 and incorporated herein by reference.
3.1(a)	Amended Articles of Incorporation	Filed with the SEC on January 23, 1989 and incorporated herein by reference.
3.1(b)	Certificate of Designation for the Series A 6% Convertible Preferred Shares filed May 30, 2014	Filed herewith.
3.2	Bylaws	Filed with our initial Form 10-KSB for September 30, 2003 and incorporated herein by reference.
4.1	Registration Rights Agreement dated June 3, 2014	Filed herewith.
4.2	Form of Warrant dated June 3, 2014	Filed herewith.
4.3	Form of Lock-Up Agreement	Filed herewith.
4.4	Stock Option Grant Notice for E. Will Gray dated June 3, 2014	Filed herewith.
4.5	Stock Option Grant Notice for Clarence Cottman III dated June 3, 2014	Filed herewith.
4.6	Stock Option Grant Notice for Jonathan S. Wimbish dated June 3, 2014	Filed herewith.
10.1	Merger Agreement	Filed herewith.
10.2	Master Service Agreement	Filed herewith.
10.3	Option Participation Agreement	Filed herewith.
10.4	Form of Lease Agreement	Filed herewith.
10.5	List of Assigned Leases	Filed herewith.
10.6	Lease Assignment for Clay County, Kansas	Filed herewith.
10.7	Lease Assignment for Dickinson County, Kansas	Filed herewith.
10.8	Lease Assignment for Ottowa County, Kansas	Filed herewith.
10.9	Lease Assignment for Saline County, Kansas	Filed herewith.
10.10	Employment Agreement for E. Will Gray II	Filed herewith.
10.11	Private Placement Memorandum dated May 28, 2014	Filed herewith.
10.12	Form of Securities Purchase Agreement dated June 3, 2014	Filed herewith.
10.13	Escrow Agreement for Offering Funds	Filed herewith.
10.14	Jenson Services Escrow Agreement	Filed herewith.
99.1	Dala Petroleum Corp. Financial Statements for the Period from Inception (January 17, 2014) through May 21, 2014	Filed herewith.
99.2	Dala Petroleum Corp. Unaudited Pro-Forma Financial Statements	Filed herewith.

Additional Documents Incorporated by Reference

(i)

Quarterly Report on Form 10-Q filed on May 15, 2014;

(ii)

Quarterly Report on Form 10-Q filed on February 14, 2014;

(iii)

Annual Report filed on Form 10-K filed on November 27, 2013; and

(iv)

Annual Report filed on Form 10-K filed on D ecember 11, 2012.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

WESTCOTT PRODUCTS CORP.


Date:	June 3, 2014	By:	/s/ E. Will Gray II
			E. Will Gray II
			Chief Executive Officer and Director

Exhibit 3.1(b)

WESTCOTT PRODUCTS CORPORATION

CERTIFICATE OF DESIGNATION OF PREFERENCES,

RIGHTS AND LIMITATIONS

SERIES A 6% CONVERTIBLE PREFERRED STOCK

PURSUANT TO SECTION 151 OF THE

DELAWARE GENERAL CORPORATION LAW

The undersigned, Wayne Bassham and E. Will Gray II, do hereby certify that:

1. They are the President and Secretary, respectively, of Westcott Products Corporation, a Delaware corporation (the “ Corporation ”).

2. The Corporation is authorized to issue 50,000,000 shares of preferred stock, none of which have been issued.

3. The following resolutions were duly adopted by the board of directors of the Corporation (the “ Board of Directors ”):

WHEREAS, the Certificate of Incorporation of the Corporation provides for a class of its authorized stock known as Series A 6% Convertible Preferred Stock, consisting of 600,000 shares, $0.01 par value per share, issuable from time to time in one or more series, as filed with the Secretary of State of the State of Delaware on February 27, 2014 (the “600,000 Share Certificate”); and

WHEREAS, the Board of Directors deems it to be in the best interests of the Corporation to amend its Certificate of Incorporation to delete the 600,000 Share Certificate, of which no shares have been issued or are outstanding, and to further amend its Certificate of Incorporation by adopting the Certificate of Designation of Preferences, Rights and Limitations of Series A 6% Convertible Preferred Stock set forth below; and

WHEREAS, the Board of Directors is authorized to fix the dividend rights, dividend rate, voting rights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stock and the number of shares constituting any series and the designation thereof, of any of them; and

WHEREAS, it is the desire of the Board of Directors, pursuant to its authority as aforesaid, to fix the rights, preferences, restrictions and other matters relating to a series of the preferred stock, which shall consist of, except as otherwise set forth in the Purchase Agreement (as defined below), up to 2,025 shares of the preferred stock, which the Corporation has the authority to issue;

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby provide for the issuance of a series of preferred stock for cash or exchange of other securities, rights or property and does hereby fix and determine the rights, preferences, restrictions and other matters relating to such series of preferred stock as follows:

TERMS OF SERIES A 6% CONVERTIBLE PREFERRED STOCK

Section 1 .

Definitions . For the purposes hereof, the following terms shall have the following meanings:

“ Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act.

“ Alternate Consideration ” shall have the meaning set forth in Section 7(e).

“ Bankruptcy Event ” means any of the following events: (a) the Corporation or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Corporation or any Significant Subsidiary thereof, (b) there is commenced against the Corporation or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Corporation or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Corporation or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Corporation or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Corporation or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts, or (g) the Corporation or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

“ Base Conversion Price ” shall have the meaning set forth in Section 7(b).

“ Beneficial Ownership Limitation ” shall have the meaning set forth in Section 6(d).

“ Business Day ” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“ Buy-In ” shall have the meaning set forth in Section 6(c)(iv).

“ Change of Control Transaction ” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of effective control (whether through legal or beneficial ownership of capital stock of the Corporation, by contract or otherwise) of in excess of 33% of the voting securities of the Corporation (other than by means of conversion or exercise of Preferred Stock and the Securities issued together with the Preferred Stock), (b) the Corporation merges into or consolidates with any other Person, or any Person merges into or consolidates with the Corporation and, after giving effect to such transaction, the stockholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the Corporation or the successor entity of such transaction, (c) the Corporation sells or transfers all or substantially all of its assets to another Person and the stockholders of the Corporation immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately after the transaction, (d) a replacement at one time or within a one year period of more than one-half of the members of the Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board of Directors was approved by a majority of the members of the Board of Directors who are members on the Original Issue Date), or (e) the execution by the Corporation of an agreement to which the Corporation is a party or by which it is bound, providing for any of the events set forth in clauses (a) through (d) above.

“ Closing ” means the closing of the purchase and sale of the Securities pursuant to Section 2.1 of the Purchase Agreement.

“ Closing Date ” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto and all conditions precedent to (i) each Holder’s obligations to pay the Subscription Amount and (ii) the Corporation’s obligations to deliver the Securities have been satisfied or waived.

“ Commission ” means the United States Securities and Exchange Commission.

“ Common Stock ” means the Corporation’s common stock, par value $0.001 per share, and stock of any other class of securities into which such securities may hereafter be reclassified or changed.

“ Common Stock Equivalents ” means any securities of the Corporation or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“ Conversion Amount ” means the sum of the Stated Value at issue.

“ Conversion Date ” shall have the meaning set forth in Section 6(a).

“ Conversion Price ” shall have the meaning set forth in Section 6(b).

“ Conversion Shares ” means, collectively, the shares of Common Stock issuable upon conversion of the shares of Preferred Stock in accordance with the terms hereof.

“ Conversion Shares Registration Statement ” means a registration statement that registers the resale of all Conversion Shares of the Holders, who shall be named as “selling stockholders” therein and meets the requirements of the Registration Rights Agreement.

“ Dilutive Issuance ” shall have the meaning set forth in Section 7(b).

“ Dilutive Issuance Notice ” shall have the meaning set forth in Section 7(b).

“ Dividend Conversion Rate ” means the lesser of (a) the Conversion Price or (b) 90% of the lesser of (i) the average of the VWAPs for the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the applicable Dividend Payment Date or (ii) the average of the VWAPs for the 20 consecutive Trading Days ending on the Trading Day that is immediately prior to the date the applicable Dividend Conversion Shares are issued and delivered if such delivery is after the Dividend Payment Date.

“ Dividend Conversion Shares ” shall have the meaning set forth in Section 3(a).

“ Dividend Notice Period ” shall have the meaning set forth in Section 3(a).

“ Dividend Payment Date ” shall have the meaning set forth in Section 3(a).

“ Dividend Share Amount ” shall have the meaning set forth in Section 3(a).

“ Effective Date ” means the date that the Conversion Shares Registration Statement filed by the Corporation pursuant to the Registration Rights Agreement is first declared effective by the Commission.

“ Equity Conditions ” means, during the period in question, (a) the Corporation shall have duly honored all conversions scheduled to occur or occurring by virtue of one or more Notices of Conversion of the applicable Holder on or prior to the dates so requested or required, if any, (b) the Corporation shall have paid all liquidated damages and other amounts owing to the applicable Holder in respect of the Preferred Stock, (c)(i) there is an effective Conversion Shares Registration Statement pursuant to which the Holders are permitted to utilize the prospectus thereunder to resell all of the shares of Common Stock issuable pursuant to the Transaction Documents (and the Corporation believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future) or (ii) all of the Conversion Shares issuable pursuant to the Transaction Documents (and shares issuable in lieu of cash payments of dividends) may be resold pursuant to Rule 144 without volume or manner-of-sale restrictions or current public information requirements as determined by the counsel to the Corporation as set forth in a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders, (d) the Common Stock is trading on a Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed or quoted for trading on such Trading Market (and the Corporation believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (e) there is a sufficient number of authorized, but unissued and otherwise unreserved, shares of Common Stock for the issuance of all of the shares then issuable pursuant to the Transaction Documents, (f) there is no existing Triggering Event and no existing event which, with the passage of time or the giving of notice, would constitute a Triggering Event, (g) the issuance of the shares in question would not violate the limitations set forth in Section 6(d) herein, (h) there has been no public announcement of a pending or proposed Fundamental Transaction or Change of Control Transaction that has not been consummated, (i) the applicable Holder is not in possession of any information provided by the Corporation that constitutes, or may constitute, material non-public information and (j) for each Trading Day in a period of 20 consecutive Trading Days prior to the applicable date in question, the daily dollar trading volume for the Common Stock on the principal Trading Market exceeds $150,000 per Trading Day.

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Corporation pursuant to any stock or option plan duly adopted by a majority of the non-employee members of the Board of Directors of the Corporation or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any securities issued pursuant to the Purchase Agreement and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of the Purchase Agreement, provided that such securities have not been amended since the date of the Purchase Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of any such securities and (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Corporation, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Corporation and shall provide to the Corporation additional benefits in addition to the investment of funds, but shall not include a transaction in which the Corporation is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities.

“ Fundamental Transaction ” shall have the meaning set forth in Section 7(e).

“ GAAP ” means United States generally accepted accounting principles.

“ Holder ” shall have the meaning given such term in Section 2.

“ Indebtedness ” means (a) any liabilities for borrowed money or amounts owed in excess of $100,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Corporation’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business, and (c) the present value of any lease payments in excess of $100,000 due under leases required to be capitalized in accordance with GAAP.

“ Junior Securities ” means the Common Stock and all other Common Stock Equivalents of the Corporation other than those securities which are explicitly senior or pari passu to the Preferred Stock in dividend rights or liquidation preference.

“ Liens ” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“ Liquidation ” shall have the meaning set forth in Section 5.

“ New York Courts ” shall have the meaning set forth in Section 11(d).

“ Notice of Conversion ” shall have the meaning set forth in Section 6(a).

“ Original Issue Date ” means the date of the first issuance of any shares of the Preferred Stock regardless of the number of transfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence such Preferred Stock.

“ Permitted Indebtedness ” means (a) the Indebtedness existing on the Original Issue Date and set forth on Schedule 3.1(aa) attached to the Purchase Agreement and (b) lease obligations and purchase money indebtedness of up to $100,000, in the aggregate, incurred in connection with the acquisition of capital assets and lease obligations with respect to newly acquired or leased assets.

“ Permitted Lien ” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Corporation) have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Corporation’s business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other similar Liens arising in the ordinary course of the Corporation’s business, and which (x) do not individually or in the aggregate materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business of the Corporation and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien, (c) Liens incurred in connection with Permitted Indebtedness under clause (a) thereunder, and (d) Liens incurred in connection with Permitted Indebtedness under clause (b) thereunder, provided that such Liens are not secured by assets of the Corporation or its Subsidiaries other than the assets so acquired or leased.

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“ Preferred Stock ” shall have the meaning set forth in Section 2.

“ Purchase Agreement ” means the Securities Purchase Agreement, dated as of the Original Issue Date, among the Corporation and the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.

“ Registration Rights Agreement ” means the Registration Rights Agreement, dated as of the date of the Purchase Agreement, among the Corporation and the original Holders, in the form of Exhibit B attached to the Purchase Agreement.

“ Registration Statement ” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Underlying Shares by each Holder as provided for in the Registration Rights Agreement.

“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ Rule 424 ” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“ Securities ” means the Preferred Stock, the Warrants, the Warrant Shares and the Underlying Shares.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Share Delivery Date ” shall have the meaning set forth in Section 6(c).

“ Stated Value ” shall have the meaning set forth in Section 2, as the same may be increased pursuant to Section 3.

“ Subscription Amount ” shall mean, as to each Holder, the aggregate amount to be paid for the Preferred Stock purchased pursuant to the Purchase Agreement as specified below such Holder’s name on the signature page of the Purchase Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

“ Subsidiary ” means any subsidiary of the Corporation as set forth on Schedule 3.1(a) of the Purchase Agreement and shall, where applicable, also include any direct or indirect subsidiary of the Corporation formed or acquired after the date of the Purchase Agreement.

“ Successor Entity ” shall have the meaning set forth in Section 7(e).

“ Trading Day ” means a day on which the principal Trading Market is open for business.

“ Trading Market ” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

“ Transaction Documents ” means this Certificate of Designation, the Purchase Agreement, the Warrants, the Registration Rights Agreement, the Lock-Up Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated pursuant to the Purchase Agreement.

“ Transfer Agent ” means American Registrar & Transfer Co., the current transfer agent of the Corporation with a mailing address of 342 E 900 S, Salt Lake City, Utah 84111 and a facsimile number of (801)363-9066, and any successor transfer agent of the Company.

“ Triggering Event ” shall have the meaning set forth in Section 10(a).

“ Triggering Redemption Amount ” means, for each share of Preferred Stock, the sum of (a) the greater of (i) 130% of the Stated Value and (ii) the product of (y) the VWAP on the Trading Day immediately preceding the date of the Triggering Event and (z) the Stated Value divided by the then Conversion Price, (b) all accrued but unpaid dividends thereon and (c) all liquidated damages and other costs, expenses or amounts due in respect of the Preferred Stock.

“ Triggering Redemption Payment Date ” shall have the meaning set forth in Section 10(b).

“ Underlying Shares ” means the shares of Common Stock issued and issuable upon conversion of the Preferred Stock, upon exercise of the Warrants and issued and issuable in lieu of the cash payment of dividends on the Preferred Stock in accordance with the terms of this Certificate of Designation.

“ Variable Rate Transaction ” shall have the meaning ascribed to such term in Section 4.13(b) of the Purchase Agreement.

“ VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Holders of a majority in interest of the Securities then outstanding and reasonably acceptable to the Corporation, the fees and expenses of which shall be paid by the Corporation.

“ Warrants ” means, collectively, the Common Stock purchase warrants delivered to the Holder at the Closing in accordance with Section 2.2(a) of the Purchase Agreement, which Warrants shall be exercisable immediately and have a term of exercise equal to three years, in the form of Exhibit C attached to the Purchase Agreement.

“ Warrant Shares ” means the shares of Common Stock issuable upon exercise of the Warrants.

Section 2 .

Designation, Amount and Par Value . The series of preferred stock shall be designated as its Series A 6% Convertible Preferred Stock (the “ Preferred Stock ”) and the number of shares so designated shall be up to 2,025 (which shall not be subject to increase without the written consent of all of the holders of the Preferred Stock (each, a “ Holder ” and collectively, the “ Holders ”)). Each share of Preferred Stock shall have a par value of $0.01 per share and a stated value equal to $1,000, subject to increase set forth in Section 3 below (the “ Stated Value ”).

Section 3 .

Dividends .

Dividends in Cash or in Kind . Holders shall be entitled to receive, and the Corporation shall pay, cumulative dividends at the rate per share (as a percentage of the Stated Value per share) of 6% per annum (subject to increase pursuant to Section 10(b)) , payable quarterly on January 1, April 1, July 1 and October 1, beginning on the first such date after the Original Issue Date and on each Conversion Date (with respect only to Preferred Stock being converted) (each such date, a “ Dividend Payment Date ”) (if any Dividend Payment Date is not a Trading Day, the applicable payment shall be due on the next succeeding Trading Day) in cash, or at the Corporation’s option, in duly authorized, validly issued, fully paid and non-assessable shares of Common Stock as set forth in this Section 3(a), or a combination thereof (the dollar amount to be paid in shares of Common Stock, the “ Dividend Share Amount ”). The form of dividend payments to each Holder shall be determined in the following order of priority: (i) if funds are legally available for the payment of dividends and the Equity Conditions have not been met during the 20 consecutive Trading Days immediately prior to the applicable Dividend Payment Date (the “ Dividend Notice Period ”), in cash only, (ii) if funds are legally available for the payment of dividends and the Equity Conditions have been met during the Dividend Notice Period, at the sole election of the Corporation, in cash or shares of Common Stock which shall be valued at the Dividend Conversion Rate, (iii) if funds are not legally available for the payment of dividends and the Equity Conditions have been met during the Dividend Notice Period, in shares of Common Stock which shall be valued at the Dividend Conversion Rate, (iv) if funds are not legally available for the payment of dividends and the Equity Condition relating to an effective Conversion Shares Registration Statement has been waived by such Holder, as to such Holder only, in unregistered shares of Common Stock which shall be valued at the Dividend Conversion Rate, and (v) if funds are not legally available for the payment of dividends and the Equity Conditions have not been met during the Dividend Notice Period, then, at the election of such Holder, such dividends shall accrue to the next Dividend Payment Date or shall be accreted to, and increase, the outstanding Stated Value. In addition, as a condition to paying dividends in shares of Common Stock, as to such Dividend Payment Date, prior to such Dividend Notice Period (but not more than five (5) Trading Days prior to the commencement of such Dividend Notice Period), the Corporation shall have delivered to each Holder’s account with The Depository Trust Company a number of shares of Common Stock to be applied against such Dividend Share Amount equal to the quotient of (x) the applicable Dividend Share Amount divided by (y) the Dividend Conversion Rate, assuming for such purposes that the Dividend Payment Date is the Trading Day immediately prior to the commencement of the Dividend Notice Period (the “ Dividend Conversion Shares ”). The Holders shall have the same rights and remedies with respect to the delivery of any such shares as if such shares were being issued pursuant to Section 6.

Corporation’s Ability to Pay Dividends in Cash or Kind . On the Closing Date, the Corporation shall have notified the Holders whether or not it may legally pay cash dividends as of the Closing Date. The Corporation shall promptly notify the Holders at any time the Corporation shall become able or unable, as the case may be, to legally pay cash dividends. If at any time the Corporation has the right to pay dividends in cash or shares of Common Stock, the Corporation must provide the Holders with at least 20 Trading Days’ notice of its election to pay a regularly scheduled dividend in shares of Common Stock (the Corporation may indicate in such notice that the election contained in such notice shall continue for later periods until revised by a subsequent notice). The aggregate number of shares of Common Stock otherwise issuable to a Holder on a Dividend Payment Date shall be reduced by the number of shares of Common Stock previously issued to such Holder in connection with such Dividend Payment Date. If any Dividend Conversion Shares are issued to a Holder in connection with a Dividend Payment Date and are not applied against a Dividend Share Amount, then such Holder shall promptly return such excess shares to the Corporation.

Dividend Calculations . Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and shall accrue daily commencing on the Original Issue Date, and shall be deemed to accrue from such date whether or not earned or declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends. Payment of dividends in shares of Common Stock shall otherwise occur pursuant to Section 6(c)(i) herein and, solely for purposes of the payment of dividends in shares, the Dividend Payment Date shall be deemed the Conversion Date. Dividends shall cease to accrue with respect to any Preferred Stock converted, provided that, the Corporation actually delivers the Conversion Shares within the time period required by Section 6(c)(i) herein. Except as otherwise provided herein, if at any time the Corporation pays dividends partially in cash and partially in shares, then such payment shall be distributed ratably among the Holders based upon the number of shares of Preferred Stock held by each Holder on such Dividend Payment Date.

Late Fees . Any dividends, whether paid in cash or shares of Common Stock, that are not paid within three Trading Days following a Dividend Payment Date shall continue to accrue and shall entail a late fee, which must be paid in cash, at the rate of 18% per annum or the lesser rate permitted by applicable law which shall accrue daily from the Dividend Payment Date through and including the date of actual payment in full.

Other Securities . So long as any Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall redeem, purchase or otherwise acquire directly or indirectly any Junior Securities except as expressly permitted by Section 10(a)(ix). So long as any Preferred Stock shall remain outstanding, neither the Corporation nor any Subsidiary thereof shall directly or indirectly pay or declare any dividend or make any distribution upon (other than a dividend or distribution described in Section 6 or dividends due and paid in the ordinary course on preferred stock of the Corporation at such times when the Corporation is in compliance with its payment and other obligations hereunder), nor shall any distribution be made in respect of, any Junior Securities as long as any dividends due on the Preferred Stock remain unpaid, nor shall any monies be set aside for or applied to the purchase or redemption (through a sinking fund or otherwise) of any Junior Securities or shares pari passu with the Preferred Stock.

Special Reserves . The Corporation acknowledges and agrees that the capital of the Corporation in respect of the Preferred Stock and any future issuances of the Corporation’s capital stock shall be equal to the aggregate par value of such Preferred Stock or capital stock, as the case may be, and that, on or after the date of the Purchase Agreement, it shall not increase the capital of the Corporation with respect to any shares of the Corporation’s capital stock issued and outstanding on such date. The Corporation also acknowledges and agrees that it shall not create any special reserves without the prior written consent of each Holder.

Section 4 .

Voting Rights . Except as otherwise provided herein or as otherwise required by law, the Preferred Stock shall have no voting rights. However, as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of 67% or more of the then outstanding shares of the Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this Certificate of Designation, (b) authorize or create any class of stock ranking as to dividends, redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu with, the Preferred Stock, (c) amend its certificate of incorporation or other charter documents in any manner that adversely affects any rights of the Holders, (d) increase the number of authorized shares of Preferred Stock or (e) enter into any agreement with respect to any of the foregoing.

Section 5 .

Liquidation . Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “ Liquidation ”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for each share of Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. A Fundamental Transaction or Change of Control Transaction shall not be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.

Section 6 .

Conversion .

Conversions at Option of Holder . Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject to the limitations set forth in Section 6(d)) determined by dividing the Stated Value of such share of Preferred Stock by the Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice attached hereto as Annex A (a “ Notice of Conversion ”). Each Notice of Conversion shall specify the number of shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers by facsimile such Notice of Conversion to the Corporation (such date, the “ Conversion Date ”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of shares of Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Preferred Stock promptly following the Conversion Date at issue. Shares of Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall not be reissued.

Conversion Price . The conversion price for the Preferred Stock shall equal $0.70, subject to adjustment herein (the “ Conversion Price ”).

Mechanics of Conversion

Delivery of Conversion Shares Upon Conversion . Not later than three (3) Trading Days after each Conversion Date (the “ Share Delivery Date ”), the Corporation shall deliver, or cause to be delivered, to the converting Holder (A) the number of Conversion Shares being acquired upon the conversion of the Preferred Stock (including, if the Corporation has given continuous notice pursuant to Section 3(b) for payment of dividends in shares of Common Stock at least 20 Trading Days prior to the date on which the Notice of Conversion is delivered to the Corporation, shares of Common Stock representing the payment of accrued dividends otherwise determined pursuant to Section 3(a) but assuming that the Dividend Notice Period is the 20 Trading Days period immediately prior to the date on which the Notice of Conversion is delivered to the Corporation and excluding for such issuance the condition that the Corporation deliver the Dividend Share Amount as to such dividend payment prior to the commencement of the Dividend Notice Period) which, on or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, shall be free of restrictive legends and trading restrictions (other than those which may then be required by the Purchase Agreement), and (B) a bank check in the amount of accrued and unpaid dividends (if the Corporation has elected or is required to pay

accrued dividends in cash). On or after the earlier of (i) the six month anniversary of the Original Issue Date or (ii) the Effective Date, the Corporation shall deliver the Conversion Shares required to be delivered by the Corporation under this Section 6 electronically through the Depository Trust Company or another established clearing corporation performing similar functions.

ii.

Failure to Deliver Conversion Shares . If, in the case of any Notice of Conversion, such Conversion Shares are not delivered to or as directed by the applicable Holder by the Share Delivery Date, the Holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such Conversion Shares, to rescind such Conversion, in which event the Corporation shall promptly return to the Holder any original Preferred Stock certificate delivered to the Corporation and the Holder shall promptly return to the Corporation the Conversion Shares issued to such Holder pursuant to the rescinded Conversion Notice.

iii.

Obligation Absolute; Partial Liquidated Damages . The Corporation’s obligation to issue and deliver the Conversion Shares upon conversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of any obligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder in connection with the issuance of such Conversion Shares; provided , however , that such delivery shall not operate as a waiver by the Corporation of any such action that the Corporation may have against such Holder. In the event a Holder shall elect to convert any or all of the Stated Value of its Preferred Stock, the Corporation may not refuse conversion based on any claim that such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoining conversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and the Corporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of Preferred Stock which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigation of the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment. In the absence of such injunction, the Corporation shall issue Conversion Shares and, if applicable, cash, upon a properly noticed conversion. If the Corporation fails to deliver to a Holder such Conversion Shares pursuant to Section 6(c)(i) on the third Trading Day after the Share Delivery Date applicable to such conversion, the Corporation shall pay to such Holder, in cash, as liquidated damages and not as a penalty, for each $5,000 of Stated Value of Preferred Stock being converted, $50 per Trading Day (increasing to $100 per Trading Day on the third Trading Day and increasing to $200 per Trading Day on the sixth Trading Day after such damages begin to accrue) for each Trading Day after such second Trading Day after the Share Delivery Date until such Conversion Shares are delivered or Holder rescinds such conversion. Nothing herein shall limit a Holder’s right to pursue actual damages or declare a Triggering Event pursuant to Section 10 hereof for the Corporation’s failure to deliver Conversion Shares within the period specified herein and such Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.

iv.

Compensation for Buy-In on Failure to Timely Deliver Conversion Shares Upon Conversion . In addition to any other rights available to the Holder, if the Corporation fails for any reason to deliver to a Holder the applicable Conversion Shares by the Share Delivery Date pursuant to Section 6(c)(i), and if after such Share Delivery Date such Holder is required by its brokerage firm to purchase (in an open market transaction or otherwise), or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by such Holder of the Conversion Shares which such Holder was entitled to receive upon the conversion relating to such Share Delivery Date (a “ Buy-In ”), then the Corporation shall (A) pay in cash to such Holder (in addition to any other remedies available to or elected by such Holder) the amount, if any, by which (x) such Holder’s total purchase price (including any brokerage commissions) for the Common Stock so purchased exceeds (y) the product of (1) the aggregate number of shares of Common Stock that such Holder was entitled to receive from the conversion at issue multiplied by (2) the actual sale price at which the sell order giving rise to such purchase obligation was executed (including any brokerage commissions) and (B) at the option of such Holder, either reissue (if surrendered) the shares of Preferred Stock equal to the number of shares of Preferred Stock submitted for conversion (in which case, such conversion shall be deemed rescinded) or deliver to such Holder the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements under Section 6(c)(i). For example, if a Holder purchases shares of Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Preferred Stock with respect to which the actual sale price of the Conversion Shares (including any brokerage commissions) giving rise to such purchase obligation was a total of $10,000 under clause (A) of the immediately preceding sentence, the Corporation shall be required to pay such Holder $1,000. The Holder shall provide the Corporation written notice indicating the amounts payable to such Holder in respect of the Buy-In and, upon request of the Corporation, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver the Conversion Shares upon conversion of the shares of Preferred Stock as required pursuant to the terms hereof.

Reservation of Shares Issuable Upon Conversion . The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance upon conversion of the Preferred Stock and payment of dividends on the Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of Persons other than the Holder (and the other holders of the Preferred Stock), not less than such aggregate number of shares of the Common Stock as shall (subject to the terms and conditions set forth in the Purchase Agreement) be issuable (taking into account the adjustments and restrictions of Section 7) upon the conversion of the then outstanding shares of Preferred Stock and payment of dividends hereunder. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly authorized, validly issued, fully paid and nonassessable and, if the Conversion Shares Registration Statement is then effective under the Securities Act, shall be registered for public resale in accordance with such Conversion Shares Registration Statement (subject to such Holder’s compliance with its obligations under the Registration Rights Agreement).

vi.

Fractional Shares . No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Preferred Stock. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such conversion, the Corporation shall at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Conversion Price or round up to the next whole share.

vii.

Transfer Taxes and Expenses . The issuance of Conversion Shares on conversion of this Preferred Stock shall be made without charge to any Holder for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such Conversion Shares, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such Conversion Shares upon conversion in a name other than that of the Holders of such shares of Preferred Stock and the Corporation shall not be required to issue or deliver such Conversion Shares unless or until the Person or Persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees required for same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Conversion Shares.

Beneficial Ownership Limitation . The Corporation shall not effect any conversion of the Preferred Stock, and a Holder shall not have the right to convert any portion of the Preferred Stock, to the extent that, after giving effect to the conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any Persons acting as a group together with such Holder or any of such Holder’s Affiliates) would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Preferred Stock with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (i) conversion of the remaining, unconverted Stated Value of Preferred Stock beneficially owned by such Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or unconverted portion of any other securities of the Corporation subject to a limitation on conversion or exercise analogous to the limitation contained herein (including, without limitation, the Preferred Stock or the Warrants) beneficially owned by such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 6(d), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. To the extent that the limitation contained in this Section 6(d) applies, the determination of whether the Preferred Stock is convertible (in relation to other securities owned by such Holder together with any Affiliates) and of how many shares of Preferred Stock are convertible shall be in the sole discretion of such Holder, and the submission of a Notice of Conversion shall be deemed to be such Holder’s determination of whether the shares of Preferred Stock may be converted (in relation to other securities owned by such Holder together with any Affiliates) and how many shares of the Preferred Stock are convertible, in each case subject to the Beneficial Ownership Limitation. To ensure compliance with this restriction, each Holder will be deemed to represent to the Corporation each time it delivers a Notice of Conversion that such Notice of Conversion has not violated the restrictions set forth in this paragraph and the Corporation shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder . For purposes of this Section 6(d), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (i) the Corporation’s most recent periodic or annual report filed with the Commission, as the case may be, (ii) a more recent public announcement by the Corporation or (iii) a more recent written notice by the Corporation or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Corporation shall within two Trading Days confirm orally and in writing to such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Corporation, including the Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Preferred Stock held by the applicable Holder. A

Holder, upon not less than 61 days’ prior notice to the Corporation, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 6(d) applicable to its Preferred Stock provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock upon conversion of this Preferred Stock held by the Holder and the provisions of this Section 6(d) shall continue to apply. Any such increase or decrease will not be effective until the 61 ^st day after such notice is delivered to the Corporation and shall only apply to such Holder and no other Holder. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 6(d) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation contained herein or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of Preferred Stock.

Section 7 .

Certain Adjustments .

Stock Dividends and Stock Splits . If the Corporation, at any time while this Preferred Stock is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of Common Stock on shares of Common Stock or any other Common Stock Equivalents (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation upon conversion of, or payment of a dividend on, this Preferred Stock), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of the Common Stock, any shares of capital stock of the Corporation, then the Conversion Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding any treasury shares of the Corporation) outstanding immediately before such event, and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to this Section 7(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

Subsequent Equity Sales . If, at any time while this Preferred Stock is outstanding, the Corporation or any Subsidiary, as applicable sells or grants any option to purchase or sells or grants any right to reprice, or otherwise disposes of or issues (or announces any sale, grant or any option to purchase or other disposition), any Common Stock or Common Stock Equivalents entitling any Person to acquire shares of Common Stock at an effective price per share that is lower than the then Conversion Price (such lower price, the “ Base Conversion Price ” and such issuances, collectively, a “ Dilutive Issuance ”) (if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is lower than the Conversion Price, such issuance shall be deemed to have occurred for less than the Conversion Price on such date of the Dilutive Issuance), then the Conversion Price shall be reduced to equal the Base Conversion Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustment will be made under this Section 7(b) in respect of an Exempt Issuance. If the Corporation enters into a Variable Rate Transaction, despite the prohibition set forth in the Purchase Agreement, the Corporation shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion price at which such securities may be converted or exercised. The Corporation shall notify the Holders in writing, no later than the Trading Day following the issuance of any Common Stock or Common Stock Equivalents subject to this Section 7(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Corporation provides a Dilutive Issuance Notice pursuant to this Section 7(b), upon the occurrence of any Dilutive Issuance, the Holders are entitled to receive a number of Conversion Shares

based upon the Base Conversion Price on or after the date of such Dilutive Issuance, regardless of whether a Holder accurately refers to the Base Conversion Price in the Notice of Conversion.

Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 7(a) above, if at any time the Corporation grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder of will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete conversion of such Holder’s Preferred Stock (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

Pro Rata Distributions . During such time as this Preferred Stock is outstanding, if the Corporation declares or makes any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a " Distribution "), at any time after the issuance of this Preferred Stock, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete Conversion of this Preferred Stock (without regard to any limitations on Conversion hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution ( provided , however , to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

Fundamental Transaction . If, at any time while this Preferred Stock is outstanding, (i) the Corporation, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Corporation with or into another Person, (ii) the Corporation, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Corporation or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Corporation, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the C orporation, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other

Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent conversion of this Preferred Stock, the Holder shall have the right to receive, for each Conversion Share that would have been issuable upon such conversion immediately prior to the occurrence of such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of this Preferred Stock), the number of shares of Common Stock of the successor or acquiring corporation or of the Corporation, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Preferred Stock is convertible immediately prior to such Fundamental Transaction (without regard to any limitation in Section 6(d) on the conversion of this Preferred Stock). For purposes of any such conversion, the determination of the Conversion Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Corporation shall apportion the Conversion Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any conversion of this Preferred Stock following such Fundamental Transaction. To the extent necessary to effectuate the foregoing provisions, any successor to the Corporation or surviving entity in such Fundamental Transaction shall file a new Certificate of Designation with the same terms and conditions and issue to the Holders new preferred stock consistent with the foregoing provisions and evidencing the Holders’ right to convert such preferred stock into Alternate Consideration. The Corporation shall cause any successor entity in a Fundamental Transaction in which the Corporation is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents (as defined in the Purchase Agreement) in accordance with the provisions of this Section 7(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this Preferred Stock, deliver to the Holder in exchange for this Preferred Stock a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Preferred Stock which is convertible for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon conversion of this Preferred Stock (without regard to any limitations on the conversion of this Preferred Stock) prior to such Fundamental Transaction, and with a conversion price which applies the conversion price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such conversion price being for the purpose of protecting the economic value of this Preferred Stock immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Certificate of Designation and the other Transaction Documents referring to the “Corporation” shall refer instead to the Successor Entity), and may exercise every right and power of the Corporation and shall assume all of the obligations of the Corporation under this Certificate of Designation and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Corporation herein.

Calculations . All calculations under this Section 7 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 7, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding any treasury shares of the Corporation) issued and outstanding.

Notice to the Holders .

Adjustment to Conversion Price . Whenever the Conversion Price is adjusted pursuant to any provision of this Section 7, the Corporation shall promptly deliver to each Holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

ii.

Notice to Allow Conversion by Holder . If (A) the Corporation shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Corporation shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Corporation shall authorize the granting to all holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Corporation shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Corporation is a party, any sale or transfer of all or substantially all of the assets of the Corporation, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property or (E) the Corporation shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Corporation, then, in each case, the Corporation shall cause to be filed at each office or agency maintained for the purpose of conversion of this Preferred Stock, and shall cause to be delivered to each Holder at its last address as it shall appear upon the stock books of the Corporation, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange, provided that the failure to deliver such notice or any defect therein or in the delivery thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Corporation or any of the Subsidiaries, the Corporation shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to convert the Conversion Amount of this Preferred Stock (or any part hereof) during the 20-day period commencing on the date of such notice through the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 8 .

[RESERVED]

Section 9 .

Negative Covenants . As long as any shares of Preferred Stock are outstanding, unless the holders of at least 67% in Stated Value of the then outstanding shares of Preferred Stock shall have otherwise given prior written consent, the Corporation shall not, and shall not permit any of the Subsidiaries to, directly or indirectly:

other than Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of any kind, including but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

other than Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

amend its charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and adversely affects any rights of the Holder;

repay, repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common Stock, Common Stock Equivalents or Junior Securities, other than as to (i) the Conversion Shares or Warrant Shares as permitted or required under the Transaction Documents and (ii) repurchases of Common Stock or Common Stock Equivalents of departing officers and directors of the Corporation, provided that such repurchases shall not exceed an aggregate of $100,000 for all officers and directors for so long as the Preferred Stock is outstanding;

pay cash dividends or distributions on Junior Securities of the Corporation;

enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed in any public filing with the Commission, unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise required for board approval); or

enter into any agreement with respect to any of the foregoing.

Section 10 .

Redemption Upon Triggering Events .

“ Triggering Event ” means, wherever used herein any of the following events (whatever the reason for such event and whether such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body):

the failure of the initial Conversion Shares Registration Statement to be declared effective by the Commission on or prior to the 240 ^th day after the Original Issue Date;

ii.

if, during the Effectiveness Period (as defined in the Registration Rights Agreement), the effectiveness of the Conversion Shares Registration Statement lapses for more than an aggregate of 60 calendar days (which need not be consecutive calendar days) during any 12 month period, or the Holders shall not otherwise be permitted to resell Registrable Securities under the Conversion Shares Registration Statement for more than an aggregate of 60 calendar days (which need not be consecutive calendar days) during any 12 month period;

iii.

the Corporation shall fail to deliver Conversion Shares issuable upon a conversion hereunder that comply with the provisions hereof prior to the fifth Trading Day after such shares are required to be delivered hereunder, or the Corporation shall provide written notice to any Holder, including by way of public announcement, at any time, of its intention not to comply with requests for conversion of any shares of Preferred Stock in accordance with the terms hereof;

iv.

one of the Events (as defined in the Registration Rights Agreement) described in subsections (i), (ii) or (iii) of Section 2(b) of the Registration Rights Agreement shall not have been cured to the satisfaction of the Holders prior to the expiration of 30 calendar days from the Event Date (as defined in the Registration Rights Agreement) relating thereto (other than an Event resulting from a failure of a Conversion Shares Registration Statement to be declared timely effective by the Commission on or prior to the 240th day after the Original Issue Date, which shall be covered by Section 10(a)(i));

the Corporation shall fail for any reason to pay in full the amount of cash due pursuant to a Buy-In within five calendar days after notice therefor is delivered hereunder or shall fail to pay all amounts owed on account of any Event (as defined in the Registration Rights Agreement) within five days of the date due and payable;

vi.

the Corporation shall fail to have available a sufficient number of authorized and unreserved shares of Common Stock to issue to such Holder upon a conversion hereunder;

vii.

unless specifically addressed elsewhere in this Certificate of Designation as a Triggering Event, the Corporation shall fail to observe or perform any other covenant, agreement or warranty contained in, or otherwise commit any breach of the Transaction Documents, and such failure or breach shall not, if subject to the possibility of a cure by the Corporation, have been cured within 30 calendar days after the date on which written notice of such failure or breach shall have been delivered;

viii.

any breach of the Lock-Up Agreements delivered to the initial Holders at the Closing pursuant to Section 2.2(a) of the Purchase Agreement;

ix.

the Corporation shall redeem more than a de minimis number of Junior Securities other than as to repurchases of Common Stock or Common Stock Equivalents from departing officers and directors, provided that, while any of the Preferred Stock remains outstanding, such repurchases shall not exceed an aggregate of $100,000 from all officers and directors;

the Corporation shall be party to a Change of Control Transaction;

xi.

there shall have occurred a Bankruptcy Event;

xii.

the Common Stock shall fail to be listed or quoted for trading on a Trading Market for more than five Trading Days, which need not be consecutive Trading Days;

xiii.

the electronic transfer by the Company of shares of Common Stock through the Depository Trust Company or another established clearing corporation is no longer available or is subject to a “chill”; or

xiv.

any monetary judgment, writ or similar final process shall be entered or filed against the Corporation, any subsidiary or any of their respective property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated, unbonded or unstayed for a period of 45 calendar days.

Upon the occurrence of a Triggering Event, each Holder shall (in addition to all other rights it may have hereunder or under applicable law) have the right, exercisable at the sole option of such Holder, to require the Corporation to redeem all of the Preferred Stock then held by such Holder for a redemption price, in cash, equal to the Triggering Redemption Amount. The Triggering Redemption Amount shall be due and payable or issuable, as the case may be, within five Trading Days of the date on which the notice for the payment therefor is provided by a Holder (the “ Triggering Redemption Payment Date ”). If the Corporation fails to pay in full the Triggering Redemption Amount hereunder on the date such amount is due in accordance with this Section, the Corporation will pay interest thereon at a rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law, accruing daily from such date until the Triggering Redemption Amount, plus all such interest thereon, is paid in full. For purposes of this Section, a share of Preferred Stock is outstanding until such date as the applicable Holder shall have received Conversion Shares upon a conversion (or attempted conversion) thereof that meets the requirements hereof or has been paid the Triggering Redemption Amount in cash.

Section 11 .

Miscellaneous .

Notices . Any and all notices or other communications or deliveries to be provided by the Holders hereunder including, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Corporation, at the address set forth above Attention: E. Will Gray II, facsimile number (432)505-9476, or such other facsimile number or address as the Corporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 11. Any and all notices or other communications or deliveries to be provided by the Corporation hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier service addressed to each Holder at the facsimile number or address of such Holder appearing on the books of the Corporation, or if no such facsimile number or address appears on the books of the Corporation, at the principal place of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section prior to 5:30 p.m. (New York City time) on any date, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth in this Section on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given.

Absolute Obligation . Except as expressly provided herein, no provision of this Certificate of Designation shall alter or impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends and accrued interest, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, herein prescribed.

Lost or Mutilated Preferred Stock Certificate . If a Holder’s Preferred Stock certificate shall be mutilated, lost, stolen or destroyed, the Corporation shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated certificate, or in lieu of or in substitution for a lost, stolen or destroyed certificate, a new certificate for the shares of Preferred Stock so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such certificate, and of the ownership hereof reasonably satisfactory to the Corporation.

Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Certificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough of Manhattan (the “ New York Courts ”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Certificate of Designation and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Certificate of Designation or the transactions contemplated hereby. If any party shall commence an action

or proceeding to enforce any provisions of this Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.

Waiver . Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designation shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Certificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherence to any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or any other Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation on any other occasion. Any waiver by the Corporation or a Holder must be in writing.

Severability . If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance of this Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of interest permitted under applicable law.

Next Business Day . Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day.

Headings . The headings contained herein are for convenience only, do not constitute a part of this Certificate of Designation and shall not be deemed to limit or affect any of the provisions hereof.

Status of Converted or Redeemed Preferred Stock . Shares of Preferred Stock may only be issued pursuant to the Purchase Agreement. If any shares of Preferred Stock shall be converted, redeemed or reacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series A 6% Convertible Preferred Stock.

*********************

RESOLVED, FURTHER, that the Chairman, the President or any Vice President, and the Secretary or any Assistant Secretary, of the Corporation be and they hereby are authorized and directed to prepare and file this Certificate of Designation of Preferences, Rights and Limitations in accordance with the foregoing resolution and the provisions of Delaware law.

IN WITNESS WHEREOF, the undersigned have executed this Certificate this 30 ^th day of May 2014.


/s/ Wayne Bassham		/s/ E. Will Gray II
Name: Wayne Bassham		Name: E. Will Gray II
Title: President		Title: Secretary

ANNEX A

NOTICE OF CONVERSION

(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED STOCK)

The undersigned hereby elects to convert the number of shares of Series A 6% Convertible Preferred Stock indicated below into shares of common stock, par value $0.001 per share (the “ Common Stock ”), of Westcott Products Corporation, a Delaware corporation (the “ Corporation ”), according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in the name of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is delivering herewith such certificates and opinions as may be required by the Corporation in accordance with the Purchase Agreement. No fee will be charged to the Holders for any conversion, except for any such transfer taxes.

Conversion calculations:

Date to Effect Conversion: __________________________________________________________________

Number of shares of Preferred Stock owned prior to Conversion: _____________________________________

Number of shares of Preferred Stock to be Converted: _____________________________________________

Stated Value of shares of Preferred Stock to be Converted: __________________________________________

Number of shares of Common Stock to be Issued: ________________________________________________

Applicable Conversion Price:_________________________________________________________________

Number of shares of Preferred Stock subsequent to Conversion: ______________________________________

Address for Delivery: ______________________

DWAC Instructions:

Broker no: _________

Account no: ___________

[HOLDER]

By:___________________________________

Name:

Title:

Exhibit 4.1

EXHIBIT B

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “ Agreement ”) is made and entered into as of June 3, 2014, between Westcott Products Corporation, a Delaware corporation (the “ Company ”), and each of the several purchasers signatory hereto (each such purchaser, a “ Purchaser ” and, collectively, the “ Purchasers ”).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, between the Company and each Purchaser (the “ Purchase Agreement ”).

The Company and each Purchaser hereby agrees as follows:

Definitions .

Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

“ Advice ” shall have the meaning set forth in Section 6(d).

“ Effectiveness Date ” means, with respect to the Initial Registration Statement required to be filed hereunder, the 150 ^th calendar day following the date hereof (or, in the event of a “full review” by the Commission, the 180 ^th calendar day following the date hereof) and with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the 90 ^th calendar day following the date on which an additional Registration Statement is required to be filed hereunder (or, in the event of a “full review” by the Commission, the 120 ^th calendar day following the date such additional Registration Statement is required to be filed hereunder); provided , however , that in the event the Company is notified by the Commission that one or more of the above Registration Statements will not be reviewed or is no longer subject to further review and comments, the Effectiveness Date as to such Registration Statement shall be the fifth Trading Day following the date on which the Company is so notified if such date precedes the dates otherwise required above, provided, further, if such Effectiveness Date falls on a day that is not a Trading Day, then the Effectiveness Date shall be the next succeeding Trading Day.

“ Effectiveness Period ” shall have the meaning set forth in Section 2(a).

“ Event ” shall have the meaning set forth in Section 2(d).

“ Event Date ” shall have the meaning set forth in Section 2(d).

“ Filing Date ” means, with respect to the Initial Registration Statement required hereunder, the 60 ^th calendar day following the date hereof and, with respect to any additional Registration Statements which may be required pursuant to Section 2(c) or Section 3(c), the earliest practical date on which the Company is permitted by SEC Guidance to file such additional Registration Statement related to the Registrable Securities.

“ Holder ” or “ Holders ” means the holder or holders, as the case may be, from time to time of Registrable Securities.

“ Indemnified Party ” shall have the meaning set forth in Section 5(c).

“ Indemnifying Party ” shall have the meaning set forth in Section 5(c).

“ Initial Registration Statement ” means the initial Registration Statement filed pursuant to this Agreement.

“ Losses ” shall have the meaning set forth in Section 5(a).

“ Plan of Distribution ” shall have the meaning set forth in Section 2(a).

“ Prospectus ” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated by the Commission pursuant to the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“ Registrable Securities ” means, as of any date of determination, (a) all of the shares of Common Stock then issued and issuable upon conversion in full of the Preferred Stock (assuming on such date the shares of Preferred Stock are converted in full without regard to any conversion limitations therein), (b) all shares of Common Stock issued and issuable as dividends on the Preferred Stock assuming all dividend payments are made in shares of Common Stock and the Preferred Stock is held for at least 3 years, (c) all Warrant Shares then issued and issuable upon exercise of the Warrants (assuming on such date the Warrants are exercised in full without regard to any exercise limitations therein), (d) any additional shares of Common Stock issued and issuable in connection with any anti-dilution provisions in the Preferred Stock or the Warrants (in each case, without giving effect to any limitations on conversion set forth in the Certificate of Designation or limitations on exercise set forth in the Warrants) and (e) any securities issued or then issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing; provided, however , that any such Registrable Securities shall cease to be Registrable Securities (and the Company shall not be required to maintain the effectiveness of any, or file another, Registration Statement hereunder with respect thereto) for so long as (a) a Registration Statement with respect to the sale of such Registrable Securities is declared effective by the Commission under the Securities Act and such Registrable Securities have been disposed of by the Holder in accordance with such effective Registration Statement, (b) such Registrable Securities have been previously sold in accordance with Rule 144, or (c) such securities become eligible for resale without volume or manner-of-sale restrictions and without current public information pursuant to Rule 144 as set forth in a written opinion letter to such effect, addressed, delivered and acceptable to the Transfer Agent and the affected Holders (assuming that such securities and any securities issuable upon exercise, conversion or exchange of which, or as a dividend upon which, such securities were issued or are issuable, were at no time held by any Affiliate of the Company, and all Warrants are exercised by cashless exercise as provided in Section 2(c) of each of the Warrants), as reasonably determined by the Company, upon the advice of counsel to the Company.

“ Registration Statement ” means any registration statement required to be filed hereunder pursuant to Section 2(a) and any additional registration statements contemplated by Section 2(c) or Section 3(c), including (in each case) the Prospectus, amendments and supplements to any such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in any such registration statement.

“ Rule 415 ” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“ Selling Stockholder Questionnaire ” shall have the meaning set forth in Section 3(a).

“ SEC Guidance ” means (i) any publicly-available written or oral guidance of the Commission staff, or any comments, requirements or requests of the Commission staff and (ii) the Securities Act.

Shelf Registration .

(a)

On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all of the Registrable Securities that are not then registered on an effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. Each Registration Statement filed hereunder shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith, subject to the provisions of Section 2(e)) and shall contain (unless otherwise directed by at least 85% in interest of the Holders) substantially the “ Plan of Distribution ” attached hereto as Annex A . Subject to the terms of this Agreement, the Company shall use its best efforts to cause a Registration Statement filed under this Agreement (including, without limitation, under Section 3(c)) to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the applicable Effectiveness Date, and shall use its best efforts to keep such Registration Statement continuously effective under the Securities Act until all Registrable Securities covered by such Registration Statement (i) have been sold, thereunder or pursuant to Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144 and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Transfer Agent and the affected Holders (the “ Effectiveness Period ”). The Company shall telephonically request effectiveness of a Registration Statement as of 5:00 p.m. Eastern Time on a Trading Day. The Company shall immediately notify the Holders via facsimile or by e-mail of the effectiveness of a Registration Statement on the same Trading Day that the Company telephonically confirms effectiveness with the Commission, which shall be the date requested for effectiveness of such Registration Statement. The Company shall, by 9:30 a.m. Eastern Time on the Trading Day after the effective date of such Registration Statement, file a final Prospectus with the Commission as required by Rule 424. Failure to so notify the Holder within one (1) Trading Day of such notification of effectiveness or failure to file a final Prospectus as foresaid shall be deemed an Event under Section 2(d).

(b)

Notwithstanding the registration obligations set forth in Section 2(a), if the Commission informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly inform each of the Holders thereof and use its commercially reasonable efforts to file amendments to the Initial Registration Statement as required by the Commission, covering the maximum number of Registrable Securities permitted to be registered by the Commission, on Form S-3 or such other form available to register for resale the Registrable Securities as a secondary offering, subject to the provisions of Section 2(e); with

respect to filing on Form S-3 or other appropriate form, and subject to the provisions of Section 2(d) with respect to the payment of liquidated damages; provided , however , that prior to filing such amendment, the Company shall be obligated to use diligent efforts to advocate with the Commission for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.

(c)

Notwithstanding any other provision of this Agreement and subject to the payment of liquidated damages pursuant to Section 2(d), if the Commission or any SEC Guidance sets forth a limitation on the number of Registrable Securities permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the Commission for the registration of all or a greater portion of Registrable Securities), unless otherwise directed in writing by a Holder as to its Registrable Securities, the number of Registrable Securities to be registered on such Registration Statement will be reduced as follows:

First, the Company shall reduce or eliminate any securities to be included by any Person other than a Holder;

Second, the Company shall reduce Registrable Securities represented by Warrant Shares (applied, in the case that some Warrant Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Warrant Shares held by such Holders); and

Third, the Company shall reduce Registrable Securities represented by Conversion Shares (applied, in the case that some Conversion Shares may be registered, to the Holders on a pro rata basis based on the total number of unregistered Conversion Shares held by such Holders).

In the event of a cutback hereunder, the Company shall give the Holder at least five (5) Trading Days prior written notice along with the calculations as to such Holder’s allotment. In the event the Company amends the Initial Registration Statement in accordance with the foregoing, the Company will use its best efforts to file with the Commission, as promptly as allowed by Commission or SEC Guidance provided to the Company or to registrants of securities in general, one or more registration statements on Form S-3 or such other form available to register for resale those Registrable Securities that were not registered for resale on the Initial Registration Statement, as amended.

(d)

If: (i) the Initial Registration Statement is not filed on or prior to its Filing Date (if the Company files the Initial Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) herein, the Company shall be deemed to have not satisfied this clause (i)), or (ii) the Company fails to file with the Commission a request for acceleration of a Registration Statement in accordance with Rule 461 promulgated by the Commission pursuant to the Securities Act, within five Trading Days of the date that the Company is notified (orally or in writing, whichever is earlier) by the Commission that such Registration Statement will not be “reviewed” or will not be subject to further review, or (iii) prior to the effective date of a Registration Statement, the Company fails to file a pre-effective amendment and otherwise respond in writing to comments made by the Commission in respect of such Registration Statement within twenty (20) calendar days after the receipt of comments by or notice from the Commission that such amendment is required in order for such Registration Statement to be declared effective, or (iv) a Registration Statement registering for resale all of the Registrable Securities is not declared effective by the Commission by the Effectiveness Date of the Initial Registration Statement, or (v) after the effective date of a Registration Statement, such Registration Statement ceases for any reason to remain continuously effective as to all Registrable Securities included in such Registration Statement, or the Holders are otherwise not permitted to utilize the Prospectus therein to resell such Registrable Securities, for more than ten (10) consecutive calendar days or more than an aggregate of fifteen (15) calendar days (which need not

be consecutive calendar days) during any 12-month period (any such failure or breach being referred to as an “ Event ”, and for purposes of clauses (i) and (iv), the date on which such Event occurs, and for purpose of clause (ii) the date on which such five (5) Trading Day period is exceeded, and for purpose of clause (iii) the date which such twenty (20) calendar day period is exceeded, and for purpose of clause (v) the date on which such ten (10) or fifteen (15) calendar day period, as applicable, is exceeded being referred to as “ Event Date ”), then, in addition to any other rights the Holders may have hereunder or under applicable law, on each such Event Date and on each monthly anniversary of each such Event Date (if the applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to the product of 1.5% multiplied by the aggregate Subscription Amount under the Purchase Agreement of the Securities then held by such Holder. The parties agree that the maximum aggregate liquidated damages payable to a Holder under this Agreement shall be 9% of the aggregate Subscription Amount paid by such Holder pursuant to the Purchase Agreement. If the Company fails to pay any partial liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 18% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such partial liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. The partial liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event.

(e)

If Form S-3 is not available for the registration of the resale of Registrable Securities hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form and (ii) undertake to register the Registrable Securities on Form S-3 as soon as such form is available, provided that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement on Form S-3 covering the Registrable Securities has been declared effective by the Commission.

Registration Procedures .

In connection with the Company’s registration obligations hereunder, the Company shall:

(a)

Not less than five (5) Trading Days prior to the filing of each Registration Statement and not less than one (1) Trading Day prior to the filing of any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to each Holder copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of such Holders, and (ii) cause its officers and directors, counsel and independent registered public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to each Holder, to conduct a reasonable investigation within the meaning of the Securities Act. Notwithstanding the above, the Company shall not be obligated to provide the Holders advance copies of any universal shelf registration statement registering securities in addition to those required hereunder, or any Prospectus prepared thereto. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities shall reasonably object in good faith, provided that, the Company is notified of such objection in writing no later than five (5) Trading Days after the Holders have been so furnished copies of a Registration Statement or one (1) Trading Day after the Holders have been so furnished copies of any related Prospectus or amendments or supplements thereto. Each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex B (a “ Selling Stockholder Questionnaire ”) on a date that is not less than two (2) Trading Days prior to the Filing Date or by the end of the fourth (4 ^th ) Trading Day following the date on which such Holder receives draft materials in accordance with this Section.

(b)

(i) Prepare and file with the Commission such amendments, including post-effective amendments, to a Registration Statement and the Prospectus used in connection therewith as may be necessary to keep a Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities, (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement (subject to the terms of this Agreement), and, as so supplemented or amended, to be filed pursuant to Rule 424, (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to a Registration Statement or any amendment thereto and provide as promptly as reasonably possible to the Holders true and complete copies of all correspondence from and to the Commission relating to a Registration Statement (provided that, the Company shall excise any information contained therein which would constitute material non-public information regarding the Company or any of its Subsidiaries), and (iv) comply in all material respects with the applicable provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by a Registration Statement during the applicable period in accordance (subject to the terms of this Agreement) with the intended methods of disposition by the Holders thereof set forth in such Registration Statement as so amended or in such Prospectus as so supplemented.

(c)

If during the Effectiveness Period, the number of Registrable Securities at any time exceeds 100% of the number of shares of Common Stock then registered in a Registration Statement, then the Company shall file as soon as reasonably practicable, but in any case prior to the applicable Filing Date, an additional Registration Statement covering the resale by the Holders of not less than the number of such Registrable Securities.

(d)

Notify the Holders of Registrable Securities to be sold (which notice shall, pursuant to clauses (iii) through (vi) hereof, be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made) as promptly as reasonably possible (and, in the case of (i)(A) below, not less than one (1) Trading Day prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one (1) Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed, (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and whenever the Commission comments in writing on such Registration Statement, and (C) with respect to a Registration Statement or any post-effective amendment, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose, (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in a Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to a Registration Statement, Prospectus or other documents so that, in the case of a Registration Statement or the Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, and (vi) of the occurrence or existence of any pending corporate development with respect to the Company that the Company believes may be material and that, in the determination of the Company, makes it not in the best interest of the Company to allow continued availability of a Registration Statement or Prospectus, provided , however , in no event shall any such notice contain any information which would constitute material, non-public information regarding the Company or any of its Subsidiaries.

(e)

Use its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order stopping or suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(f)

Furnish to each Holder, without charge, at least one conformed copy of each such Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference to the extent requested by such Person, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; provided, that any such item which is available on the EDGAR system (or successor thereto) need not be furnished in physical form.

(g)

Subject to the terms of this Agreement, the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(d).

(h)

The Company shall cooperate with any broker-dealer through which a Holder proposes to resell its Registrable Securities in effecting a filing with the FINRA Corporate Financing Department pursuant to FINRA Rule 5110, as requested by any such Holder, and the Company shall pay the filing fee required by such filing within two (2) Business Days of request therefor.

(i)

Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the Registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep each registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by each Registration Statement; provided, that, the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

(j)

If requested by a Holder, cooperate with such Holder to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holder may request.

(k)

Upon the occurrence of any event contemplated by Section 3(d), as promptly as reasonably possible under the circumstances taking into account the Company’s good faith assessment of any adverse consequences to the Company and its stockholders of the premature disclosure of such event, prepare a supplement or amendment, including a post-effective amendment, to a Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither a Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. If the Company notifies the Holders in accordance with clauses (iii) through (vi) of Section 3(d) above to suspend the use of any

Prospectus until the requisite changes to such Prospectus have been made, then the Holders shall suspend use of such Prospectus. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company shall be entitled to exercise its right under this Section 3(k) to suspend the availability of a Registration Statement and Prospectus, subject to the payment of partial liquidated damages otherwise required pursuant to Section 2(d), for a period not to exceed 60 calendar days (which need not be consecutive days) in any 12-month period.

(l)

Comply with all applicable rules and regulations of the Commission.

(m)

The Company shall use its best efforts to maintain eligibility for use of Form S-3 (or any successor form thereto) for the registration of the resale of Registrable Securities.

(n)

The Company may require each selling Holder to furnish to the Company a certified statement as to the number of shares of Common Stock beneficially owned by such Holder and, if required by the Commission, the natural persons thereof that have voting and dispositive control over the shares. During any periods that the Company is unable to meet its obligations hereunder with respect to the registration of the Registrable Securities solely because any Holder fails to furnish such information within three Trading Days of the Company’s request, any liquidated damages that are accruing at such time as to such Holder only shall be tolled and any Event that may otherwise occur solely because of such delay shall be suspended as to such Holder only, until such information is delivered to the Company.

Registration Expenses . All fees and expenses incident to the performance of or compliance with, this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses of the Company’s counsel and independent registered public accountants) (A) with respect to filings made with the Commission, (B) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, (C) in compliance with applicable state securities or Blue Sky laws reasonably agreed to by the Company in writing (including, without limitation, fees and disbursements of counsel for the Company in connection with Blue Sky qualifications or exemptions of the Registrable Securities) and (D) if not previously paid by the Company in connection with an Issuer Filing, with respect to any filing that may be required to be made by any broker through which a Holder intends to make sales of Registrable Securities with FINRA pursuant to FINRA Rule 5110, so long as the broker is receiving no more than a customary brokerage commission in connection with such sale, (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. In no event shall the Company be responsible for any broker or similar commissions of any Holder or, except to the extent provided for in the Transaction Documents, any legal fees or other costs of the Holders.

Indemnification .

(a)

Indemnification by the Company . The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, members, partners, agents, brokers (including brokers who offer and sell Registrable Securities as principal as a result of a pledge or any failure to perform under a margin call of Common Stock), investment advisors and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, members, stockholders, partners, agents and employees (and any other Persons with a functionally equivalent role of a Person holding such titles, notwithstanding a lack of such title or any other title) of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “ Losses ”), as incurred, arising out of or relating to (1) any untrue or alleged untrue statement of a material fact contained in a Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading or (2) any violation or alleged violation by the Company of the Securities Act, the Exchange Act or any state securities law, or any rule or regulation thereunder, in connection with the performance of its obligations under this Agreement, except to the extent, but only to the extent, that (i) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement, such Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (ii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified person and shall survive the transfer of any Registrable Securities by any of the Holders in accordance with Section 6(h).

(b)

Indemnification by Holders . Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based solely upon: (x) such Holder’s failure to comply with any applicable prospectus delivery requirements of the Securities Act through no fault of the Company or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished in writing by such Holder to the Company

expressly for inclusion in such Registration Statement or such Prospectus or (ii) to the extent, but only to the extent, that such information relates to such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence of an event of the type specified in Section 3(d)(iii)-(vi), to the extent, but only to the extent, related to the use by such Holder of an outdated, defective or otherwise unavailable Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated, defective or otherwise unavailable for use by such Holder and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), but only if and to the extent that following the receipt of the Advice the misstatement or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling Holder under this Section 5(b) be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(c)

Conduct of Indemnification Proceedings . If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “ Indemnified Party ”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “ Indemnifying Party ”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that, the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have materially and adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses, (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding, or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a material conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of no more than one separate counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

Subject to the terms of this Agreement, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party; provided, that, the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) not to be entitled to indemnification hereunder.

(d)

Contribution . If the indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then each Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in this Agreement, any reasonable attorneys’ or other fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute pursuant to this Section 5(d), in the aggregate, any amount in excess of the amount by which the net proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission.

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

Miscellaneous .

(a)

Remedies . In the event of a breach by the Company or by a Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, shall be entitled to specific performance of its rights under this Agreement. Each of the Company and each Holder agrees that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall not assert or shall waive the defense that a remedy at law would be adequate.

(b)

No Piggyback on Registrations; Prohibition on Filing Other Registration Statements . Except as set forth on Schedule 6(b) , neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities. The Company shall not file any other registration statements until all Registrable Securities are registered pursuant to a Registration Statement that is declared effective by the Commission, provided that this Section 6(b) (i) shall not prohibit the Company from filing amendments to registration statements filed prior to the date of this Agreement and (ii) shall not prohibit the Company from filing a shelf registration statement on Form S-3 for a primary offering by the Company, provided that the Company makes no offering of securities pursuant to such shelf registration statement prior to the effective date of the Registration Statement required hereunder that includes all of the Registrable Securities.

(c)

Compliance . Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it (unless an exemption therefrom is available) in connection with sales of Registrable Securities pursuant to a Registration Statement.

(d)

Discontinued Disposition . By its acquisition of Registrable Securities, each Holder agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(d)(iii) through (vi), such Holder will forthwith discontinue disposition of such Registrable Securities under a Registration Statement until it is advised in writing (the “ Advice ”) by the Company that the use of the applicable Prospectus (as it may have been supplemented or amended) may be resumed. The Company will use its best efforts to ensure that the use of the Prospectus may be resumed as promptly as is practicable. The Company agrees and acknowledges that any periods during which the Holder is required to discontinue the disposition of the Registrable Securities hereunder shall be subject to the provisions of Section 2(d).

(e)

Piggy-Back Registrations . If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans, then the Company shall deliver to each Holder a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided , however , that the Company shall not be required to register any Registrable Securities pursuant to this Section 6(e) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the Commission pursuant to the Securities Act or that are the subject of a then effective Registration Statement.

(f)

Amendments and Waivers . The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of 67% or more of the then outstanding Registrable Securities (for purposes of clarification, this includes any Registrable Securities issuable upon exercise or conversion of any Security). If a Registration Statement does not register all of the Registrable Securities pursuant to a waiver or amendment done in compliance with the previous sentence, then the number of Registrable Securities to be registered for each Holder shall be reduced pro rata among all Holders and each Holder shall have the right to designate which of its Registrable Securities shall be omitted from such Registration Statement. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of a Holder or some Holders and that does not directly or indirectly affect the rights of other Holders may be given only by such Holder or Holders of all of the Registrable Securities to which such waiver or consent relates; provided , however , that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the first sentence of this Section 6(f). No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration also is offered to all of the parties to this Agreement.

(g)

Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be delivered as set forth in the Purchase Agreement.

(h)

Successors and Assigns . This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign (except by merger) its rights or obligations hereunder without the prior written consent of all of the Holders of the then outstanding Registrable Securities. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under Section 5.7 of the Purchase Agreement.

(i)

No Inconsistent Agreements . Neither the Company nor any of its Subsidiaries has entered, as of the date hereof, nor shall the Company or any of its Subsidiaries, on or after the date of this Agreement, enter into any agreement with respect to its securities, that would have the effect of impairing the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Except as set forth on Schedule 6(i) , neither the Company nor any of its Subsidiaries has previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been satisfied in full.

(j)

Execution and Counterparts . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

(k)

Governing Law . All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in accordance with the provisions of the Purchase Agreement.

(l)

Cumulative Remedies . The remedies provided herein are cumulative and not exclusive of any other remedies provided by law.

(m)

Severability . If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(n)

Headings . The headings in this Agreement are for convenience only, do not constitute a part of the Agreement and shall not be deemed to limit or affect any of the provisions hereof.

(o)

Independent Nature of Holders’ Obligations and Rights . The obligations of each Holder hereunder are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting in concert or as a group or entity with respect to such obligations or the transactions contemplated by this Agreement or any other matters, and the Company acknowledges that the Holders are not acting in concert or as a group, and the Company shall not asset any such claim, with respect to such obligations or transactions. Each Holder shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose. The use of a single agreement with respect to the obligations of the Company contained was solely in the control of the Company, not the action or decision of any Holder, and was done solely for the convenience of the Company and not because it was required or requested to do so by any Holder. It is expressly understood and agreed that each provision contained in this Agreement is between the Company and a Holder, solely, and not between the Company and the Holders collectively and not between and among Holders.

********************

(Signature Pages Follow)

IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.


WESTCOTT PRODUCTS CORPORATION


By:	/s/ E. Will Gray II
	Name: E. Will Gray II
	Title: CEO and President

[SIGNATURE PAGE OF HOLDERS FOLLOWS]

[SIGNATURE PAGE OF HOLDERS TO WESTCOTT/DALA RRA]

Name of Holder: __________________________

Signature of Authorized Signatory of Holder : _________ /s/ _________________

Name of Authorized Signatory: _________________________

Title of Authorized Signatory: __________________________

[SIGNATURE PAGES CONTINUE]

Annex A

Plan of Distribution

Each Selling Stockholder (the “ Selling Stockholders ”) of the securities and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities covered hereby on the [NAME OF principal Trading Market] or any other stock exchange, market or trading facility on which the securities are traded or in private transactions. These sales may be at fixed or negotiated prices. A Selling Stockholder may use any one or more of the following methods when selling securities:

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

block trades in which the broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

an exchange distribution in accordance with the rules of the applicable exchange;

privately negotiated transactions;

settlement of short sales;

in transactions through broker-dealers that agree with the Selling Stockholders to sell a specified number of such securities at a stipulated price per security;

through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

a combination of any such methods of sale; or

any other method permitted pursuant to applicable law.

The Selling Stockholders may also sell securities under Rule 144 under the Securities Act of 1933, as amended (the “ Securities Act ”), if available, rather than under this prospectus.

Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this Prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

In connection with the sale of the securities or interests therein, the Selling Stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions they assume. The Selling Stockholders may also sell securities short and deliver these securities to close out their short positions, or loan or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The Selling Stockholders and any broker-dealers or agents that are involved in selling the securities may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholder has informed the Company that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the securities.

The Company is required to pay certain fees and expenses incurred by the Company incident to the registration of the securities. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

Because Selling Stockholders may be deemed to be “underwriters” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder. In addition, any securities covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus. The Selling Stockholders have advised us that there is no underwriter or coordinating broker acting in connection with the proposed sale of the resale securities by the Selling Stockholders.

We agreed to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholders without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for the Company to be in compliance with the current public information under Rule 144 under the Securities Act or any other rule of similar effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common stock by the Selling Stockholders or any other person. We will make copies of this prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

Annex B

WESTCOTT PRODUCTS CORPORATION

Selling Stockholder Notice and Questionnaire

The undersigned beneficial owner of common stock (the “ Registrable Securities ”) of Westcott Products Corporation, a Delaware corporation (the “ Company ”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “ Commission ”) a registration statement (the “ Registration Statement ”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “ Securities Act ”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “ Registration Rights Agreement ”) to which this document is annexed. A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

NOTICE

The undersigned beneficial owner (the “ Selling Stockholder ”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

QUESTIONNAIRE

Name.

(a)

Full Legal Name of Selling Stockholder

(b)

Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

(c)

Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):

2. Address for Notices to Selling Stockholder:


Telephone:


Fax:


Contact Person:

3. Broker-Dealer Status:

(a)

Are you a broker-dealer?

Yes o No o

(b)

If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

Yes o No o

Note:

If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

(c)

Are you an affiliate of a broker-dealer?

Yes o No o

(d)

If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

Yes o No o

Note:

If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

4. Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.

(a)

Type and Amount of other securities beneficially owned by the Selling Stockholder:

5. Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.


Date:	Beneficial Owner:

	By:
		Name:
		Title:

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

Brunson Chandler & Jones PLLC

175 South Main Street, Suite 1500

Salt Lake City, Utah 84111

Fax: (801)355-5005

Email: callie@bcjlaw.com

Schedule 6(b)


Shareholder Name	Amount of Shares to Be Registered
Claire Catherine Keneally	6,000
John Sebastian Keneally	6,000
Ian Matthews Keneally	6,000
Edwin C. Brown Family Trust	30,000
Able Family Trust	12,000
Baldo Sanso	36,000
Bill Pearson	12,000
Robert Redfearn	29,000
Garrett Soden	6,000
Charles Clark	6,000
Ronald Lincoln	12,000
KDND Family Trust	24,000
Robert Sali	61,000
Chris Dabbs	6,000
Phillip McPherson	6,000
Robert Pollack	6,000
Timothy Sorenson	6,000
Erin Cottman	5,000
Brian Bayley	60,000

Schedule 6(i)

No exceptions.

Exhibit 4.2

EXHIBIT C

NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

COMMON STOCK PURCHASE WARRANT

WESTCOTT PRODUCTS CORPORATION


Warrant Shares:________	Initial Exercise Date: June 3, 2014

THIS COMMON STOCK PURCHASE WARRANT (the “ Warrant ”) certifies that, for value received, _____________ or its assigns (the “ Holder ”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after the date hereof (the “ Initial Exercise Date ”) and on or prior to the close of business on the three year anniversary of the Effective Date (as defined in the Purchase Agreement)(the “ Termination Date ”) but not thereafter, to subscribe for and purchase from Westcott Products Corporation, a Delaware corporation (the “ Company ”), up to ______ shares (as subject to adjustment hereunder, the “ Warrant Shares ”) of Common Stock. The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).

Section 1 .

Definitions . Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement (the “ Purchase Agreement ”), dated June 3, 2014, among the Company and the purchasers signatory thereto.

Section 2 .

Exercise .

Exercise of Warrant . Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise in the form annexed hereto and within three (3) Trading Days of the date said Notice of Exercise is delivered to the Company, the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier’s check drawn on a United States bank or, if available, pursuant to the cashless exercise procedure specified in Section 2(c) below. No ink-original Notice of Exercise shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise form be required. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding

number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof.

Exercise Price . The exercise price per share of the Common Stock under this Warrant shall be $1.35 , subject to adjustment hereunder (the “ Exercise Price ”).

Cashless Exercise . If at any time after the six month anniversary of the date of the Purchase Agreement, there is no effective Registration Statement registering, or no current prospectus available for, the resale of the Warrant Shares by the Holder, then this Warrant may also be exercised, in whole or in part, at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive a number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the VWAP on the Trading Day immediately preceding the date on which Holder elects to exercise this Warrant by means of a “cashless exercise,” as set forth in the applicable Notice of Exercise;

(B) = the Exercise Price of this Warrant, as adjusted hereunder; and

(X) = the number of Warrant Shares that would be issuable upon exercise of this Warrant in accordance with the terms of this Warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

Notwithstanding anything herein to the contrary, on the Termination Date, this Warrant shall be automatically exercised via cashless exercise pursuant to this Section 2(c).

(d)

Mechanics of Exercise .

Delivery of Warrant Shares Upon Exercise . Warrant Shares purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“ DWAC ”) if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder or (B) the shares are eligible for resale by the Holder pursuant to Rule 144, and otherwise by physical delivery to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the delivery to the Company of the Notice of Exercise (such date, the “ Warrant Share Delivery Date ”). The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price (or by cashless exercise, if permitted) and all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares, having been paid. If the Company fails for any reason to deliver to the Holder the Warrant Shares subject to a Notice of Exercise by the Warrant Share Delivery Date, the Company shall pay to the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on the VWAP of the Common Stock on the date of the applicable Notice of Exercise), $10 per Trading Day (increasing to $15 per Trading Day on the fifth Trading Day after such liquidated damages begin to accrue) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares are delivered or Holder rescinds such exercise.

ii.

Delivery of New Warrants Upon Exercise . If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of this Warrant certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

iii.

Rescission Rights . If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then the Holder will have the right to rescind such exercise.

iv.

Compensation for Buy-In on Failure to Timely Deliver Warrant Shares Upon Exercise . In addition to any other rights available to the Holder, if the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases, shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall (A) pay in cash to the Holder the amount, if any, by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.

No Fractional Shares or Scrip . No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.

vi.

Charges, Taxes and Expenses . Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided , however , that in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may

require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all Transfer Agent fees required for same-day processing of any Notice of Exercise and all fees to the Depository Trust Company (or another established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares.

vii.

Closing of Books . The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

Holder’s Exercise Limitations . The Company shall not effect any exercise of this Warrant, and a Holder shall not have the right to exercise any portion of this Warrant, pursuant to Section 2 or otherwise, to the extent that after giving effect to such issuance after exercise as set forth on the applicable Notice of Exercise, the Holder (together with the Holder’s Affiliates, and any other Persons acting as a group together with the Holder or any of the Holder’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Holder and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of this Warrant with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which would be issuable upon (i) exercise of the remaining, nonexercised portion of this Warrant beneficially owned by the Holder or any of its Affiliates and (ii) exercise or conversion of the unexercised or nonconverted portion of any other securities of the Company (including, without limitation, any other Common Stock Equivalents) subject to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 2(e), beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder, it being acknowledged by the Holder that the Company is not representing to the Holder that such calculation is in compliance with Section 13(d) of the Exchange Act and the Holder is solely responsible for any schedules required to be filed in accordance therewith. To the extent that the limitation contained in this Section 2(e) applies, the determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable shall be in the sole discretion of the Holder, and the submission of a Notice of Exercise shall be deemed to be the Holder’s determination of whether this Warrant is exercisable (in relation to other securities owned by the Holder together with any Affiliates) and of which portion of this Warrant is exercisable, in each case subject to the Beneficial Ownership Limitation, and the Company shall have no obligation to verify or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 2(e), in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding. Upon the written or oral request of a Holder, the Company shall within two Trading Days confirm orally and in writing to the Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise of securities of the Company, including this Warrant, by the Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was reported. The “ Beneficial Ownership Limitation ” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice to the Company, may increase or decrease the Beneficial Ownership Limitation provisions of this Section 2(e), provided that the Beneficial Ownership Limitation in no event exceeds 9.99% of the number of shares of the Common Stock outstanding immediately after

giving effect to the issuance of shares of Common Stock upon exercise of this Warrant held by the Holder and the provisions of this Section 2(e) shall continue to apply. Any such increase or decrease will not be effective until the 61 ^st day after such notice is delivered to the Company. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 2(e) to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation. The limitations contained in this paragraph shall apply to a successor holder of this Warrant.

Section 3 .

Certain Adjustments .

Stock Dividends and Splits . If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.

Subsequent Equity Sales . If the Company or any Subsidiary thereof, as applicable, at any time while this Warrant is outstanding, shall sell or grant any option to purchase, or sell or grant any right to reprice, or otherwise dispose of or issue (or announce any offer, sale, grant or any option to purchase or other disposition) any Common Stock or Common Stock Equivalents, at an effective price per share less than the Exercise Price then in effect (such lower price, the “ Base Share Price ” and such issuances collectively, a “ Dilutive Issuance ”) (it being understood and agreed that if the holder of the Common Stock or Common Stock Equivalents so issued shall at any time, whether by operation of purchase price adjustments, reset provisions, floating conversion, exercise or exchange prices or otherwise, or due to warrants, options or rights per share which are issued in connection with such issuance, be entitled to receive shares of Common Stock at an effective price per share that is less than the Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price on such date of the Dilutive Issuance at such effective price), then simultaneously with the consummation of each Dilutive Issuance the Exercise Price shall be reduced and only reduced to equal the Base Share Price. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. Notwithstanding the foregoing, no adjustments shall be made, paid or issued under this Section 3(b) in respect of an Exempt Issuance. The Company shall notify the Holder, in writing, no later than the Trading Day following the issuance or deemed issuance of any Common Stock or Common Stock Equivalents subject to this Section 3(b), indicating therein the applicable issuance price, or applicable reset price, exchange price, conversion price and other pricing terms (such notice, the “ Dilutive Issuance Notice ”). For purposes of clarification, whether or not the Company provides a Dilutive Issuance Notice pursuant to this Section 3(b), upon the occurrence of any Dilutive Issuance, the Holder is entitled to receive a number of Warrant Shares based upon the Base Share Price regardless of whether the Holder accurately refers to the Base Share Price in the Notice of Exercise. If the Company enters into a Variable Rate Transaction, despite the prohibition thereon in the Purchase Agreement, the Company shall be deemed to have issued Common Stock or Common Stock Equivalents at the lowest possible conversion or exercise price at which such securities may be converted or exercised

Subsequent Rights Offerings . In addition to any adjustments pursuant to Section 3(a) above, if at any time the Company grants, issues or sells any Common Stock Equivalents or rights to purchase stock, warrants, securities or other property pro rata to the record holders of any class of shares of Common Stock (the “ Purchase Rights ”), then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to participate in any such Purchase Right would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

Pro Rata Distributions . During such time as this Warrant is outstanding, if the Company shall declare or make any dividend or other distribution of its assets (or rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement, scheme of arrangement or other similar transaction) (a “ Distribution ”), at any time after the issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in such Distribution to the same extent that the Holder would have participated therein if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Beneficial Ownership Limitation) immediately before the date of which a record is taken for such Distribution, or, if no such record is taken, the date as of which the record holders of shares of Common Stock are to be determined for the participation in such Distribution ( provided , however , to the extent that the Holder's right to participate in any such Distribution would result in the Holder exceeding the Beneficial Ownership Limitation, then the Holder shall not be entitled to participate in such Distribution to such extent (or in the beneficial ownership of any shares of Common Stock as a result of such Distribution to such extent) and the portion of such Distribution shall be held in abeyance for the benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding the Beneficial Ownership Limitation).

Fundamental Transaction . If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, or (v) the Company , directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person or group of Persons whereby such other Person or group acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination) (each a “ Fundamental Transaction ”), then, upon any subsequent exercise of this Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder (without regard to any

limitation in Section 2(e) on the exercise of this Warrant), the number of shares of Common Stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration (the “ Alternate Consideration ”) receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 2(e) on the exercise of this Warrant). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction, the Company or any Successor Entity (as defined below) shall, at the Holder’s option, exercisable at any time concurrently with, or within 30 days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an amount of cash equal to the Black Scholes Value of the remaining unexercised portion of this Warrant on the date of the consummation of such Fundamental Transaction. “ Black Scholes Value ” means the value of this Warrant based on the Black and Scholes Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“ Bloomberg ”) determined as of the day of consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date, (B) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT function on Bloomberg as of the Trading Day immediately following the public announcement of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of the price per share being offered in cash, if any, plus the value of any non-cash consideration, if any, being offered in such Fundamental Transaction and (D) a remaining option time equal to the time between the date of the public announcement of the applicable Fundamental Transaction and the Termination Date. The Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “ Successor Entity ”) to assume in writing all of the obligations of the Company under this Warrant and the other Transaction Documents in accordance with the provisions of this Section 3(e) pursuant to written agreements in form and substance reasonably satisfactory to the Holder and approved by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the Holder, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant and the other Transaction Documents referring to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the Company under this Warrant and the other Transaction Documents with the same effect as if such Successor Entity had been named as the Company herein.

Calculations . All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.

Notice to Holder .

Adjustment to Exercise Price . Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and any resulting adjustment to the number of Warrant Shares and setting forth a brief statement of the facts requiring such adjustment.

ii.

Notice to Allow Exercise by Holder . If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register of the Company, at least 20 calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.

Section 4 .

Transfer of Warrant .

Transferability . Subject to compliance with any applicable securities laws and the conditions set forth in Section 4(d) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder (including, without limitation, any registration rights) are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company unless the Holder has assigned this Warrant in full, in which case, the Holder shall surrender this Warrant to the Company within three (3) Trading Days of the date the Holder delivers an assignment form to the Company assigning this Warrant full. The Warrant, if

properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

New Warrants . This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 4(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the Initial Exercise Date and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.

Warrant Register . The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “ Warrant Register ”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.

Transfer Restrictions . If , at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be either (i) registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws or (ii) eligible for resale pursuant to Rule 144, the Company may require, as a condition of allowing such transfer, that the Holder or transferee of this Warrant, as the case may be, comply with the provisions of Section 5.7 of the Purchase Agreement.

Representation by the Holder . The Holder, by the acceptance hereof, represents and warrants that it is acquiring this Warrant and, upon any exercise hereof, will acquire the Warrant Shares issuable upon such exercise, for its own account and not with a view to or for distributing or reselling such Warrant Shares or any part thereof in violation of the Securities Act or any applicable state securities law, except pursuant to sales registered or exempted under the Securities Act.

Section 5 .

Miscellaneous .

No Rights as Stockholder Until Exercise . This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i), except as expressly set forth in Section 3.

Loss, Theft, Destruction or Mutilation of Warrant . The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

Saturdays, Sundays, Holidays, etc . If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.

Authorized Shares .

The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its

officers who are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).

Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.

Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

Jurisdiction . All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be determined in accordance with the provisions of the Purchase Agreement.

Restrictions . The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered and the Holder does not utilize cashless exercise, will have restrictions upon resale imposed by state and federal securities laws.

Nonwaiver and Expenses . No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding the fact that all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

Notices . Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement.

Limitation of Liability . No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase price of any Common

Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

Remedies . The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.

Successors and Assigns . Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder or holder of Warrant Shares.

Amendment . This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

Severability . Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

Headings . The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Page Follows)

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.


WESTCOTT PRODUCTS CORPORATION


By:	/s/ E. Will Gray II
	Name: E. Will Gray II
	Title: CEO and President

NOTICE OF EXERCISE

TO:

WESTCOTT PRODUCTS CORPORATION

(1)

The undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

(2)

Payment shall take the form of (check applicable box):

[ ] in lawful money of the United States; or

[ ] [if permitted the cancellation of such number of Warrant Shares as is necessary, in accordance with the formula set forth in subsection 2(c), to exercise this Warrant with respect to the maximum number of Warrant Shares purchasable pursuant to the cashless exercise procedure set forth in subsection 2(c).

(3)

Please issue said Warrant Shares in the name of the undersigned or in such other name as is specified below:

_______________________________

The Warrant Shares shall be delivered to the following DWAC Account Number:

_______________________________

(4) Accredited Investor . The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: _____________________________________________________________________________

Signature of Authorized Signatory of Investing Entity : _______________________________________________________

Name of Authorized Signatory: _________________________________________________________________________

Title of Authorized Signatory: __________________________________________________________________________

Date: _____________________________________________________________________________________________

EXHIBIT B

ASSIGNMENT FORM

(To assign the foregoing Warrant, execute this form and supply required information. Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced thereby are hereby assigned to


Name:	____________________________________________
	(Please Print)

Address:	____________________________________________
	(Please Print)

Dated: _______________ __, ______

Holder’s Signature:__________________________

Holder’s Address:___________________________

Exhibit 4.3

EXHIBIT E

FORM OF LOCK-UP AGREEMENT

June 3, 2014

Each Purchaser referenced below:

Re:

Securities Purchase Agreement, dated as of June 3, 2014 (the “Purchase Agreement ”), between Westcott Products Corporation, a Delaware corporation (the “ Company ”) and the purchasers signatory thereto (each, a “ Purchaser ” and, collectively, the “ Purchasers ”)

Ladies and Gentlemen:

Defined terms not otherwise defined in this letter agreement (the “ Letter Agreement ”) shall have the meanings set forth in the Purchase Agreement. Pursuant to Section 2.2 of the Purchase Agreement and in satisfaction of a condition of the Company’s obligations under the Purchase Agreement, the undersigned irrevocably agrees with the Company that, from the date hereof until the 12-month anniversary of the date the Merger 8-K is filed with the Commission (such period, the “ Restriction Period ”), the undersigned will not offer, sell, contract to sell, hypothecate, pledge or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the undersigned or any Affiliate of the undersigned or any person in privity with the undersigned or any Affiliate of the undersigned), directly or indirectly, including the filing (or participation in the filing) of a registration statement with the Commission in respect of, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act with respect to, any shares of Common Stock or Common Stock Equivalents beneficially owned, held or hereafter acquired by the undersigned (the “ Securities ”). Beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. In order to enforce this covenant, the Company shall impose irrevocable stop-transfer instructions preventing the Transfer Agent from effecting any actions in violation of this Letter Agreement. The restrictions contained in this letter agreement shall not apply to: (i) transfers of shares of Common Stock as a bona fide gift or gifts to the undersigned’s immediately family or charitable organizations, (ii) transfers of shares of Common Stock or any Common Stock Equivalent to the immediate family of the undersigned, to a trust the beneficiaries of which are exclusively the undersigned and/or a member or members of the immediate family of the undersigned or to any corporation, partnership, limited liability company or other entity all of the beneficial ownership interests of which are held exclusively by the undersigned and/or a member or members of the immediate family of the undersigned, or (iii) if the undersigned is a corporation, partnership, limited liability company or other business entity, any transfers to any shareholder, partner or member of, or owner of a similar equity interest in, the undersigned, as the case may be, if, in any such case, such transfer is not for value, provided, that in the case of any transfer or distribution pursuant to the preceding clause(s) (i), (ii) and (iii), prior to and as a condition of any such transfer or distribution, each donee, distributee or transferee shall execute and deliver to the Purchasers a lock-up letter for the remainder of the Restriction Period, in the form of this Letter Agreement.

The undersigned acknowledges that the execution, delivery and performance of this Letter Agreement is a material inducement to each Purchaser to complete the transactions contemplated by the Purchase Agreement and that each Purchaser (which shall be a third party beneficiary of this Letter Agreement) and the Company shall be entitled to specific performance of the undersigned’s obligations hereunder. The undersigned hereby represents that the undersigned has the power and authority to execute, deliver and perform this Letter Agreement, that the undersigned has received adequate consideration therefor and that the undersigned will indirectly benefit from the closing of the transactions contemplated by the Purchase Agreement.

This Letter Agreement may not be amended or otherwise modified in any respect without the written consent of each of the Company, each Purchaser and the undersigned. This Letter Agreement shall be construed and enforced in accordance with the laws of the State of New York without regard to the principles of conflict of laws. The undersigned hereby irrevocably submits to the exclusive jurisdiction of the United States District Court sitting in the Southern District of New York and the courts of the State of New York located in Manhattan, for the purposes of any suit, action or proceeding arising out of or relating to this Letter Agreement, and hereby waives, and agrees not to assert in any such suit, action or proceeding, any claim that (i) it is not personally subject to the jurisdiction of such court, (ii) the suit, action or proceeding is brought in an inconvenient forum, or (iii) the venue of the suit, action or proceeding is improper. The undersigned hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by receiving a copy thereof sent to the Company at the address in effect for notices to it under the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. The undersigned hereby waives any right to a trial by jury. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. The undersigned agrees and understands that this Letter Agreement does not intend to create any relationship between the undersigned and each Purchaser and that each Purchaser is not entitled to cast any votes on the matters herein contemplated and that no issuance or sale of the Securities is created or intended by virtue of this Letter Agreement.

By its signature below, the Transfer Agent hereby acknowledges and agrees that, reflecting this Letter Agreement, it has placed an irrevocable stop transfer instruction on all Securities beneficially owned by the undersigned until the end of the Restriction Period. This Letter Agreement shall be binding on successors and assigns of the undersigned with respect to the Securities and any such successor or assign shall enter into a similar agreement for the benefit of the Purchasers.

*** SIGNATURE PAGE FOLLOWS***

This Letter Agreement may be executed in two or more counterparts, all of which when taken together may be considered one and the same agreement.

_________________________

Address for Notice:

_________________________

_____________________________

Number of shares of Common Stock

Number of shares of Common Stock underlying subject to warrants, options, debentures or other convertible securities

By signing below, the Company agrees to enforce the restrictions on transfer set forth in this Letter Agreement.

WESTCOTT PRODUCTS CORPORATION


By:
Name: E. Will Gray II
Title: President and CEO

Acknowledged and agreed to

as of the date set forth above:

American Registrar & Transfer Co.


By:
Name:
Title:

Exhibit 4.4

WESTCOTT PRODUCTS CORPORATION

INCENTIVE STOCK OPTION AGREEMENT



Name of Optionee: E. Will Gray II


No. of Shares Covered: 400,000	Date of Grant: June 3, 2014


Exercise Price Per Share: $0.70	Expiration Date: June 3, 2020


Exercise Schedule:


Date(s) of Exercisability May 30, 2015 May 30, 2016 May 30, 2017 May 30, 2018		No. of Shares as to Which Option Becomes Exercisable 100,000 100,000 100,000 100,000

This is an Incentive Stock Option Agreement (“ Agreement ”) between Westcott Products Corporation (the “ Company ”), and the optionee identified above (the “ Optionee ”) effective as of the date of grant specified above.

Background

The Company has entered into a Merger Agreement with Dala Petroleum Corp., a Nevada corporation, as of the Date of Grant listed above.

Pursuant to the Merger Agreement, the Board of Directors of the Company (the “ Board ”) hereby grants the Option to the Optionee under the terms and conditions as follows:

Terms and Conditions ^*

Grant . The Optionee is granted the Option to purchase the number of Shares specified at the beginning of this Agreement.

Exercise Price . The price to the Optionee of each Share subject to the Option will be the exercise price specified at the beginning of this Agreement (which price may not be less than the Fair Market Value as of the date of grant or, if the Optionee owns or is deemed to own stock possessing more than 10% of the combined voting power of all classes of stock of the Company, 110% of the Fair Market Value as of the date of grant).

Incentive Stock Option . The Option is intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “ Code ”), provided that to the extent the Option or part thereof fails to qualify as an incentive stock option, it will be treated as a non-statutory stock option.

Exercise Schedule . The Option will vest and become exercisable as to the number of Shares and on the dates specified in the exercise schedule at the beginning of this Agreement. The exercise schedule will be cumulative; thus, to the extent the Option has not already been exercised and has not expired, terminated or been cancelled, the Optionee or the person otherwise entitled to exercise the Option as provided herein may at any time, and from time to time, purchase all or any portion of the Shares then purchasable under the exercise schedule.

The Option may also be exercised in full (notwithstanding the exercise schedule) under the circumstances described in Section 8 of this Agreement if it has not expired prior thereto.

Expiration .

(a)

Timing . The Option will expire at 5:00 p.m. Mountain Time on the earliest of:

(1)

The expiration date specified at the beginning of this Agreement;

(2)

The expiration of the period after the termination of employment of the Optionee within which the Option can be exercised (as specified in Section 7 of this Agreement); or

(3)

Upon termination of the Optionee’s employment for cause or if it is determined by the Company within ten days after termination of the Optionee’s employment by the Optionee that cause existed for termination by the Company, the date of such determination.

(b)

Expiration Final . In no event may anyone exercise the Option, in whole or in part, after it has expired, notwithstanding any other provision of this Agreement.

(c)

Rescission . If the Option is exercised, and prior to the delivery of the certificate representing the Shares so purchased, it is determined that cause for termination existed, then the Company, in its sole discretion, may rescind the Option exercise by the Optionee and terminate the Option.

Procedure to Exercise Option .

(a)

Notice of Exercise . The Option may be exercised by delivering written notice of exercise to the Company at the principal executive office of the Company, to the attention of the Company’s Secretary, in the form attached to this Agreement. The notice shall state the number of Shares to be purchased, and shall be signed by the person exercising the Option. If the person exercising the Option is not the Optionee, he/she also must submit appropriate proof of his/her right to exercise the Option.

(b)

Tender of Payment . Upon giving notice of any exercise hereunder, the Optionee shall provide for payment of the purchase price of the Shares being purchased through one or a combination of the following methods:

(1)

Cash (including check, bank draft or money order);

(2)

To the extent permitted by law, through a broker assisted cashless exercise in which the Optionee simultaneously exercises the Option and sells all or a portion of the Shares thereby acquired pursuant to a brokerage or similar relationship and uses the proceeds from such sale to pay the purchase price of such Shares; or

(3)

By delivery to the Company of unencumbered Shares having an aggregate Fair Market Value on the date of exercise equal to the purchase price of such Shares.

(c)

Limitation on Payment by Shares. Notwithstanding Section 6(b), the Option may not be exercised through payment of any portion of the purchase price with Shares if, in the opinion of the Committee, payment in such manner could have adverse financial accounting consequences for the Company that were not applicable at the time of the grant.

(d)

Delivery of Certificates . As soon as practicable after the Company receives the notice and purchase price provided for above, it shall deliver to the person exercising the Option, in the name of such person, a certificate or certificates representing the Shares being purchased. The Company shall pay any original issue or transfer taxes with respect to the issue or transfer of the Shares and all fees and expenses incurred by it in connection therewith. All Shares so issued shall be fully paid and nonassessable. Notwithstanding anything to the contrary in this Agreement, no certificate for Shares distributable under this Agreement shall be issued and delivered unless the issuance of such certificate complies with all applicable legal requirements including, without limitation, compliance with the provisions of applicable state securities laws, the Securities Act and the Exchange Act.

Employment Requirement . The Option may be exercised only while the Optionee remains employed with the Company or a parent or subsidiary thereof, and only if the Optionee has been continuously so employed since the date the Option was granted; provided that:

(a)

Post-Employment. The Option may be exercised for three months after termination of the Optionee’s employment if such cessation of employment is for a reason other than death or disability, but only to the extent that it was exercisable immediately prior to termination of employment, provided that if termination of the Optionee’s employment shall have been for cause, the Option shall expire, and all rights to purchase Shares hereunder shall terminate, immediately upon such termination.

(b)

Death or Disability . The Option may be exercised for one year after termination of the Optionee’s employment if such termination of employment is because of death or disability of the Optionee.

Acceleration of Vesting .

(a)

Death or Disability . In the event of the death or disability of the Optionee, any portion of the Option that was not previously exercisable shall become immediately exercisable in full if the Optionee shall have been continuously employed by the Company or a parent or subsidiary thereof between the date the Option was granted and the date of such death or disability.

(b)

Change in Control . If a Change in Control of the Company or buyout of the operations of the Company shall or is to occur, then the Option, if not already exercised in full or otherwise terminated, expired or cancelled, shall become immediately exercisable in full and shall remain exercisable during the remaining term of the Option.

(c)

Discretionary Acceleration . Notwithstanding any other provisions of this Agreement to the contrary, the Committee may, in its sole discretion, declare at any time that the Option shall be immediately exercisable.

Limitation on Transfer . During the lifetime of the Optionee, only the Optionee or his/her guardian or legal representative may exercise the Option. The Option may not be assigned or transferred by the Optionee otherwise than by will or the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder.

10.

No Shareholder Rights Before Exercise . No person shall have any of the rights of a shareholder of the Company with respect to any Share subject to the Option until the Share actually is issued to him/her upon exercise of the Option.

11.

Discretionary Adjustment . In the event of any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of shares, rights offering, or extraordinary dividend or divestiture (including a spin off), or any other change in the corporate structure or Shares of the Company, the Committee (or if the Company does not survive any such transaction, a comparable committee of the Board of Directors of the surviving corporation) may, without the consent of the Optionee, make such adjustment as it determines in its discretion to be appropriate as to the number and kind of securities granted herein and, in order to prevent dilution or enlargement of rights of the Optionee, the number and kind of securities issuable upon exercise of the Option and the exercise price hereof.

12.

Tax Effect of Transfer of Shares . The Optionee hereby acknowledges that if any Shares received pursuant to the exercise of any portion of the Option are sold within two years from the date of grant or within one year from the effective date of exercise of the Option, or if certain other requirements of the Code are not satisfied, such Shares will be deemed under the Code not to have been acquired by the Optionee pursuant to an “incentive stock option” as defined in the Code; and that the Company shall not be liable to the Optionee in the event the Option for any reason is deemed not to be an “incentive stock option” within the meaning of the Code. Furthermore, the Optionee will promptly notify the Company, in writing, of any sale of Shares received through the exercise of any portion of the Option within two years from the date of grant or within one year from the effective date of exercise of the Option.

13.

Interpretation of This Agreement . All decisions and interpretations made by the Committee with regard to any question arising hereunder shall be binding and conclusive upon the Company and the Optionee.

14.

Discontinuance of Employment . This Agreement shall not give the Optionee a right to continued employment with the Company or any parent or subsidiary of the Company, and the Company or any such parent or subsidiary employing the Optionee may terminate his/her employment at any time and otherwise deal with the Optionee without regard to the effect it may have upon him/her under this Agreement.

15.

Option Subject to Articles of Incorporation and By Laws . The Optionee acknowledges that the Option and the exercise thereof is subject to the Articles of Incorporation, as amended from time to time, and the By Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations.

16.

Obligation to Reserve Sufficient Shares . The Company shall at all times during the term of the Option reserve and keep available a sufficient number of Shares to satisfy this Agreement.

17.

Binding Effect . This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Optionee.

18.

Choice of Law . This Agreement is entered into under the laws of the State of Delaware and shall be construed and interpreted thereunder without regard to its conflict of law principles.

The Optionee and the Company have executed this Agreement as of the 3rd day of June, 2014.


E. Will Gray II

/s/ E. Will Gray II

WESTCOTT PRODUCTS CORPORATION

By
Its

Exhibit 4.5

WESTCOTT PRODUCTS CORPORATION

INCENTIVE STOCK OPTION AGREEMENT



Name of Optionee: Clarence Cottman III


No. of Shares Covered: 100,000	Date of Grant: June 3, 2014


Exercise Price Per Share: $0.70	Expiration Date: June 3, 2020


Exercise Schedule:


Date(s) of Exercisability May 30, 2015 May 30, 2016		No. of Shares as to Which Option Becomes Exercisable 50,000 50,000

Background

The Company has entered into a Merger Agreement with Dala Petroleum Corp., a Nevada corporation, as of the Date of Grant listed above.

Pursuant to the Merger Agreement, the Board of Directors of the Company (the “ Board ”) hereby grants the Option to the Optionee under the terms and conditions as follows:

Terms and Conditions ^*

Grant . The Optionee is granted the Option to purchase the number of Shares specified at the beginning of this Agreement.

The Option may also be exercised in full (notwithstanding the exercise schedule) under the circumstances described in Section 8 of this Agreement if it has not expired prior thereto.

Expiration .

(a)

Timing . The Option will expire at 5:00 p.m. Mountain Time on the earliest of:

(1)

The expiration date specified at the beginning of this Agreement;

(2)

The expiration of the period after the termination of employment of the Optionee within which the Option can be exercised (as specified in Section 7 of this Agreement); or

(3)

(b)

Expiration Final . In no event may anyone exercise the Option, in whole or in part, after it has expired, notwithstanding any other provision of this Agreement.

(c)

Procedure to Exercise Option .

(a)

(b)

(1)

Cash (including check, bank draft or money order);

(2)

(3)

By delivery to the Company of unencumbered Shares having an aggregate Fair Market Value on the date of exercise equal to the purchase price of such Shares.

(c)

(d)

(a)

(b)

Death or Disability . The Option may be exercised for one year after termination of the Optionee’s employment if such termination of employment is because of death or disability of the Optionee.

Acceleration of Vesting .

(a)

(b)

(c)

10.

11.

12.

13.

14.

15.

16.

Obligation to Reserve Sufficient Shares . The Company shall at all times during the term of the Option reserve and keep available a sufficient number of Shares to satisfy this Agreement.

17.

Binding Effect . This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Optionee.

18.

Choice of Law . This Agreement is entered into under the laws of the State of Delaware and shall be construed and interpreted thereunder without regard to its conflict of law principles.

The Optionee and the Company have executed this Agreement as of the 3rd day of June, 2014.


OPTIONEE:

/s/ Clarence Cottman III
Clarence Cottman III

WESTCOTT PRODUCTS CORPORATION

By
Its

Exhibit 4.6

WESTCOTT PRODUCTS CORPORATION

INCENTIVE STOCK OPTION AGREEMENT



Name of Optionee: Jonathan S. Wimbish


No. of Shares Covered: 100,000	Date of Grant: June 3, 2014


Exercise Price Per Share: $0.70	Expiration Date: June 3, 2020


Exercise Schedule:


Date(s) of Exercisability May 30, 2015 May 30, 2016		No. of Shares as to Which Option Becomes Exercisable 50,000 50,000

Background

The Company has entered into a Merger Agreement with Dala Petroleum Corp., a Nevada corporation, as of the Date of Grant listed above.

Pursuant to the Merger Agreement, the Board of Directors of the Company (the “ Board ”) hereby grants the Option to the Optionee under the terms and conditions as follows:

Terms and Conditions ^*

Grant . The Optionee is granted the Option to purchase the number of Shares specified at the beginning of this Agreement.

The Option may also be exercised in full (notwithstanding the exercise schedule) under the circumstances described in Section 8 of this Agreement if it has not expired prior thereto.

Expiration .

(a)

Timing . The Option will expire at 5:00 p.m. Mountain Time on the earliest of:

(1)

The expiration date specified at the beginning of this Agreement;

(2)

The expiration of the period after the termination of employment of the Optionee within which the Option can be exercised (as specified in Section 7 of this Agreement); or

(3)

(b)

Expiration Final . In no event may anyone exercise the Option, in whole or in part, after it has expired, notwithstanding any other provision of this Agreement.

(c)

Procedure to Exercise Option .

(a)

(b)

(1)

Cash (including check, bank draft or money order);

(2)

(3)

By delivery to the Company of unencumbered Shares having an aggregate Fair Market Value on the date of exercise equal to the purchase price of such Shares.

(c)

(d)

(a)

(b)

Death or Disability . The Option may be exercised for one year after termination of the Optionee’s employment if such termination of employment is because of death or disability of the Optionee.

Acceleration of Vesting .

(a)

(b)

(c)

10.

11.

12.

13.

14.

15.

16.

Obligation to Reserve Sufficient Shares . The Company shall at all times during the term of the Option reserve and keep available a sufficient number of Shares to satisfy this Agreement.

17.

Binding Effect . This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Optionee.

18.

Choice of Law . This Agreement is entered into under the laws of the State of Delaware and shall be construed and interpreted thereunder without regard to its conflict of law principles.

The Optionee and the Company have executed this Agreement as of the 3rd day of June, 2014.


OPTIONEE:

/s/ Jonathan S. Wimbish
Jonathan S. Wimbish

WESTCOTT PRODUCTS CORPORATION

By
Its

Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (the “Agreement” ) is made as of June 2, by and among Westcott Products Corporation, a Delaware corporation ( “Parent” ); Dala Acquisition Corp., a Nevada corporation and wholly-owned subsidiary of Parent ( “Merger Subsidiary” ); Dala Petroleum Corp., a Nevada corporation ( “Company” ) and wholly-owned subsidiary of Chisholm Partners II, LLC, a Louisiana limited liability company ( “Company Shareholder” ). The foregoing are sometimes singly referred to as a “Party” or collectively as the “Parties . ”

RECITALS:

WHEREAS, Company is engaged in the business of the acquisition of oil and gas leasehold interests and intends to engage in the business of oil and gas exploration (the “Business” ); and

WHEREAS, the Boards of Directors of Parent, Merger Subsidiary and Company, Company Shareholder, as Company’s sole shareholder, Parent, as Merger Subsidiary’s sole shareholder, have approved the merger of the Merger Subsidiary with and into Company (the “Merger” ) upon the terms and subject to the conditions set forth herein; and

WHEREAS, the Parties desire to execute and deliver this Agreement and all related or necessary documentation that may be reasonably required or necessary to complete the Merger as contemplated by the Parties under the Nevada Revised Statutes (the “NRS” ) or as otherwise required by applicable governing any Party (collectively, the “Transaction Documents” );

WHEREAS, for federal income tax purposes, it is intended that the Merger will qualify as a reorganization within the meaning of Section 368(a)(1)(A) and (a)(2)(E) of the Internal Revenue Code of 1986, as amended (the “Code” ); and

WHEREAS, the Parties desire to make certain representations, warranties and agreements in connection with the Merger and to prescribe various conditions to the Merger;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual representations, warranties, covenants and agreements contained herein, the Parties hereto agree as follows:

ARTICLE 1
THE MERGER; CONVERSION OF SHARES

1.1

The Merger . Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 1.2 hereof), Merger Subsidiary will be merged with and into Company in accordance with the provisions of the NRS, whereupon the separate corporate existence of Merger Subsidiary will cease, and Company will continue as the surviving corporation (the “Surviving Corporation” ). From and after the Effective Time, the Surviving Corporation will possess all the rights, privileges, powers and franchises and be subject to all the restrictions, disabilities and duties of Company and Merger Subsidiary, all as more fully described in the NRS.

1.2

Effective Time . As soon as practicable after each of the conditions set forth in Article 5 and Article 6 has been satisfied or waived, Company and Merger Subsidiary will file, or cause to be filed, with the Nevada Secretary of State, Articles of Merger for the Merger, which Articles will be in the form required by and executed in accordance with the applicable provisions of the NRS. The Merger will become effective at the time such filing is made, or if agreed otherwise by the Parties, such later time or date as may be set forth in the Articles of Merger (the “Effective Time” ).

1.3

Closing . Unless this Agreement has been terminated and the transactions contemplated herein have been abandoned pursuant to Article 7 hereof, the closing of the Merger (the “Closing” ) will take place at a time and on a date (the “Closing Date” ) to be specified by the Parties, which will likely be no later than June 6, 2014 (the “ Termination Date ”) (unless such date is extended by the Parties in writing), subject, however, to the satisfaction or waiver of all of the conditions provided for in Articles 5 and 6 hereof by such date. The Closing will be held at the offices of Leonard W. Burningham, Esq., 455 East 500 South, Suite 205, Salt Lake City, Utah, or at such other place as the Parties may agree, at which time and place the Transaction Documents necessary or appropriate to effect the Merger and the transactions contemplated herein will be exchanged by the Parties. Except as otherwise provided herein, all actions taken at the Closing will be deemed to be taken simultaneously.

1.4

Conversion of Interests . Subject to the terms and conditions of this Agreement, at the Effective Time, by virtue of the Merger and without any action on the part of Company and/or Merger Subsidiary:

(a)

Each share of common stock of Company ( “Company Common Stock” ) issued and outstanding immediately prior to the Effective Time will be converted into the right to receive one (1) share of Parent or an aggregate of 10,000,000 shares of common stock of Parent, par value $0.001 per share ( “Parent Common Stock” ). The amount of Parent Common Stock into which shares of Company Common Stock is converted, on a one to one basis, is referred to herein as the “Merger Consideration . ”

(b)

Except as expressly set forth herein, each share of any other equity interest of Company will be canceled, without payment of any consideration therefor and without any conversion thereof.

(c)

Each share of common stock of Merger Subsidiary, par value $0.001 per share ( “Merger Subsidiary Common Stock” ), issued and outstanding immediately prior to the Effective Time will be canceled as of the Effective Time.

(d)

Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time that is then owned beneficially or of record by Parent, Merger Subsidiary or any direct or indirect subsidiary of Parent or Merger Subsidiary, will be canceled, without payment of any consideration therefor and without any conversion thereof. Furthermore, at the Effective Time, one (1) share of Company Common Stock shall be issued to Parent.

1.5

Exchange of Company Common Stock and Options .

(a)

At the Closing, Company and Company Shareholder will cause the delivery of Company Shareholder’s Company Common Stock, constituting all of Company outstanding Company Common Stock, immediately prior to the Effective Time, to Parent ( “Company Shareholder’s Company Certificate”) , together with appropriate assignments signed by such holder, in exchange for 10,000,000 shares of Parent and Company Shareholder’s Company Certificate so surrendered will be canceled. It is anticipated that Company Shareholder will thereafter transfer the 10,000,000 shares received as Merger Consideration to its members on a pro rata basis, subject to compliance with applicable securities laws, rules and regulations.

(b)

All shares of Parent Common Stock issued upon the surrender for exchange of shares of Company Common Stock in accordance with the terms hereof will be deemed to have been issued in full satisfaction of all rights pertaining to such Company Common Stock.

(c)

As of the Effective Time, the holder of Company Shareholder’s Company Certificate representing shares of Company Common Stock will cease to have any rights as a Company Shareholder, except such rights, if any, as it may have pursuant to the NRS. Except as provided above, until such Company Shareholder’s Company Certificate is surrendered for exchange, each such Company Certificate will, after the Effective Time, represent for all purposes only the right to receive certificates representing the number of whole shares of Parent Common Stock into which Company Common Stock shall have been converted pursuant to the Merger as provided in Section 1.4(a).

(d)

No fractional shares of Parent Common Stock will be issued upon the surrender for exchange of Company Certificates; no dividend or other distribution of Parent will relate to any fractional share; and such fractional share will not entitle the holder thereof to vote or to any rights of a shareholder of Parent. All fractional shares of Parent Common Stock to which a holder of Company Common Stock immediately prior to the Effective Time would otherwise be entitled, at the Effective Time, will be aggregated if and to the extent multiple Company Certificates of such holder are submitted together to Parent. If a fractional share results from such aggregation, then such fractional share will be rounded up to the nearest whole share and each holder of shares of Company Common Stock interests who otherwise would be entitled to receive such fractional share of Parent Common Stock will receive one whole share in lieu of such fractional share, as applicable.

1.6

Articles of Incorporation of the Surviving Corporation . The Articles of Incorporation of Company as in effect immediately prior to the Effective Time will be the Articles of Incorporation of the Surviving Corporation until thereafter amended in accordance with applicable law.

1.7

Bylaws of the Surviving Corporation . The Bylaws of Company, as in effect immediately prior to the Effective Time, will be the Bylaws of the Surviving Corporation until thereafter amended in accordance with applicable law.

1.8

Directors and Officers of the Surviving Corporation and Parent.

(a)

Directors and Officers of the Surviving Corporation . The directors and officers of Company, as of the Effective Time, shall continue as the directors of the Surviving Corporation.

(b)

Directors of the Parent . The directors of Parent immediately prior to the Effective Time shall appoint Clancy Cottman and Jon Wimbish to Parent’s Board of Directors, and thereafter, the current directors of Parent shall resign, in seriatim, effective as of the Effective Time, and the following officers shall be appointed as officers of Parent by the present or new directors of Parent: E. Will Gray II, as Chief Executive Officer; and Callie Tempest Jones, Esq. as Secretary.

1.9

Parent Common Stock and other Parent Securities Outstanding Immediately Prior the Closing of Merger . Immediately prior to the Closing of the Merger, Parent shall have not more than 2,500,000 outstanding shares of Parent Common Stock, and no options, warrants, calls or other rights to acquire authorized but unissued Parent Common Stock or other securities of Parent shall be outstanding.

1.10

Completion of Private Placement and Escrow of Funds, the Release of which shall be subject only to the Closing and the Effective Date of the Merger . Prior to and as a condition precedent to Closing of the Merger, Parent shall have caused to be raised in a private placement offering no less than $2,000,000 ( “Parent Private Offering” or the “Offering” ), all funds of which shall be held in escrow by a person or persons satisfactory to Parent and Company until the minimum Offering amount is raised, at which time the Closing of the Merger shall occur and the funds raised shall be released forthwith to Parent, on the Effective Time. A description of the Offering terms of Parent Private Offering is outlined in Sections 5.4(c) and 6.4(d) hereof, in the conditions of the respective Parties to the Closing of the Merger.

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF COMPANY AND COMPANY SHAREHOLDER

Company and Company Shareholder hereby represents and warrants to Parent and Merger Subsidiary as follows:

2.1

Disclosure Schedule . The disclosure schedule attached hereto as Exhibit 2.1 ( “Company Disclosure Schedule” ) is divided into sections that correspond to the sections of this Article 2. Company Disclosure Schedule comprises a list of all exceptions to the truth and accuracy of, and of all disclosures or descriptions required by, the representations and warranties set forth in the remaining sections of this Article 2.

2.2

Corporate Organization, etc . Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada with the requisite corporate power and authority to carry on its business as it is now being conducted and to own, operate and lease its properties and assets, is duly qualified or licensed to do business as a foreign corporation in good standing in every other jurisdiction in which the character or location of the properties and assets owned, leased or operated by it or the conduct of its business requires such qualification or licensing, except in such jurisdictions in which the failure to be so qualified or licensed and in good standing would not, individually or in the aggregate, have a Material Adverse Effect (as defined below) on Company. Company Disclosure Schedule contains a list of all jurisdictions in which Company is qualified or licensed to do business and includes complete and correct copies of Company’s articles of incorporation and bylaws. Company does not own or control any capital stock of any corporation or any interest in any partnership, joint venture or other entity.

2.3

Capitalization . The authorized capital securities of Company is set forth in Company Disclosure Schedule. The number of shares of Company Common Stock outstanding as of the date of this Agreement and the Options granted under Company 2014 Equity Incentive Plan and as set forth in Company Disclosure Schedule represents all of the issued and outstanding capital securities of Company. All issued and outstanding shares of Company Common Stock and Options are duly authorized, validly issued, fully paid and nonassessable (subject only to the terms of further payment on exercise of the respective Options being fully satisfied) and are without, and were not issued in violation of, preemptive rights. There are no other shares of Company Common Stock or other equity securities of Company outstanding or any securities convertible into or exchangeable for such interests, securities or rights. Other than as set forth on Company Disclosure Schedule and pursuant to this Agreement, there is no subscription, option, warrant, call, right, contract, agreement, commitment, understanding or arrangement to which Company is a party, or by which it is bound, with respect to the issuance, sale, delivery or transfer of the capital securities of Company, including any right of conversion or exchange under any security or other instrument. Company has no subsidiaries.

2.4

Authorization, etc . Each of Company and Company Shareholder has all requisite corporate power and authority to enter into, execute, deliver and perform its obligations under this Agreement. This Agreement has been duly and validly executed and delivered by Company and Company Shareholder and is the valid and binding legal obligation of each Company and Company Shareholder enforceable against each in accordance with its terms, subject to bankruptcy, moratorium, principles of equity and other limitations limiting the rights of creditors generally.

2.5

Non-Contravention . Except as set forth in Company Disclosure Schedule, neither the execution, delivery nor performance of this Agreement, and each other agreement to be entered into in connection with this Agreement, nor the consummation of the transactions contemplated herein will:

(a)

violate, contravene or be in conflict with any provision of the articles of incorporation or bylaws of Company;

(b)

be in conflict with, or constitute a default, however defined (or an event which, with the giving of due notice or lapse of time, or both, would constitute such a default), under, or cause or permit the acceleration of the maturity of, or give rise to any right of termination, cancellation, imposition of fees or penalties under any debt, note, bond, lease, mortgage, indenture, license, obligation, contract, commitment, franchise, permit, instrument or other agreement or obligation to which Company is a party or by which Company or any of Company’s properties or assets is or may be bound;

(c)

result in the creation or imposition of any pledge, lien, security interest, restriction, option, claim or charge of any kind whatsoever (“ Encumbrances ”) upon any property or assets of Company under any debt, obligation, contract, agreement or commitment to which Company is a party or by which Company or any of Company’s assets or properties are bound; or

(d)

materially violate any statute, treaty, law, judgment, writ, injunction, decision, decree, order, regulation, ordinance or other similar authoritative matters (referred to herein individually as a “Law” and collectively as “Laws” ) of any foreign, federal, state or local governmental or quasi-governmental, administrative, regulatory or judicial court, department, commission, agency, board, bureau, instrumentality or other authority (referred to herein individually as an “Authority” and collectively as “Authorities” ).

2.6

Consents and Approvals . Except as set forth in Company Disclosure Schedule, with respect to Company, no consent, approval, order or authorization of or from, or registration, notification, declaration or filing with ( “Consent” ) any individual or entity, including without limitation any Authority, is required in connection with the execution, delivery or performance of this Agreement by Company or the consummation by Company of the transactions contemplated herein.

2.7

Financial Statements . Company Disclosure Schedule contains a copy of the audited financial statements of Company from inception on January 17, 2014, to May 21, 2014 ( “Company Financial Statements” ). Except as disclosed therein or in Company Disclosure Schedule, Company Financial Statements: (i) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered (except as may be indicated in the notes to such financial statements); and (ii) fairly present, in all material respects, the consolidated financial position of Company as of the respective dates and for the periods thereof and the results of operations of Company for the periods covered thereby. All adjustments considered necessary for a fair presentation of Company Financial Statements have been included.

2.8

Absence of Undisclosed Liabilities . Company does not have any material liabilities, obligations or claims of any kind whatsoever, whether secured or unsecured, accrued or unaccrued, fixed or contingent, matured or unmatured, known or unknown, direct or indirect, contingent or otherwise and whether due or to become due (referred to herein individually as a “Liability” and collectively as “Liabilities” ), other than: (a) Liabilities that are fully reflected or reserved for in Company Financial Statements; (b) Liabilities that are set forth on Company Disclosure Schedule; (c) Liabilities incurred by Company in the ordinary course of business after the date of Company Financial Statements and consistent with past practice; (d) Liabilities in an amount not to exceed $5,000 individually or in the aggregate unless such amounts are disclosed on Company Disclosure Schedule; or (e) Liabilities for express executory obligations to be performed after the Closing under the contracts described in Section 2.14 of Company Disclosure Schedule.

2.9

Absence of Certain Changes . Except as set forth in Company Disclosure Schedule, since the date of the execution of this Agreement, Company has owned and operated its assets, properties and business in the ordinary course of business and consistent with past practice. Without limiting the generality of the foregoing, subject to the aforesaid exceptions:

(a)

Company has not experienced any change that has had or could reasonably be expected to have a Material Adverse Effect on Company; and

(b)

Company has not suffered (i) any loss, damage, destruction or other property or casualty (whether or not covered by insurance) or (ii) any loss of officers, employees, dealers, distributors, independent contractors, customers or suppliers, which had or may reasonably be expected to result in a Material Adverse Effect on Company.

2.10

Assets . Except as set forth in Company Disclosure Schedule, Company has good and marketable title to all of its assets and properties, whether or not reflected in Company Financial Statements or acquired after the date thereof (except for properties sold or otherwise disposed of since the date thereof in the ordinary course of business and consistent with past practices), that relate to or are necessary for Company to conduct its business and operations as currently conducted and intended to be conducted (collectively, the “Assets” ), free and clear of any mortgage, pledge, lien, security interest, conditional or installment sales agreement, encumbrance, claim, easement, right of way, tenancy, covenant, encroachment, restriction or charge of any kind or nature (whether or not of record) (a “Lien” ), other than (i) liens securing specific Liabilities shown in Company Financial Statements with respect to which no breach, violation or default exists; (ii) mechanics’, carriers’, workers’ or other like liens arising in the ordinary course of business; (iii) minor imperfections of title that do not individually or in the aggregate, impair the continued use and operation of the Assets to which they relate in the operation of Company as currently conducted and intended to be conducted; and (iv) liens for current taxes not yet due and payable or being contested in good faith by appropriate proceedings ( “Permitted Liens” ).

2.11

Receivables and Payables .

(c)

Except as set forth on Company Disclosure Schedule, all accounts receivable of Company represent sales in the ordinary course of business and, to Company’s knowledge, are current and collectible net of any reserves shown in Company Financial Statements and none of such receivables is subject to any Lien other than a Permitted Lien.

(d)

Except as set forth on Company Disclosure Schedule, all payables of Company arose in bona fide transactions in the ordinary course of business and no such payable is delinquent by more than sixty (60) days beyond the due date in its payment.

2.12

Intellectual Property Rights . Company owns or has the unrestricted right to use, and Company Disclosure Schedule contains a detailed listing of, all patents, patent applications, patent rights, registered and unregistered trademarks, trademark applications, tradenames, service marks, service mark applications, copyrights, internet domain names, computer programs and other computer software, inventions, know-how, trade secrets, technology, proprietary processes, trade dress, software and formulae (collectively, “Intellectual Property Rights” ) used in, or necessary for, the operation of its business as currently conducted or intended to be conducted. Except as set forth on Company Disclosure Schedule, to Company’s knowledge, the use of all Intellectual Property Rights necessary or required for the conduct of the business of Company as presently conducted and as intended to be conducted does not infringe or violate the Intellectual Property Rights of any person or entity. Except as described on Company Disclosure Schedule, to Company’s knowledge: (a) Company does not own or use any Intellectual Property Rights pursuant to any written license agreement; (b) Company has not granted any person or entity any rights, pursuant to a written license agreement or otherwise, to use the Intellectual Property Rights; and (c) Company owns, has unrestricted right to use and has sole and exclusive possession of and has good and valid title to, all of the Intellectual Property Rights, free and clear of all Liens and Encumbrances. All license agreements relating to Intellectual Property Rights are binding and there is not, under any of such licenses, any existing default or event of default (or event which with notice or lapse of time, or both, would constitute a default, or would constitute a basis for a claim on non-performance) on the part of Company or, to the knowledge of Company, any other party thereto.

2.13

Litigation . Except as set forth in Company Disclosure Schedule, there is no legal, administrative, arbitration, or other proceeding, suit, claim or action of any nature or investigation, review or audit of any kind, or any judgment, decree, decision, injunction, writ or order pending, noticed, scheduled, or, to the knowledge of Company, threatened or contemplated by or against or involving Company, its assets, properties or business or its directors, officers, agents or employees (but only in their capacity as such), whether at law or in equity, before or by any person or entity or Authority, or which questions or challenges the validity of this Agreement or any action taken or to be taken by the Parties hereto pursuant to this Agreement or in connection with the transactions contemplated herein.

2.14

Contracts and Commitments; No Default .

(e)

Except as set forth in Company Disclosure Schedule, Company is not a party to, nor are any of the Assets bound by, any written or oral:

(i)

employment, non-competition, consulting or severance agreement, collective bargaining agreement, or pension, profit-sharing, incentive compensation, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay or retirement plan or agreement;

(ii)

indenture, mortgage, note, installment obligation, agreement or other instrument relating to the borrowing of money by Company;

(iii)

contract, agreement, lease (real or personal property) or arrangement that (A) is not terminable on less than 30 days’ notice without penalty, (B) is not over one year in length of obligation of Company, or (C) involves an obligation of more than $50,000 over its term;

(iv)

contract, agreement, commitment or license relating to Intellectual Property Rights or contract, agreement or commitment of any other type, whether or not fully performed, not otherwise disclosed pursuant to this Section 2.14;

(v)

obligation or requirement to provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in any person or entity; or

(vi)

outstanding sales or purchase contracts, commitments or proposals that will result in any material loss upon completion or performance thereof after allowance for direct distribution expenses, or bound by any outstanding contracts, bids, sales or service proposals quoting prices that are not reasonably expected to result in a normal profit.

(f)

True and complete copies (or summaries, in the case of oral items) of all agreements disclosed pursuant to this Section 2.14 ( “Company Contracts” ) have been provided to Parent for review. Except as set forth in Company Disclosure Schedule, all of Company Contracts items are valid and enforceable by and against Company in accordance with their terms, and are in full force and effect. Company is not in breach, violation or default, however defined, in the performance of any of its obligations under any of Company Contracts, and no facts and circumstances exist which, whether with the giving of due notice, lapse of time, or both, would constitute such breach, violation or default thereunder or thereof, and, to the knowledge of Company, no other parties thereto are in a breach, violation or default, however defined, thereunder or thereof, and no facts or circumstances exist which, whether with the giving of due notice, lapse of time, or both, would constitute such a breach, violation or default thereunder or thereof.

2.15

Compliance with Law; Permits and Other Operating Rights . Except as set forth in Company Disclosure Schedule, the Assets, properties, business and operations of Company are and have been in compliance in all respects with all Laws applicable to Company’s assets, properties, business and operations, except where the failure to comply would not have a Material Adverse Effect. Company possesses all material permits, licenses and other authorizations from all Authorities necessary to permit it to operate its business in the manner in which it presently is conducted and the consummation of the transactions contemplated by this Agreement will not prevent Company from being able to continue to use such permits and operating rights. Company has not received notice of any violation of any such applicable Law, and is not in default with respect to any order, writ, judgment, award, injunction or decree of any Authority.

2.16

Brokers . Except as otherwise set forth in Section 2.16 of Company Disclosure Schedule, neither Company nor, to the knowledge of Company, any of the its directors, officers or employees, has employed any broker, finder, investment banker or financial advisor or incurred any liability for any brokerage fee or commission, finder’s fee or financial advisory fee, in connection with the transactions contemplated hereby, nor is there any basis known to Company for any such fee or commission to be claimed by any person or entity.

2.17

Issuance of Parent Common Stock . To Company’s knowledge, as of the date of this Agreement and as of the Effective Time, no facts or circumstances exist or will exist that could cause the issuance of Parent Common Stock pursuant to the Merger to fail to meet the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act” ), and the General Rules and Regulations of the Securities and Exchange Commission (the “SEC” ) promulgated thereunder.

2.18

Books and Records . The books of account, minute books, stock record books and other material records of Company, all of which have been made available to Parent, are complete and correct in all material respects and have been maintained in accordance with reasonable business practices. The minute books of Company contain accurate and complete records of all formal meetings held of, and corporate action taken by, the directors, officers, managers, director committees and manager committees of Company.

2.19

Business Generally; Accuracy of Information . No representation or warranty made by Company or Company Shareholder in this Agreement, Company Disclosure Schedule or in any document, agreement or certificate furnished or to be furnished to Parent at the Closing by or on behalf of Company or Company Shareholder in connection with any of the transactions contemplated by this Agreement, including any information about Company and Company Shareholder contained in the Private Placement Memorandum to be utilized in the Parent Private Offering, contains or will contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements herein or therein not misleading in light of the circumstances in which they are made, and all of the foregoing completely and correctly presents the information required or purported to be set forth herein or therein.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY

Parent and Merger Subsidiary represent and warrant to Company as follows:

3.1

Disclosure Schedule . The disclosure schedule attached hereto as Exhibit 3.1 ( “Parent Disclosure Schedule” ) is divided into sections that correspond to the sections of this Article 3. Parent Disclosure Schedule comprises a list of all exceptions to the truth and accuracy of, and of all disclosures or descriptions required by, the representations and warranties set forth in the remaining sections of this Article 3.

3.2

Corporate Organization, Standing and Power . Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; and Merger Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada. Each of Parent and Merger Subsidiary has all corporate power and authority to own its properties and to carry on its business as now being conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the failure to be so qualified would have a Material Adverse Effect on Parent and Merger Subsidiary. Parent owns all of the outstanding capital stock of Merger Subsidiary. Parent does not own or control any capital stock of any corporation or any interest in any partnership, joint venture or other entity, other than Merger Subsidiary.

3.3

Authorization . Each of Parent and the Merger Subsidiary has all the requisite corporate power and authority to enter into this Agreement and to carry out the transactions contemplated herein. The board of directors of Parent and the Merger Subsidiary, and Parent as the sole shareholder of the Merger Subsidiary, have taken all action required by law, their respective articles of incorporation and bylaws or otherwise to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated herein. This Agreement is the valid and binding legal obligation of Parent and the Merger Subsidiary enforceable against each of them in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or similar laws that affect creditors’ rights generally.

3.4

Capitalization . The authorized capital securities of Parent and Merger Subsidiary are set forth in Parent Disclosure Schedule. The number of shares of Parent Common Stock, as of the date of this Agreement and as set forth in Parent Disclosure Schedule, represent all of the issued and outstanding capital securities of the Parent. All issued and outstanding shares of Parent Common Stock are duly authorized, validly issued, fully paid and nonassessable and are without, and were not issued in violation of, preemptive rights. There are no shares of Parent Common Stock or other equity securities of Parent outstanding or any securities convertible into or exchangeable for such interests, securities or rights. Other than as set forth on Parent Disclosure Schedule and pursuant to this Agreement, there is no subscription, option, warrant, call, right, contract, agreement, commitment, understanding or arrangement to which Parent is a party, or by which it is bound, with respect to the issuance, sale, delivery or transfer of the capital securities of Parent, including any right of conversion or exchange under any security or other instrument.

3.5

Non-Contravention . Neither the execution, delivery and performance of this Agreement nor the consummation of the transactions contemplated herein will:

(a)

violate any provision of the articles of incorporation or bylaws of Parent or the Merger Subsidiary; or

(b)

be in conflict with, or constitute a default, however defined (or an event which, with the giving of due notice or lapse of time, or both, would constitute such a default), under, or cause or permit the acceleration of the maturity of, or give rise to, any right of termination, cancellation, imposition of fees or penalties under, any debt, note, bond, lease, mortgage, indenture, license, obligation, contract, commitment, franchise, permit, instrument or other agreement or obligation to which Parent or Merger Subsidiary is a party or by which Parent or Merger Subsidiary or any of their respective properties or assets is or may be bound;

(c)

result in the creation or imposition of any Encumbrance upon any property or assets of Parent or Merger Subsidiary under any debt, obligation, contract, agreement or commitment to which Parent or Merger Subsidiary is a party or by which Parent or Merger Subsidiary or any of their respective assets or properties is or may be bound; or

(d)

violate any Law of any Authority.

3.6

Consents and Approvals . No Consent is required by any person or entity, including without limitation any Authority, in connection with the execution, delivery and performance by Parent or Merger Subsidiary of this Agreement, or the consummation of the transactions contemplated herein, other than any Consent which, if not made or obtained, will not, individually or in the aggregate, have a Material Adverse Effect on the business of Parent or Merger Subsidiary.

3.7

Valid Issuance . Parent Common Stock to be issued in connection with the Merger will be duly authorized and, when issued, delivered and paid for as provided in this Agreement, will be validly issued, fully paid and non-assessable.

3.8

Financial Statements .

(a)

The financial statements of Parent consisting of audited financial statements for the fiscal years ended September 30, 2013, and 2012, and interim unaudited financial statements for the quarter ended March 31, 2013 (the “Parent Financial Statements” ): (i) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered (except as may be indicated in the notes to such financial statements); and (ii) fairly present, in all material respects, the consolidated financial position of Parent and its consolidated subsidiaries as of the respective dates thereof and the consolidated results of operations of Parent and its consolidated subsidiaries for the periods covered thereby. All adjustments considered necessary for a fair presentation of the Parent Financial Statements have been included.

3.9

No Liabilities . Parent does not have any Liabilities, except for (i) Liabilities expressly stated in the most recent balance sheet, or (ii) other Liabilities which do not exceed $5,000 in the aggregate, except as set forth in Parent Disclosure Schedule in Section 3.9 thereof.

3.10

No Assets . As of the Closing, Parent will not have any assets or operations of any kind, except as identified in the most recent balance sheet and notes thereto of Parent Financial Statements and as included in Parent Disclosure Schedule.

3.11

Absence of Certain Changes . Parent has owned and operated the assets, properties and business that it has owned in the ordinary course of business and consistent with past practice. Without limiting the generality of the foregoing, subject to the aforesaid exceptions, Parent has not experienced any change that has had or could reasonably be expected to have a Material Adverse Effect on Parent.

3.12

Litigation . There is no legal, administrative, arbitration, or other proceeding, suit, claim or action of any nature or investigation, review or audit of any kind, or any judgment, decree, decision, injunction, writ or order pending, noticed, scheduled, or, to the knowledge of Parent or Merger Subsidiary, threatened or contemplated by or against or involving the Parent, its assets, properties or business or its directors, officers, agents or employees (but only in their capacity as such), whether at law or in equity, before or by any person or entity or Authority, or which questions or challenges the validity of this Agreement or any action taken or to be taken by the Parties hereto pursuant to this Agreement or in connection with the transactions contemplated herein.

3.13

Contracts and Commitments; No Default . Parent is not a party to, nor are any of its Assets bound by, any contract (a “ Parent Contracts ”) that is not disclosed in Parent Disclosure Schedule. None of Parent Contracts contains a provision requiring the consent of any party with respect to the consummation of the transactions contemplated by this Agreement. Parent is not in breach, violation or default, however defined, in the performance of any of its obligations under any of Parent Contracts, and no facts and circumstances exist which, whether with the giving of due notice, lapse of time, or both, would constitute such breach, violation or default thereunder or thereof, and, to the knowledge of Parent, no other parties thereto are in a breach, violation or default, however defined, thereunder or thereof, and no facts or circumstances exist which, whether with the giving of due notice, lapse of time, or both, would constitute such a breach, violation or default thereunder or thereof.

3.14

No Broker or Finder . No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Merger or any of the other transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent.

3.15

Intercompany and Affiliate Transactions; Insider Interests . Except as expressly identified in the reports and registration statements of Parent filed with the SEC ( “Parent SEC Reports and Registration Statements” ), the Consent of Directors of Parent approving the Merger or Parent Disclosure Schedule, there are, and during the last two years, there have been, no transactions, agreements or arrangements of any kind, direct or indirect, between Parent, on the one hand, and any director, officer, employee, stockholder, or affiliate of Parent, on the other hand, including, without limitation, loans, guarantees or pledges to, by or for the Parent or from, to, by or for any of such persons, that are effected with all corporate consents and approvals necessary under controlling law, and currently in effect.

3.16

Business Generally; Accuracy of Information . No representation or warranty made by Parent in this Agreement, Parent Disclosure Schedule, or in any document, agreement or certificate furnished or to be furnished to Company at the Closing by or on behalf of Parent in connection with any of the transactions contemplated by this Agreement contains or will contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements herein or therein not misleading in light of the circumstances in which they are made, and all of the foregoing completely and correctly present the information required or purported to be set forth herein or therein.

3.17

SEC Reports and Registration Statements . Parent is a “reporting issuer” under the Securities Exchange Act of 1934, as amended (the “Exchange Act” ), and has timely filed all reports required to be filed by it under Section 13 of the Exchange Act during the past 12 months. Parent SEC Reports and Registration Statements do not contain any untrue statement of material fact or omit to state any material fact necessary in order to make the statements herein or therein not misleading in light of the circumstances in which they are made.

ARTICLE 4
COVENANTS OF THE PARTIES

4.1

Conduct of Business . Except as contemplated by this Agreement, during the period from the date of this Agreement to the Closing Date, Company and Parent will each conduct its business and operations according to its ordinary and usual course of business consistent with past practices. Without limiting the generality of the foregoing, and, except as otherwise expressly provided in this Agreement or as otherwise disclosed in Parent Disclosure Schedule or Company Disclosure Schedule, respectively, prior to the Closing Date, without the prior written consent of the other Parties, not to be unreasonably delayed, Parent and Company each will not:

(a)

amend its articles of incorporation or bylaws;

(b)

issue, reissue, sell, deliver or pledge or authorize or propose the issuance, reissuance, sale, delivery or pledge of shares of capital stock of any class, or securities convertible into capital stock of any class, or any rights, warrants or options to acquire any convertible securities or capital stock;

(c)

adjust, split, combine, subdivide, reclassify or redeem, purchase or otherwise acquire, or propose to redeem or purchase or otherwise acquire, any shares of its capital stock or any of its other securities;

(d)

declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, redeem or otherwise acquire any shares of its capital stock or other securities, alter any term of any of its outstanding securities;

(e)

(i) except as required under any employment agreement, increase in any manner the compensation of any of its directors, officers or other employees; (ii) pay or agree to pay any pension, retirement allowance or other employee benefit not required or permitted by any existing plan, agreement or arrangement to any such director, officer or employee, whether past or present; or (iii) commit itself to any additional pension, profit-sharing, bonus, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or to any employment agreement or consulting agreement (arising out of prior employment ) with or for the benefit of any person, or, except to the extent required to comply with applicable law, amend any of such plans or any of such agreements in existence on the date of this Agreement;

(f)

hire any additional personnel except in the ordinary course of business;

(g)

incur, assume, suffer or become subject to, whether directly or by way of guarantee or otherwise, any Liabilities which, individually or in the aggregate, exceed $5,000 in the case of Parent or $50,000 in the case of Company;

(h)

make or enter into any commitment for capital expenditures in excess of $5,000 in the case of Parent or $50,000 in the case of Company;

(i)

pay, lend or advance any amount to, or sell, transfer or lease any properties or assets (real, personal or mixed, tangible or intangible) to, or enter into any agreement or arrangement with, any of its officers or directors or any affiliate or associate of any of its officers or directors;

(j)

terminate, enter into or amend in any material respect any contract, agreement, lease, license or commitment, or take any action or omit to take any action which will cause a breach, violation or default (however defined) under any contract, except in the ordinary course of business and consistent with past practice;

(k)

acquire any of the business or assets of any other person or entity;

(l)

permit any of its current insurance (or reinsurance) policies to be canceled or terminated or any of the coverage thereunder to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies providing coverage equal to or greater than coverage remaining under those canceled, terminated or lapsed are in full force and effect;

(m)

enter into other material agreements, commitments or contracts not in the ordinary course of business or in excess of current requirements;

(n)

settle or compromise any suit, claim or dispute, or threatened suit, claim or dispute (other than any settlement or compromise having no Material Adverse Effect upon its assets, operations or financial position); or

(o)

agree in writing or otherwise to take any of the foregoing actions or any action which would make any representation or warranty in this Agreement untrue or incorrect in any material respect.

Nothing herein shall prevent each Party from operating its business in the ordinary course and consistent with past practice.

4.2

Full Access . Throughout the period prior to Closing, each Party has and will afford to the other and its directors, officers, employees, counsel, accountants, investment advisors and other authorized representatives and agents, reasonable access to the facilities, properties, books and records of the other Party in order that the other may have full opportunity to make such investigations as it will desire to make of the affairs of the disclosing Party. Each Party will furnish such additional financial and operating data and other information as the other will, from time to time, reasonably request, including without limitation access to the working papers of its independent certified public accountants; provided, however , that any such investigation will not affect or otherwise diminish or obviate in any respect any of the representations and warranties of the disclosing Parties.

4.3

Confidentiality . Each Party hereto agrees that it will not use, or permit the use of, any of the information relating to any other Party hereto furnished to it in connection with the transactions contemplated herein ( “Information” ) in a manner or for a purpose detrimental to such other Party or otherwise than in connection with the transactions, and that they will not disclose, divulge, provide or make accessible (collectively, “Disclose” or “Disclosure” ), or permit the Disclosure of, any of the Information to any person or entity, other than their respective directors, officers, employees, investment advisors, accountants, counsel and other authorized representatives and agents, except as may be required by judicial or administrative process or, in the opinion of such Party’s counsel, by other requirements of Law; provided, however, that prior to any Disclosure of any Information permitted hereunder, the disclosing Party will first obtain the recipients’ undertaking to comply with the provisions of this Section with respect to such Information. The term “Information” as used herein will not include any information relating to a Party that the Party disclosing such information can show: (i) to have been in its possession prior to its receipt from another Party hereto; (ii) to be now or to later become generally available to the public through no fault of the disclosing Party; (iii) to have been available to the public at the time of its receipt by the disclosing Party; (iv) to have been received separately by the disclosing Party in an unrestricted manner from a person entitled to disclose such information; or (v) to have been developed independently by the disclosing Party without regard to any information received in connection with this transaction or related transactions contemplated herein. Each Party hereto also agrees to promptly return to the Party from whom it originally received such Information all original and duplicate copies of written materials containing Information should the transactions contemplated herein not occur. All Parties hereto will be deemed to have satisfied each’ obligations to hold the Information confidential if each exercises the same care as each takes with respect to each Party’s similar information.

4.4

Filings; Consents; Removal of Objections . Subject to the terms and conditions herein provided, the Parties hereto will use their best efforts to take or cause to be taken all actions and do or cause to be done all things necessary, proper or advisable under applicable Laws to consummate and make effective, as soon as reasonably practicable, the transactions contemplated hereby, including without limitation obtaining all Consents of any person or entity, whether private or governmental, required in connection with the consummation of the transactions contemplated herein. In furtherance, and not in limitation of the foregoing, it is the intent of the Parties to consummate the transactions contemplated herein at the earliest practicable time, and they respectively agree to exert commercially reasonable efforts to that end, including without limitation: (i) the removal or satisfaction, if possible, of any objections to the validity or legality of the transactions contemplated herein; and (ii) the satisfaction of the conditions to consummation of the transactions contemplated hereby.

4.5

Further Assurances; Cooperation; Notification .

(a)

Each Party hereto will, before, at and after Closing, execute and deliver such instruments and take such other actions as the other Party may reasonably require in order to carry out the intent of this Agreement. Without limiting the generality of the foregoing, at any time after the Closing, at the reasonable request of Parent and without further consideration, Company will execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation and take such action as Parent may reasonably deem necessary or desirable in order to more effectively consummate the transactions contemplated hereby.

(b)

At all times from the date hereof until the Closing, each Party will promptly notify the other in writing of the occurrence of any event which it reasonably believes will or may result in a failure by such Party to satisfy the conditions specified in this Article 4.

4.6

Supplements to Disclosure Schedules . Prior to the Closing, each Party will supplement or amend their respective Disclosure Schedules with respect to any event or development which, if existing or occurring at or prior to the date of this Agreement, would have been required to be set forth or described in such Disclosure Schedules or which is necessary to correct any information in such Disclosure Schedules or in any representation and warranty of Company or Parent, which has been rendered inaccurate by reason of such event or development. For purposes of determining the accuracy as of the date hereof of the representations and warranties of Company contained in Article 2 hereof or Parent in Article 3 hereof in order to determine the fulfillment of the conditions set forth herein, the Disclosure Schedule of each Party will be deemed to exclude any information contained in any supplement or amendment hereto delivered after the delivery of their Disclosure Schedules, except to the extent such information is delivered prior to Closing.

4.7

Public Announcements . No Party hereto will make any public announcement with respect to the transactions contemplated herein without the prior written consent of the other Party, which consent will not be unreasonably withheld or delayed; provided , however , that any Party hereto may at any time make any announcement that is required by applicable Law so long as the Party so required to make an announcement promptly upon learning of such requirement notifies the other Party of such requirement and discusses with the other Party in good faith the exact proposed wording of any such announcement.

4.8

Satisfaction of Conditions Precedent . Each Party will use commercially reasonable efforts to satisfy or cause to be satisfied all the conditions precedent that are applicable to them, and to cause the transactions contemplated by this Agreement to be consummated, and, without limiting the generality of the foregoing, to obtain all material consents and authorizations of third parties and to make filings with, and give all notices to, third parties that may be necessary or reasonably required on its part in order to effect the transactions contemplated hereby.

4.9

Resignation of Officers And Directors . At the Closing, the pre-Closing officers and directors of Parent shall submit their written resignations from such offices effective as of the Closing, in seriatim. Prior to their resignations, the pre-Closing directors of Parent shall appoint to the Board of Directors of Parent, those persons indicated in Section 1.8(b), effective as of the Closing. To the extent deemed required or necessary by Parent, Parent will have complied with the applicable provisions of SEC Rule 14f-1 promulgated under the Exchange Act in respect of the election of the new directors of Parent.

4.10

8-K Current Report . Within four (4) business days of the Effective Time of the Merger, Parent, through the primary efforts of Company and its counsel, will cause the required 8-K Current Report on SEC Form 8-K to be filed with the SEC (the “8-K Current Report” ), which shall include Company Financial Statements, along with unaudited pro forma balance sheets, income statements and related footnotes showing the effects of the Merger among the Parties for the financial periods required by Regulation S-K and Regulation S-X of the SEC and Form 8-K of the SEC, along with the “Form 10 Information” outlined in subparagraph (i) of SEC Rule 144.

ARTICLE 5
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT
AND MERGER SUBSIDIARY

Notwithstanding any other provision of this Agreement to the contrary, the obligation of Parent and Merger Subsidiary to effect the transactions contemplated herein will be subject to the satisfaction at or prior to the Closing, or waiver by Parent, of each of the following conditions:

5.1

Representations and Warranties True . The representations and warranties of Company contained in this Agreement, including without limitation in Company Disclosure Schedule initially delivered to Parent as Exhibit 2.1 (and not including any changes or additions delivered to Parent pursuant to Section 4.6, unless delivered prior to Closing), will be true, complete and accurate in all material respects as of the date when made and at and as of the Closing Date as though such representations and warranties were made at and as of such time, except for changes specifically permitted or contemplated by this Agreement, and except insofar as the representations and warranties relate expressly and solely to a particular date or period, in which case they will be true and correct at the Closing with respect to such date or period.

5.2

Performance . Company will have performed and complied in all material respects with all agreements, covenants, obligations and conditions required by this Agreement to be performed or complied with by the Company on or prior to the Closing.

5.3

Required Approvals and Consents .

(a)

All action required by law and otherwise to be taken by Company and Company Shareholder to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will have been duly and validly taken, and any required consent of holders of Company Options shall have been obtained.

(b)

All Consents of or from all Authorities required hereunder to consummate the transactions contemplated herein, will have been delivered, made or obtained, and Parent will have received copies thereof.

5.4

Agreements and Documents . Parent and Merger Subsidiary will have received the following agreements and documents, each of which will be in full force and effect:

(a)

a certificate executed on behalf of Company by its Chief Executive Officer confirming that the conditions set forth in Sections 5.1, 5.2, 5.3, 5.5, 5.6 and 5.7 have been duly satisfied;

(b)

a Joint or Singular consent (respectively, in the form of Exhibit 5.4(b)(i) and Exhibit 5.4(b)(ii)) of Unanimous Written Consent of Company Board of Directors and of Company Shareholder approving the Merger, among other provisions thereof, executed by all members of Company Board of Directors and Company Shareholder;

(c)

Parent Private Placement Offering shall consist of a unit comprised of one (1) share of Parent’s Series A 6% Convertible Preferred Stock and 1,429 three (3) year warrants to acquire 1,429 additional shares of Parent Common Stock (computed on a one warrant for one share basis for each share of common stock that can be acquired on conversion of such Series A 6% Convertible Preferred Stock at the initial conversion price of $0.70 per share) at an exercise price of $1.35 per share (subject to adjustment as set forth in the warrant) at an Offering price of $1,000 per unit (the “Unit”). Parent shall have raised not less than $2,000,000 from the sale of the Units (the minimum Offering) to persons who are “accredited investors” or non-“U.S. Persons” in consideration of the issuance of a minimum of 2,000 Units up to a maximum of 2,500 Units. Each share of the Series A 6% Convertible Preferred Stock shall be convertible at any time at the option of the holder into Parent Common Stock at the conversion price of $0.70 per common share (subject to adjustment as set forth in the Series A 6% Convertible Preferred Stock Certificate of Designation). Not less than $2,000,000 shall have been placed in escrow with a person or persons satisfactory to Parent and Company with the release of such funds being subject only to the Closing and Effective Time of the Merger, without further qualification (“Parent Private Offering”). In the case of an over subscription of Units, Parent may increase the Units being offered to a maximum of 2,775 Units;

(d)

Jenson Services, Inc., a Utah corporation and a shareholder of Parent (“Jenson Services”), shall have deposited 200,000 shares of Parent Common Stock with Company counsel to be held for two (2) years as security for any claim against Parent related to its outstanding capitalization or Parent’s representations and warranties contained in Section 3 hereof in accordance with the Escrow Agreement in the form of Exhibit 5.4(d) ; and

(e)

Company Shareholder shall have executed the Company Shareholder Representations and Warranties in the form of Exhibit 5.4(e) .

5.5

Adverse Changes . No material adverse change will have occurred in the business, financial condition, prospects, assets or operations of Company since the date of execution of this Agreement, except as set forth in Company Disclosure Schedule or incurred in the ordinary course of business and consistent with past practice.

5.6

No Proceeding or Litigation . No suit, action, investigation, inquiry or other proceeding by any Authority or other person or entity will have been instituted or threatened which delays or questions the validity or legality of the transactions contemplated hereby or which, if successfully asserted, would, in the reasonable judgment of Parent, individually or in the aggregate, otherwise have a Material Adverse Effect on Company’s business, financial condition, prospects, assets or operations or prevent or delay the consummation of the transactions contemplated by this Agreement.

5.7

Legislation . No Law will have been enacted which prohibits, restricts or delays the consummation of the transactions contemplated hereby or any of the conditions to the consummation of such transactions.

5.8

Appropriate Documentation . Parent will have received, in a form and substance reasonably satisfactory to Parent, dated the Closing Date, all certificates and other documents, instruments and writings to evidence the fulfillment of the conditions set forth in this Article 5 as Parent may reasonably request, along with duly executed copies of the Transaction Documents by the Parties and Company Certificates.

ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF COMPANY

Notwithstanding anything in this Agreement to the contrary, the obligation of Company to effect the transactions contemplated herein will be subject to the satisfaction at or prior to the Closing of each of the following conditions:

6.1

Representations and Warranties True . The representations and warranties of Parent contained in this Agreement will be true, complete and accurate in all material respects as of the date when made and at and as of the Closing, as though such representations and warranties were made at and as of such time, except for changes permitted or contemplated in this Agreement, and except insofar as the representations and warranties relate expressly and solely to a particular date or period, in which case they will be true and correct at the Closing with respect to such date or period.

6.2

Performance . Parent will have performed and complied in all material respects with all agreements, covenants, obligations and conditions required by this Agreement to be performed or complied with by Parent at or prior to the Closing, including the obligations of the pre-Closing officers and directors of Parent set forth in Section 4.9.

6.3

Required Approvals and Consents .

(a)

All action required by law and otherwise to be taken by the directors and stockholders of the Parent to authorize the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will have been duly and validly taken.

(b)

All Consents of or from all Authorities required hereunder to consummate the transactions contemplated herein, will have been delivered, made or obtained, and Company will have received copies thereof.

6.4

Agreements and Documents . Company will have received the following agreements and documents, each of which will be in full force and effect:

(a)

a certificate executed on behalf of Parent by its Chief Executive Officer confirming that the conditions set forth in Sections 6.1, 6.2, 6.3, 6.5, 6.6 and 6.7 have been duly satisfied;

(b)

a Joint or Singular Company Board of Director’s and Company Shareholder’s Written Consent to Merger, among other provisions thereof, in the form of Exhibit 5.4(b)(i) or 5.4(b)(ii) executed by all members of Company Board of Directors and Company Shareholder;

(c)

resolutions of the Boards of Directors of Parent and of Merger Subsidiary, certified by the secretary of Parent, approving the transactions contemplated by this Agreement (by Parent as a Party and as the sole shareholder of Merger Subsidiary), including the Merger, the issuance of the Merger Consideration and the matters referred to in Section 1.8(b) of this Agreement or as otherwise required to complete the transactions contemplated hereby;

(d)

(e)

Jenson Services, a shareholder of Parent, shall have deposited 200,000 shares of Parent Common Stock with Company counsel to be held for two (2) years as security for any claim against Parent related to its outstanding capitalization or Parent’s representations and warranties contained in Section 3 hereof in accordance with the Escrow Agreement in the form of Exhibit 5.4(d) ;

(f)

Parent shall have executed the Employment Agreement of E. Will Gray II in the form of Exhibit 5.4(f ), to be effective on the Effective Time; and

(g)

Parent shall have executed the director and employee stock option agreements in the forms of Exhibit 5.4(g)(i), (ii) and (iii) , to be effective on the Effective Time.

6.5

Adverse Changes . No material adverse change will have occurred in the business, financial condition, prospects, assets or operations of Parent since December 31, 2012, except as set forth in Parent Disclosure Schedule or incurred in the ordinary course of business and consistent with past practice.

6.6

No Proceeding or Litigation . No suit, action, investigation, inquiry or other proceeding by any Authority or other person or entity will have been instituted or threatened which delays or questions the validity or legality of the transactions contemplated hereby or which, if successfully asserted, would, in the reasonable judgment of Company, individually or in the aggregate, otherwise have a Material Adverse Effect on Parent’s business, financial condition, prospects, assets or operations or prevent or delay the consummation of the transactions contemplated by this Agreement.

6.7

6.8

Appropriate Documentation . Company will have received, in a form and substance reasonably satisfactory to Company, dated the Closing Date, all certificates and other documents, instruments and writings to evidence the fulfillment of the conditions set forth in this Article 6 as Company may reasonably request, along with duly executed copies of the Transaction Documents by the Parties.

ARTICLE 7
TERMINATION AND ABANDONMENT

7.1

Termination by Mutual Consent . This Agreement may be terminated at any time prior to the Closing by the written consent of Company and Parent.

7.2

Termination by Either Company or Parent . This Agreement may be terminated by either Company or Parent if the Closing is not consummated by the Termination Date (provided that the right to terminate this Agreement under this Section 7.2 will not be available to any Party whose failure to fulfill any obligation under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such date).

7.3

Termination by Parent . This Agreement may be terminated at any time prior to the Closing by Parent if any of the conditions provided for in Article 5 have not been met or waived by Parent in writing prior to the Closing.

7.4

Termination by the Company . This Agreement may be terminated prior to the Closing by action of Company if any of the conditions provided for in Article 6 have not been met or waived by Company in writing prior to the Closing.

7.5

Procedure and Effect of Termination . In the event of termination of this Agreement and abandonment of the transactions contemplated hereby by Company or Parent pursuant to this Article 7, written notice thereof will be given to all other Parties and this Agreement will terminate and the transactions contemplated hereby will be abandoned, without further action by any of the Parties hereto. If this Agreement is terminated as provided herein:

(a)

Each of the Parties will, upon request, redeliver all documents, work papers and other material of the other Parties relating to the transactions contemplated hereby, whether obtained before or after the execution hereof, to the Party furnishing the same;

(b)

No Party will have any liability for a breach of any representation, warranty, agreement, covenant or the provision of this Agreement, unless such breach was due to a willful or bad faith action or omission of such Party or any representative, agent, employee or independent contractor thereof; and

(c)

All filings, applications and other submissions made pursuant to the terms of this Agreement will, to the extent practicable, be withdrawn from the agency or other person to which made.

ARTICLE 8
MISCELLANEOUS PROVISIONS

8.1

Expenses . Parent and Company will each bear their own costs and expenses relating to the transactions contemplated hereby, including without limitation, fees and expenses of legal counsel, accountants, investment bankers, brokers or finders, printers, copiers, consultants or other representatives for the services used, hired or connected with the transactions contemplated hereby.

8.2

Survival . Excepting only the obligations of Jenson Services mentioned in Sections 5.4(d) and 6.4(e) and as specifically contained in Exhibit 5.4(d) , the representations and warranties of the Parties shall survive the Closing for a period of one (1) year.

8.3

Amendment and Modification . Subject to applicable Law, this Agreement may be amended or modified by the Parties hereto at any time with respect to any of the terms contained herein; provided , however , that all such amendments and modifications must be in writing duly executed by all of the Parties hereto.

8.4

Waiver of Compliance; Consents . Any failure of a Party to comply with any obligation, covenant, agreement or condition herein may be expressly waived in writing by the Party entitled hereby to such compliance, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition will not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. No single or partial exercise of a right or remedy will preclude any other or further exercise thereof or of any other right or remedy hereunder. Whenever this Agreement requires or permits the consent by or on behalf of a Party, such consent will be given in writing in the same manner as for waivers of compliance.

8.5

No Third Party Beneficiaries . Nothing in this Agreement will entitle any person or entity (other than the Parties hereto and his, her or its respective successors and assigns permitted hereby) to any claim, cause of action, remedy or right of any kind.

8.6

Notices . All notices, requests, demands and other communications required or permitted hereunder will be made in writing and will be deemed to have been duly given and effective: (i) on the date of delivery, if delivered personally; (ii) on the earlier of the fourth (4th) day after mailing or the date of the return receipt acknowledgement, if mailed, postage prepaid, by certified or registered mail, return receipt requested; or (iii) on the date of transmission, if sent by facsimile, telecopy, telegraph, telex or other similar telegraphic communications equipment, or to such other person or address as the Company will furnish to the other Parties hereto in writing in accordance with this Section 8.6.


If to Company or Company Majority Shareholders Prior to the Merger:	With a copy to:

Dala Petroleum Corp. Clarence Cottman II, Managing Partner 1010 10th Street Golden, Colorado 80401	Callie Tempest Jones, Esq. 175 South Main Street Fifteenth Floor Salt Lake City, Utah 84111

or to such other person or address as either Company or Company Shareholders will furnish to the other Parties hereto in writing in accordance with this Section 8.6.


If to Parent or Merger Subsidiary Prior to the Merger:	With a copy to:

Westcott Products Corporation Wayne Bassham 8867 South Capella Way Sandy, Utah 84093	Leonard W. Burningham, Esq. 455 East 500 South, Suite 205 Salt Lake City, Utah 84111 Facsimile No.: 801-355-7126

or to such other person or address as Parent will furnish to the other Parties hereto in writing in accordance with this Section 8.6.

8.7

Assignment . This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned (whether voluntarily, involuntarily, by operation of law or otherwise) by any of the Parties hereto without the prior written consent of the other Parties.

8.8

Governing Law . This Agreement and the legal relations among the Parties hereto will be governed by and construed in accordance with the internal substantive laws of the State of Nevada (without regard to the laws of conflict that might otherwise apply) as to all matters, including without limitation matters of validity, construction, effect, performance and remedies.

8.9

Counterparts . This Agreement may be executed simultaneously in one or more counterparts, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

8.10

Headings . The table of contents and the headings of the sections and subsections of this Agreement are inserted for convenience only and will not constitute a part hereof.

8.11

Entire Agreement . This Agreement, the Disclosure Schedules and the exhibits and other writings referred to in this Agreement or in the Disclosure Schedules or any such exhibit or other writing are part of this Agreement, together they embody the entire agreement and understanding of the Parties hereto in respect of the transactions contemplated by this Agreement and together they are referred to as this Agreement or the Transaction Documents. There are no restrictions, promises, warranties, agreements, covenants or undertakings, other than those expressly set forth or referred to in this Agreement. This Agreement supersedes all prior agreements and understandings between the Parties with respect to the transaction or transactions contemplated by this Agreement. Provisions of this Agreement will be interpreted to be valid and enforceable under applicable Law to the extent that such interpretation does not materially alter this Agreement; provided, however , that if any such provision becomes invalid or unenforceable under applicable Law such provision will be stricken to the extent necessary and the remainder of such provisions and the remainder of this Agreement will continue in full force and effect.

8.12

Disputes . Notwithstanding anything contained herein to the contrary, in the case of any dispute which arises out of or relating to this Agreement or the relationship of the Parties, which the Parties cannot resolve amicably between themselves, a mediator agreeable to both Parties shall be selected to assist in resolving the dispute provided that the mediation shall be held within sixty (60) days of the notice by one Party that mediation is required. Fees for such mediation will be split equally between the Parties. If any such dispute cannot be resolved through mediation within such sixty (60) day period, any and all claims and actions arising out of or relating to this Agreement or relationship of the Parties, shall be exclusively arbitrated in Midland, Texas, in accordance with the then prevailing rules and regulations of the American Arbitration Association, which proceedings shall be final and binding on the Parties, and strictly confidential. Attorneys’ fees for such arbitration of the prevailing Party will be paid by the other Party. Neither the existence of such proceedings nor the results thereof shall be disclosed to any third party, unless expressly required by law.

8.13

Definition of Material Adverse Effect . “Material Adverse Effect” with respect to a Party means a material adverse change in or effect on the business, operations, financial condition, properties or liabilities of that Party taken as a whole; provided, however, that a Material Adverse Effect will not be deemed to include (i) changes as a result of the announcement of this transaction or related transactions contemplated herein, (ii) events or conditions arising from changes in general business or economic conditions or (iii) changes in generally accepted accounting principles.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed as of the day and year first above written.


WESTCOTT PRODUCTS CORPORATION		DALA PETROLEUM CORP.

By:	/s/ Wayne Bassham	By:	/s/ E. Will Gray II
	Wayne Bassham, President		E. Will Gray II, President

DALA ACQUISITION CORP.		CHISHOLM PARTNERS II, LLC

By:	/s/ Wayne Bassham	By:	/s/ Clancy Cottman III
	Wayne Bassham, President		Clancy Cottman III, Managing
			Member

EXHIBIT 2.1

Company Disclosure Schedule

EXHIBIT 3.1

Parent Disclosure Schedule

EXHIBIT 5.4(b)(i) or (ii)

Joint or Singular Company Board of Directors’ and Company Shareholder’s Written Consent to Merger

EXHIBIT 5.4(d)

Jenson Services Escrow Agreement

EXHIBIT 5.4(e)

Company Shareholder Representations and Warranties

Exhibit 6.4(f)

E. Will Gray II Employment

Exhibits 6.4(g)(i), (ii) and (iii)

Forms of Director and Employee Stock Option Agreements

Exhibit 10.2

MASTER SERVICE AGREEMENT

In consideration of the mutual covenants set forth herein, Dala Petroleum Corp., a Nevada corporation (“Company”) and Chisholm Partners II LLC, a Louisiana limited liability company (“Contractor”) (the Company and the Contractor may be referred to herein individually as a “Party” and collectively as the “Parties”), hereby enter into this Master Service Agreement (“MSA”), effective this 3rd day of June, 2014 to read as follows:

RECITALS :

WHEREAS , the Company is engaged in the business of acquiring, developing, drilling, operating, servicing and maintaining oil and gas wells and properties and producing oil and gas; and in the course of such operations regularly and customarily enters into contracts with independent contractors for the performance of various services relating thereto; and

WHEREAS , the Contractor represents that it has personnel capable of developing, drilling, operating, servicing and maintaining oil and gas wells and properties and in producing oil and gas, and, without limiting the generality of the foregoing, has experience in developing, operating, servicing and maintaining oil and gas projects within the State of Kansas, and desires to act as an independent contractor for the Company;

NOW, THEREFORE , the Parties hereto agree as follows:

Services . This Agreement shall control and govern all work and services performed by Contractor for Company under written or oral work orders or agreements. This Contract shall control and govern all work, services and related activities agreed to be done by Contractor and shall define the rights, liabilities, and obligations of Company and Contractor during the term hereof. It is agreed that any work shall be deemed to incorporate all terms and provisions of this Agreement and the terms of this Agreement shall control over any inconsistent provisions of any such work.

Fees and Payment Terms . The prices, rates, or amounts to be paid by Company, including labor rates, shall be those specified on Exhibit “A” attached hereto, unless modified by the written agreement. Contractor shall invoice Company following the 15th day of the month and/or the last day of the month. Company shall pay Contractor’s invoice within 15 days of receipt.

Taxes . Contractor agrees to pay all taxes, licenses, and fees levied or assessed on Contractor by any governmental agency, in connection with or incident to the performance of this Contract, and all unemployment compensation insurance, old age benefits, Social Security, or any other taxes upon the payments made to Contractor, or the wages paid to its agents, employees, and representatives. Contractor agrees to require the same agreements and to be liable for any breach of such agreements by any of its subcontractors. Contractor agrees to reimburse Company on demand for all such taxes or governmental charges which Company may be required or deem it necessary to pay on account of employees of Contractor or its subcontractors. Contractor agrees to furnish Company with the information required to enable it to make the necessary reports and to pay such taxes or charges.

Term of Agreement/Termination . This Agreement will commence on the date set forth above, and will remain in full force and effect continuously thereafter for twelve (12) months. Thereafter, until either party may terminate this Agreement by giving the other Party a minimum of thirty (30) days written notice; however, no such termination shall be effective until any and all services in progress under any applicable work orders are either satisfactorily completed or terminated by Company.

Confidentiality . Confidential Information means technical, economic, financial, pricing, marketing, leasing, acquisition or other information of the Company that has not been published or is not otherwise available to members of the public. Contractor agrees to hold as confidential and to not disclose to others Confidential Information obtained from Company. Contractor agrees not to use Confidential Information to compete with Company, or for any other purpose outside the scope of services performed under this Agreement. Confidential Information does not include information that (i) the Contractor had in its possession prior to Company’s disclosure, (ii) becomes public knowledge through no fault of the Contractor, (iii) the Contractor lawfully acquires from a third party not under an obligation of confidentiality to the Company, (iv) Contractor independently develops, or (v) is required to be disclosed by law or court order.

Compliance with Laws/Warranty . Company and Contractor agree to comply with all federal, state and local laws, rules and regulations which are now or may become applicable to operations covered by this Agreement and any work order issued in connection herewith. If any of the terms hereof are in conflict with any such applicable law, rule or regulation, the terms of this Agreement so in conflict shall not apply and said rule, regulation, or law shall prevail. Contractor warrants that its workmanship, services and material shall be of the highest quality, and shall repair or replace, at Contractor’s expense, any defects in Contractor’s work arising within one year thereof. The warranty for equipment and materials provided by Contractor shall be limited to the warranty provided by the equipment/material manufacturer, which is hereby assigned by Contractor to Company.

Waiver of Consequential Damages . Notwithstanding any other terms in this Agreement to the contrary, neither party, nor their parent, affiliated or subsidiary companies, nor the officers, directors, agents, employees or contractors of any of the foregoing, shall be liable to the other in any action or claim for incidental, indirect, special, collateral, consequential, exemplary or punitive damages arising out of or related to the services provided hereunder, including without limitation, loss of profits, loss of opportunity, loss of production, or loss of use. Any protection or limitation against liability for any losses or damages afforded any individual or entity by this Agreement shall apply whether the action in which recovery of damages is sought is based upon contract, tort, and statute or otherwise. To the extent permitted by law, any statutory remedies inconsistent with these terms are waived.

Insurance . At any and all times during the term of this Agreement, Contractor agrees to carry insurance with an insurance carrier or carriers reasonably satisfactory to Company.

Indemnity . If any claims, demands, suits and/or causes of action are ever asserted against Company, its co-lessees, partners, joint venturers, or their respective affiliates, subsidiaries, officers, directors, and employees (all of which are hereinafter referred to as the “Indemnified Company Parties”) or their respective insurers for (1) illness of, injury to and/or death of any employees of Contractor [even if only nominally employed by Contractor and deemed in fact or at law to be (or also to be) employees of Company], for (2) illness of, injury to and/or death of Contractor’s contractors or subcontractors or their respective employees, or for (3) damage to or loss of any and all property, equipment, materials and vessels owned, operated, rented, leased or chartered by Contractor, by Contractor’s contractors, by Contractor’s subcontractors, or by their respective employees, Contractor will fully and unconditionally release, protect, defend, indemnify and hold harmless the Indemnified Company Parties and their respective insurers, even if said claims, demands, suits and/or causes of action arise, in whole or in part, from negligence, strict liability, and/or unseaworthiness (pre-existing or otherwise) attributable to the Indemnified Company Parties. The sole restriction on the above is that the aforesaid claims, demands, suits and/or causes of action must have arisen out of, be related to, and/or be incidental to, in any way, the work, service or equipment covered by this Agreement or any work order issued in connection herewith.

If any claims, demands, suites and/or causes of action are ever asserted against Contractor, its employees and vessels (all of which are hereinafter in this Section referred to as the “Indemnified Contractor Parties”) or their respective insurers for (1) illness of, injury to and/or death of any employees of Company, or for (2) damage to or loss of any and all property, equipment, materials and vessels owned by Company, Company will fully and unconditionally release, protect, defend, indemnify and hold harmless the indemnified Contractor Parties and their respective insurers, even if said claims, demands, suits and/or causes of action arise, in whole or in part, from negligence, strict liability, and/or unseaworthiness (pre-existing or otherwise) attributable to the Indemnified Contractor Parties. The sole restriction on the above is that the aforesaid claims, demands, suits and/or causes of action must have arisen out of, be related to, and/or be incidental to, in any way, the work, service or equipment covered by this Agreement or any work order issued in connection herewith.

Company’s above assumed release, defense and indemnity obligations shall not include Contractor’s defense and indemnity obligations to Parties not included in the definition of Indemnified Company Parties. Contractor’s above assumed release, defense and indemnity obligations shall not include Company’s defense and indemnity obligations to Parties not included in the definition of Indemnified Contractor Parties. However, in the event that both Company and Contractor owe defense and indemnity obligations to the same Party, Contractor will satisfy Contractor’s obligations to said Party without seeking recoupment, sharing, or other recovery from Company or Company’s insurers.

Patent/License Indemnification . In addition to all other indemnifying provisions contained herein, Contractor represents and warrants that the use or construction of any and all tools and equipment furnished by Contractor and used in the work provided for herein does not infringe on any license or patent which has been issued or applied for, and Contractor agrees to defend, indemnify and hold the Indemnified Company Parties harmless from any and all claims, demands, and causes of action of every kind and character in favor of or made by any patentee, licensee, or claimant of any right or priority to such tool or equipment, or the use or construction thereof, which may result from or arise out of furnishing or use of any such tool or equipment by Contractor in connection with the work under this Agreement and applicable work orders.

10.

Independent Contractor Status . Except as set forth in Section 14(b) below, the actual performance and superintendence of all work hereunder shall be by Contractor, but Company and its representatives shall have unlimited access to the operations to determine whether work is being performed by Contractor in accordance with the provisions of this Agreement and the applicable work order or purchase order. Contractor shall be an independent contractor with respect to the performance of all work hereunder, and neither Contractor nor anyone employed by Contractor shall be deemed for any purpose to be the employee, agent, servant, or representative of Company in the performance of any work or service or part thereof in any manner dealt with hereunder. Company shall have no direction or control of Contractor or its employees and agents except with respect to the results to be obtained. The work contemplated herein shall meet the approval of Company and be subject to the general right of inspection for Company to secure the satisfactory completion thereof; however, neither Company 's failure to inspect nor failure to discover any deficiencies shall relieve Contractor of any representation, warranty or obligation at law, under this Agreement, or otherwise. Notwithstanding the foregoing, Contractor shall remove from work on behalf of Company hereunder any employee of Contractor who is convicted of a crime involving moral turpitude or who comes to work intoxicated or under the influence of a controlled substance.

11.

Hiring Practices . Except to the extent that this Agreement and the work performed hereunder may be exempt therefrom, Contractor agrees to comply with the provisions of all applicable state, federal and local requirements and regulations on hiring practices and employment.

12.

Liens . Contractor agrees to pay all just claims for labor, materials and supplies furnished by Contractor hereunder and to allow no lien or charge to become fixed upon any property of Company excepting those liens or charges resulting from Company’s breach of its payment obligations. Contractor shall furnish to Company, at Company’s request, a notarized affidavit that all payments to subcontractors and vendors have been made or are in the process of being paid.

13.

Assignment . Contractor will not assign or subcontract this Agreement, or any part thereof, without the prior written consent of Company.

14.

Default . In the event Contractor shall fail to carry out its duties under this Agreement, Company may give Contractor written notice specifying the failure or default and the period of time within which Contractor will be required by correct such failure or default in a manner satisfactory to Company.

15.

Entire Agreement/Modifications . This is the entire agreement between Company and Contractor. No modification or alteration of this Agreement will be effective unless made in writing and signed by both parties hereto.

16.

Governing Law . This Agreement is to be considered as having been executed in the State of Colorado and the parties agree that Colorado law will govern this Agreement.

17.

Waiver . No waiver by Company of any of the terms, provisions or conditions hereof shall be effective unless said waiver shall be in writing and signed by an authorized representative of Company, and no one waiver or multiple waivers shall be construed to cause or constitute any other waiver whatsoever.

18.

Notices . All notices to be given with respect to this Agreement and applicable work orders unless otherwise provided for shall be given to Company at:

Dala Petroleum Corp.

112 Loraine South

Suite 266

Midland, Texas 79701

Attn: CEO

Phone:

(XXX) XXX-XXXX

Fax:

(XXX) XXX-XXXX

and to Contractor at:

Chisholm Partners II, LLC

1010 10 ^th Street

Golden, CO 90401

Attn: Managing Director

Phone:

(805) 268-2281

E Mail: bggumma@gmail.com

All sums payable hereunder to Contractor shall be payable at Contractor’s address above unless otherwise specified herein or in the applicable work order.

DATED: June 3, 2014


Contractor		Company

Chisholm Partners II, LLC		Dala Petroleum Corp.



By:	/s/ Clarence Cottman III	By:	/s/ E. Will Gray


Clarence Cottman III		E. Will Gray, CEO

EXHIBIT A – FEE SCHEDULE

The Contractor shall be paid $25,000 upon the signing of this agreement and $25,000 per month for its Services and reimbursed for any and all direct expenses incurred by Contractor in performing its duties and obligations under this MSA.

Exhibit 10.3

OPTION PARTICIPATION AGREEMENT

Chisholm Partners II LLC, a Louisiana limited liability company (“Chisholm”) and Dala Petroleum Corp., a Nevada corporation (“Dala”), (Chisholm and Dala may be referred to herein individually as “Party” and collectively as “Parties”), hereby enter into this Option Participation Agreement (“OPA”), effective May 2014, to wit:

WHEREAS , Chisholm is in the business of developing and drilling oil and/or gas wells; and

WHEREAS , Dala has capital and desires to participate as a non-operator in the drilling for oil and/or gas;

NOW, THEREFORE , the Parties hereto agree in consideration of the mutual covenants set forth herein, the receipt and sufficiency of which are hereby acknowledged, as follows:

1. Option. Chisholm hereby grants to Dala the option (the “Option”) to participate for up to twenty-five percent (25%) of Chisholm’s share of each drilling operation in search of oil and/or gas in the State of Kansas undertaken by Chisholm on the same basis as Chisholm; i.e. , if Chisholm acquires a drilling opportunity for $10,000 and Dala elects to participate for 25%, Dala shall pay to Chisholm twenty-five (25.0%) percent of $10,000 for its interest, which interest shall be subject to 25% of any burdens placed on Chisholm’s interest.

2. Election. Within five days after Chisholm elects to participate in any such drilling operation, it shall give Dala written notice thereof, which notice shall include the cost thereof to Dala, and Dala shall have seventy-two (72) hours from receipt of such notice within which to exercise its Option by giving Chisholm written notice thereof, together with its payment of its proportionate share of the cost charged to Chisholm to participate in such drilling opportunity. Dala’s failure to timely exercise its option shall be deemed ipso facto a decision not to exercise that Option.

3. Assignment. This OPA may not be assigned by Dala without the written consent of Chisholm.

4. Governing Law. This OPA is to be considered as having been executed in the State of Colorado and the Parties agree that Colorado law will govern.

5. Termination . This agreement shall terminate and be of no future force and effect one year from the date hereof unless extended by mutual agreement.

6. Notices. All notices to be given with respect to this OPA and applicable participation shall be by email, unless otherwise provided for as follows:

Chisholm Partners II LLC

1010 10 ^th Street

Golden, CO 80401

Attention: Managing Director

Phone: (805) 268-2281

Email address: bgumma@gmail.com

Dala Petroleum Corp.

112 Loraine South, Suite 266, Midland, Texas 79701

Thus done and signed this _______________ day of May, 2014.


CHISHOLM PARTNERS II LLC		DALA PETROLEUM CORP.



By:		By:
	William Gumma, Managing Director		E. Will Gray, CEO

Exhibit 10.4

ASSIGNMENT OF OIL, GAS & MINERAL LEASES

STATE OF KANSAS

COUNTY OF ____________

KNOW ALL MEN BY THESE PRESENTS:

THAT, CHISHOLM PARTNERS II, a KANSAS LIMITED LIABILITY CORPORATION, whose mailing address is 1010 10 ^th ST., GOLDEN, CO, 80401, hereinafter referred to as " Assignor ," for One Hundred Dollars and No/100 ($100.00) cash, and other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, does hereby assign, grant, transfer, convey and deliver unto Dala Petroleum Corp., a Nevada corporation, whose mailing address is 1306 West Ohio Ave., Midland, Texas 79701, hereinafter referred to as " Assignee, " all of Assignor's rights, title and interest in and to those certain Oil, Gas and Mineral Leases affecting those certain lands situated in ________________ County, Kansas and more particularly described on Exhibit "A" attached hereto and made a part hereof, hereinafter referred to as “Said Leases.”

TO HAVE AND TO HOLD unto said Assignee, subject to the following terms and provisions:

Assignor hereby binds itself to warrant and forever defend the title to Said Leases against all persons whomsoever claiming the same or any part thereof, by, through or under Assignor, but not otherwise.

All terms and provisions hereof shall be binding upon, and inure to the benefit of Assignor and Assignee, their heirs, successors and assigns.

This Assignment is made subject to the terms and provisions of Said Leases, and Assignee agrees to be bound thereby and to indemnify and hold Assignor harmless in connection with any and all obligations relative thereto, the same as though Assignee had originally been named as Lessee in Said Leases.

This instrument may be executed in any number of counterparts and shall be binding on each party executing the same to the same extent as if all parties had executed one instrument. Such counterparts may be recorded separately or may be combined to form one instrument for recording purposes.

Effective this 21st day of May, 2014.


ASSIGNOR:



By:	/s/Clarence Cottman

NAME:		Clarence Cottman

TITLE:		Managing Director

STATE OF ____________

COUNTY OF __________

This instrument was acknowledged before me the undersigned authority on this the _____________________ day of _________, 20__ by ________________, as ________ of __________________________________, on behalf of said corporation.


NOTARY PUBLIC

STATE OF ____________

COUNTY OF __________


NOTARY PUBLIC

Exhibit A

LEASE SCHEDULE

Attached to and made a part of that certain Assignment of Oil, Gas & Mineral Lease dated __________________________ by and between ___________ as Assignor and ______________________________, as Assignees.

Exhibit 10.5

SCHEDULE OF OIL & GAS LEASE PROPERTIES

Type

Check Date

Check Num

Sorted by

County

Name

Net Acres

Term

Effective Date

Debit

Balance

Lease

Confirmation

Check

Confirmation

DIRECT OIL LEASE PURCHASES BY CHISHOLM PARTNERS II, LLC AND ASSIGNED TO DALA PETROLEUM CORP. ON MAY 21, 2014

Check

05/18/2012

1216

Clay County

Walter & Evelyn Mugler, Trustees

481 acres

5 years

05/18/2012

12,025.00

üü

Check

09/28/2012

1343

Clay County

Douglas Matson, Trustee

130 acres

5 years

09/28/2012

3,250.00

15,275.00

üü

Check

10/05/2012

1426

Clay County

Harold B. Matson

32.5 acres

5 years

09/28/2012

812.50

16,087.50

üü

Check

10/05/2012

1348

Clay County

Wayne F. Matson

144 acres

5 years

09/28/2012

1,625.00

17,712.50

üü

Check

10/07/2012

1427

Clay County

Virginia J. Cox & Douglas Cox Trustees

65 acres

5 years

09/28/2012

1,625.00

19,337.50

üü

Check

10/08/2012

1428

Clay County

Delaine K. Gifford

32.5 acres

5 years

09/28/2012

812.50

20,150.00

üü

Check

10/17/2012

1432

Clay County

Jean Baker

124 acres

5 years

10/17/2012

3,100.00

23,250.00

üü

Check

10/27/2012

1434

Clay County

Muriel Lee Wood Beaver

163 acres

5 years

10/27/2012

4,075.00

27,325.00

üü

Check

11/03/2012

1437

Clay County

Harry L. Brumbaugh, Trustee

59 acres

5 years

11/03/2012

1,475.00

28,800.00

üü

Check

11/03/2012

1436

Clay County

Marjorie M. Brumbaugh, Trustee

59 acres

5 years

11/03/2012

1,475.00

30,275.00

üü

Check

11/14/2012

1443

Clay County

Wendelken Farms, LLC

323 acres

5 years

11/14/2012

8,075.00

38,350.00

üü

Check

12/03/2012

1448

Clay County

Delores D. Case Trstee of Delores D C Est

406.5 acres

5 years

12/03/2012

10,162.50

48,512.50

üü

Check

12/03/2012

1447

Clay County

Delores D. Case Trustee

355.5 acres

5 years

12/03/2012

8,887.50

57,400.00

üü

Check

03/13/2013

1421

Clay County

Rodney C. and Rosemary A. Anderson

144 acres

5 years

03/13/2013

3,600.00

61,000.00

üü

Check

02/27/2013

1473

Clay County

Werner Family Trust

151acres

5 years

02/24/2013

3,775.00

64,775.00

üü

Check

08/20/2012

1330

Clay County

Meta M. Wendelken, Ttee

158 acres

5 years

08/20/2012

3,950.00

68,725.00

üü

Check

05/03/2012

1208

Clay County

Curtis & Patricia Gardener, Trustees

163 acres

5 years

05/03/2012

4,075.00

72,800.00

üü

Check

12/15/2011

1093

Dickinson County

Vicky C. Wolf

393 acres

5 years

12/15/2011

9,825.00

82,625.00

üü

Check

02/24/2012

1151

Dickinson County

Kenneth D. Bebermeyer Trust

691 acres

5 years

02/24/2012

17,275.00

99,900.00

üü

Check

02/24/2012

1152

Dickinson County

Shirley M. Bebermeyer Trust

691 acres

5 years

02/24/2012

17,275.00

117,175.00

üü

Check

03/09/2012

1157

Dickinson County

Stoskopf, Jo Ann & Lawrence, TTEES

716 acres

5 years

03/09/2012

17,900.00

135,075.00

üü

Check

04/24/2012

1201

Dickinson County

Douglas R. Nagely

1,207 acres

5 years

04/24/2012

24,125.00

159,200.00

üü

Check

04/25/2012

1202

Dickinson County

Gary R. Mitchell

565 acres

5 years

04/25/2012

14,125.00

173,325.00

üü

Check

04/25/2012

1204

Dickinson County

Leroy E. Bennett

511 acres

5 years

04/25/2012

12,775.00

186,100.00

üü

Check

05/04/2012

1210

Dickinson County

Steven H. & Bette A. Kohman, Trustees

713 acres

5 years

05/04/2012

17,825.00

203,925.00

üü

Check

05/10/2012

1211

Dickinson County

Paul R. Martin

162 acres

5 years

05/10/2012

4,050.00

207,975.00

üü

Check

05/21/2012

1217

Dickinson County

Russell L. Cochran

167 acres

5 years

05/29/2012

4,175.00

212,150.00

üü

Check

05/22/2012

1218

Dickinson County

Verl Wolf

393 acres

5 years

05/22/2012

9,875.00

222,025.00

üü

Check

05/23/2012

1219

Dickinson County

Bob A. Wilson

163 acres

5 years

05/23/2012

4,075.00

226,100.00

üü

Check

05/24/2012

1220

Dickinson County

Richard L. Thompson

245 acres

5 years

05/24/2012

6,925.00

233,025.00

üü

Check

06/01/2012

1226

Dickinson County

Sheldon Nelson

144 acres

5 years

06/01/2012

3,600.00

236,625.00

üü

Check

06/09/2012

1229

Dickinson County

Beverly K. Rosenow

324 acres

5 years

06/09/2012

8,100.00

244,725.00

üü

Check

06/15/2012

1235

Dickinson County

Jack E. Park

162 acres

5 years

06/15/2012

4,050.00

248,775.00

üü

Check

06/16/2012

1233

Dickinson County

James R. Greening, Ttee

73 acres

5 years

06/15/2012

1,825.00

250,600.00

üü

Check

06/16/2012

1234

Dickinson County

Mary A. Greening, Ttee

73 acres

5 years

06/15/2012

1,825.00

252,425.00

üü

Check

06/19/2012

1236

Dickinson County

Richard W. Carlson, Trustee

68 acres

5 years

06/19/2012

1,700.00

254,125.00

üü

Check

06/21/2012

1237

Dickinson County

Shelli R. Langdeau

157 acres

5 years

06/21/2012

3,925.00

258,050.00

üü

Check

06/25/2012

1240

Dickinson County

Karen J Freeman Ttee

173/ ac

5 years

06/25/2012

4,325.00

262,375.00

üü

Check

07/03/2012

1305

Dickinson County

Dan J. Townsend

80 acres

5 years

07/03/2012

2,000.00

264,375.00

üü

Check

07/03/2012

1303

Dickinson County

Lois J. Sanders Cheney, as Trustee

81 acres

5 years

07/03/2012

2,025.00

266,400.00

üü

Check

07/09/2012

1307

Dickinson County

Lynn D. Romberger

70 acres

5 years

07/09/2012

1,750.00

268,150.00

üü

Check

07/10/2012

1308

Dickinson County

Frank L. Drake & Teresa J. Drake Trustees

165 acres

5 years

07/10/2012

4,125.00

272,275.00

üü

Check

07/11/2012

1306

Dickinson County

Don L. Romberger

50 acres

5 years

07/11/2012

1,250.00

273,525.00

üü

Check

07/12/2012

1310

Dickinson County

Irmgard Porer Marshall as Trustee

36 acres

5 years

07/12/2012

900.00

274,425.00

üü

Check

07/20/2012

1316

Dickinson County

JBJ Johnson Farms, Inc.

150 acres

5 years

07/20/2012

3,750.00

278,175.00

üü

Check

07/26/2012

1317

Dickinson County

Justin C. Reynolds

356 acres

5 years

07/26/2012

8,900.00

287,075.00

üü

Check

07/31/2012

1322

Dickinson County

Daniel E. Britt

94 acres

5 years

07/31/2012

2,350.00

289,425.00

üü

Check

07/31/2012

1319

Dickinson County

Kenneth M. Chase

80 acres

5 years

07/31/2012

2,000.00

291,425.00

üü

Check

07/31/2012

1321

Dickinson County

Kenneth M. Chase, Trustee

255 acres

5 years

07/31/2012

6,375.00

297,800.00

üü

Check

07/31/2012

1320

Dickinson County

Sharon M. Chase, Trustee

255 acres

5 years

07/31/2012

6,375.00

304,175.00

üü

Check

08/10/2012

1325

Dickinson County

Daniel L. Wuthrow

140 acres

5 years

08/10/2012

3,500.00

307,675.00

üü

Check

08/17/2012

1327

Dickinson County

Charles D. Ausherman

41 acres

5 years

08/17/2012

1,025.00

308,700.00

üü

Check

08/17/2012

1326

Dickinson County

David L. Ausherman

41 acres

5 years

08/17/2012

1,025.00

309,725.00

üü

Check

08/17/2012

1328

Dickinson County

Dean A. Ausherman

41 acres

5 years

08/17/2012

1,025.00

310,750.00

üü

Check

08/17/2012

1329

Dickinson County

Kenneth D. Ausherman

41 acres

5 years

08/17/2012

1,025.00

311,775.00

üü

Check

08/28/2012

1335

Dickinson County

Kevin T & Lorine A Mckeeman, Trustees

122 acres

5 years

08/28/2012

3,050.00

314,825.00

üü

Check

08/28/2012

1336

Dickinson County

Lorine A. McKeeman Trust

122 acres

5 years

08/28/2012

3,050.00

317,875.00

üü

Check

09/03/2012

1344

Dickinson County

Donald D. Nebelsick & Elizabeth

150 acres

5 years

10/03/2012

7,500.00

325,375.00

üü

Check

09/03/2012

1345

Dickinson County

Elizabeth & Donald Nebelsick, Trstee

150 acres

5 years

10/03/2012

7,500.00

332,875.00

üü

Check

09/09/2012

1339

Dickinson County

Lavina F. Garver

110 acres

5 years

09/09/2012

2,750.00

335,625.00

üü

Check

10/03/2012

1349

Dickinson County

Carl E. Funston

80 acres

5 years

10/04/2012

2,050.00

337,675.00

üü

Check

10/03/2012

1347

Dickinson County

Mark Q. Chronister

52 acres

5 years

10/03/2012

1,300.00

338,975.00

üü

Check

10/08/2012

1429

Dickinson County

Barbara A. Wuthnow, Trustee

81 acres

5 years

10/08/2012

2,025.00

341,000.00

üü

Check

10/25/2012

1433

Dickinson County

Roland V. Rock

162 acres

5 years

10/25/2012

4,050.00

345,050.00

üü

Check

11/28/2012

1445

Dickinson County

Donald E. Emig

164. acres

8 years

12/10/2012

4,100.00

349,150.00

üü

Check

12/07/2012

1449

Dickinson County

Scott E. Emig & Pamela S. Emig

239 acres

8 years

12/07/2012

11,950.00

361,100.00

üü

Check

12/10/2012

1450

Dickinson County

Donald E. Emig

2nd Payment

4,100.00

365,200.00

2nd $25/ac payment for 8 year lease

üü

Check

01/21/2013

1464

Dickinson County

Thomas N. Mead

242 acres

3 years

01/21/2013

12,100.00

377,300.00

üü

Check

01/31/2013

1466

Dickinson County

Corey Powell & Marquette R Powell, Ttees

80 acres

5 years

01/29/2013

2,000.00

379,300.00

üü

Check

02/12/2013

1469

Dickinson County

Peggy D. Hanke

148 acres

5 years

02/12/2013

2,950.00

382,250.00

üü

Check

02/12/2013

1468

Dickinson County

Roger T. Watt

118 acres

5 years

02/12/2013

2,950.00

385,200.00

üü

Check

02/12/2013

1471

Dickinson County

Roger T. Watt, Trustee

148 acres

5 years

02/12/2013

3,700.00

388,900.00

üü

Check

02/12/2013

1470

Dickinson County

Tobey Ray Watt

98 acres

5 years

02/12/2013

2,450.00

391,350.00

üü

Check

04/24/2012

1206

Dickinson County

Kay L. & Max R. Russell, Trustees

242 acres

5 years

04/24/2012

6,050.00

397,400.00

üü

Check

05/10/2012

1212

Dickinson County

Kenneth E. Martin, Trustee

82 acres

5 years

05/10/2012

2,050.00

399,450.00

üü

Check

05/10/2012

1213

Dickinson County

Kenneth E. Martin, Trustee

82 acres

5 years

05/10/2012

2,050.00

401,500.00

üü

Check

03/27/2012

1160

Dickinson/Saline

Curtis L. Kohman

188 acres

5 years

03/27/2012

6,800.00

408,300.00

üü

Check

03/30/2012

1195

Dickinson/Saline

Etherington Farms Inc.

162 acres

5 years

03/30/2012

13,625.00

421,925.00

üü

Check

10/27/2011

1021

Ottawa

BEULAH SHOUSE REV. FAMILY TRUST

483 acres

5 years

09/17/2011

12,075.00

434,000.00

üü

Check

10/27/2011

1020

Ottawa

LEE ROY GILLMORE

160 acres

5 years

10/27/2011

4,000.00

438,000.00

üü

Check

10/27/2011

1022

Ottawa

ROBERT DRUMMOND

1,164 acres

5 years

10/27/2011

29,100.00

467,100.00

üü

Check

10/28/2011

1025

Ottawa

DEBRA BRENNEMAN

240 acres

5 years

10/28/2011

4,000.00

471,100.00

üü

Check

10/28/2011

1024

Ottawa

GREG BRENNEMAN

320 acres

5 years

10/28/2011

8,000.00

479,100.00

üü

Check

11/03/2011

1029

Ottawa

TODD L. TURNER

324 acres

5 years

11/03/2011

8,100.00

487,200.00

üü

Check

11/09/2011

1035

Ottawa

JOHN BRENNEMAN

67 acres

5 years

11/09/2011

1,675.00

488,875.00

üü

Check

11/10/2011

1036

Ottawa

THOMAS L. BARRETT

1,444 acres

5 years

11/10/2011

36,100.00

524,975.00

üü

Check

11/13/2011

1037

Ottawa

JO ANN NELSON

803 acres

5 years

11/13/2011

20,075.00

545,050.00

üü

Check

11/22/2011

1039

Ottawa

GARRY JOHNSON

82 acres

5 years

12/13/2011

2,050.00

547,100.00

üü

Check

12/15/2011

1092

Ottawa

MICHAEL P. MURRAY

804 acres

5 years

12/15/2011

20,100.00

567,200.00

üü

Check

12/19/2011

1095

Ottawa

RICHARD A. SIDENER

326 acres

5 years

12/19/2011

8,150.00

575,350.00

üü

Check

12/21/2011

1081

Ottawa/Saline

LINDGREN FAMILY FARM, LLC

230 acres

5 years

12/19/2011

5,750.00

581,100.00

üü

Check

01/02/2012

1083

Ottawa

GREGORY M. WOLF

1,254 acres

5 years

01/02/2012

31,350.00

612,450.00

üü

Check

01/16/2012

1098

Ottawa

William J and Sharolyn G. Wagner

524 acres

5 years

01/16/2012

13,100.00

625,550.00

üü

Check

01/18/2012

1102

Ottawa

Marvalee Wesley and Jay Wesley, TTEE's

309 acres

5 years

01/16/2012

7,725.00

633,275.00

üü

Check

01/25/2012

1122

Ottawa

Boster Tr fbo R & M Boster dtd 7/18/06

412 acres

5 years

01/25/2012

10,300.00

643,575.00

üü

Check

01/25/2012

1105

Ottawa

Charles D. and Nita Marie Boster TTEES

60.5 acres

5 years

01/25/2012

1,512.50

645,087.50

üü

Check

01/25/2012

1123

Ottawa

Charles D. and Nita Marie Boster TTEES

60.5 acres

5 years

01/25/2012

1,512.50

646,600.00

üü

Check

01/30/2012

1129

Ottawa

Andrea Gans

253 acres

5 years

01/30/2012

3,162.50

649,762.50

üü

Check

01/30/2012

1127

Ottawa

Gans, Inc.

357 acres

5 years

01/30/2012

8,925.00

658,687.50

üü

Check

01/30/2012

1125

Ottawa

Gregory Brenneman, TTEE

271 acres

5 years

01/30/2012

6,775.00

665,462.50

üü

Check

01/30/2012

1128

Ottawa

Linda J. Gans, TTEE

482 acres

5 years

01/30/2012

12,050.00

677,512.50

üü

Check

01/30/2012

1126

Ottawa

Thomas Brenneman, TTEE

217 acres

5 years

01/30/2012

6,775.00

684,287.50

üü

Check

02/02/2012

1132

Ottawa

Tonya Brenneman

271 acres

5 years

01/30/2012

6,775.00

691,062.50

ratification of Brenneman lease (1/3 share

üü

Check

02/03/2012

1136

Ottawa

Warren W. Condray, TTEE (Clara)

42.5 acres

5 years

02/03/2012

1,062.50

692,125.00

üü

Check

02/03/2012

1135

Ottawa

Warren W. Condray, TTEE (Warren)

42.5 acres

5 years

02/03/2012

1,062.50

693,187.50

üü

Check

02/08/2012

1143

Ottawa

Curtis R. Janssen

136.6 acres

5 years

02/08/2012

4,092.00

697,279.50

üü

Check

02/09/2012

1139

Ottawa

J. Tibbits, Inc.

407 acres

5 years

02/09/2012

10,175.00

707,454.50

üü

Check

02/09/2012

1138

Ottawa

John T. Tibbits

1,024 acres

5 years

02/09/2012

25,600.00

733,054.50

üü

Check

02/09/2012

1137

Ottawa

Thomas L. Tibbits

164 acres

5 years

02/09/2012

4,100.00

737,154.50

üü

Check

02/16/2012

1144

Ottawa

Edith B. Heidrick

214 acres

5 years

02/16/2012

5,350.00

742,504.50

üü

Check

03/01/2012

1153

Ottawa

George Tibbits

328 acres

5 years

03/01/2012

8,200.00

750,704.50

üü

Check

03/21/2012

1158

Ottawa

James Barton Henry and Susan Ann Henry

247 acres

5 years

03/21/2012

6,175.00

756,879.50

üü

Check

03/28/2012

1193

Ottawa

Keith Jungel

692 acres

5 years

03/28/2012

17,300.00

774,179.50

üü

Check

04/02/2012

1196

Ottawa

Wendell W. Kellogg Trustee

320 acres

5 years

04/02/2012

8,000.00

782,179.50

üü

Check

04/23/2012

1199

Ottawa

TODD L. TURNER

162 acres

5 years

04/23/2012

4,050.00

786,229.50

üü

Check

05/11/2012

1214

Ottawa

MNS, LP, a Kansas Fam Ltd Partnership

321 acres

5 years

05/11/2012

8,025.00

794,254.50

üü

Check

05/24/2012

1222

Ottawa

John R. Krisher

288 acres

5 years

05/24/2012

7,200.00

801,454.50

üü

Check

05/26/2012

1223

Ottawa

Julia K. & Robert L Oborny Trustees

960 acres

5 years

05/26/2012

24,000.00

825,454.50

üü

Check

05/30/2012

1224

Ottawa

Edward R. Shouse Rev Fam Trust

328 acres

5 years

05/30/2012

8,200.00

833,654.50

üü

Check

06/04/2012

1227

Ottawa

John C. Gunn, Trustee

1300 acres

5 years

06/04/2012

32,500.00

866,154.50

üü

Check

06/08/2012

1228

Ottawa

Kenneth E. Bartlett

165 acres

5 years

06/06/2012

4,125.00

870,279.50

üü

Check

06/13/2012

1232

Ottawa

Wayne and David Mills , Trustees

164 acres

5 years

06/13/2012

4,100.00

874,379.50

üü

Check

06/14/2012

1231

Ottawa

Susan Stubby

165 acres

5 years

06/14/2012

4,125.00

878,504.50

üü

Check

06/21/2012

1238

Ottawa

Thomas Brenneman, TTEE

162 acres

5 years

06/21/2012

4,050.00

882,554.50

üü

Check

06/22/2012

1239

Ottawa

Alice and Keith Lauer, Trustees

244 acres

5 years

06/22/2012

6,100.00

888,654.50

üü

Check

06/28/2012

1241

Ottawa

John D. Duggan

627 acres.

5 years

06/28/2012

15,650.00

904,304.50

üü

Check

07/16/2012

1313

Ottawa

Jerry L. Luthi

240 acres

5 years

07/16/2012

6,000.00

910,304.50

üü

Check

07/16/2012

1314

Ottawa

Jerry L. Luthi, as Trustee

165 acres

5 years

07/16/2012

4,125.00

914,429.50

üü

Check

07/16/2012

1311

Ottawa

Richard G. Luthi

240 acres

5 years

07/16/2012

6,000.00

920,429.50

üü

Check

07/16/2012

1312

Ottawa

Richard G. Luthi, as Trustee

165 acres

5 years

07/16/2012

4,125.00

924,554.50

üü

Check

09/07/2012

1337

Ottawa

Martin Land & LIvestock, LLC

312 acres,

5 years

09/07/2012

7,800.00

932,354.50

üü

Check

09/13/2012

1338

Ottawa

Laura R.& Bryan Armendariz Trustees

244 acres,

5 years

09/13/2012

6,100.00

938,454.50

üü

Check

11/13/2012

1441

Ottawa

Bradley J. Neaderhiser

69.5 acres,

5 years

11/13/2012

1,737.50

940,192.00

üü

Check

11/13/2012

1442

Ottawa

Kenneth V. Neaderhiser

69.5 acres,

5 years

11/13/2012

1,737.50

941,929.50

üü

Check

11/13/2012

1440

Ottawa

Timothy L. Neaderhiser

69.5 acres

5 years

11/13/2012

1,737.50

943,667.00

üü

Check

11/15/2012

1444

Ottawa

Rosemary Mahoney Neaderhiser

80.5 acres,

5 years

11/15/2012

2,012.50

945,679.50

üü

Check

12/21/2011

1082

Ottawa/Dickinson

MAUREEN T. RIORDAN

522 acres

5 years

12/19/2011

13,050.00

958,729.50

üü

Check

01/16/2012

1087

Ottawa

James E. & Tandis M. Peterson, Ttees

255 acres

5 years

01/16/2012

6,375.00

965,104.50

üü

Check

01/30/2012

1130

Ottawa

Michele Wise

126.5 acres

5 years

01/30/2012

3,162.50

968,267.00

üü

Check

05/04/2012

1209

Ottawa/Dickinson

Thomas Prochazka

652 acres

5 years

05/04/2012

16,300.00

984,567.00

üü

Check

05/17/2012

1215

Dickinson

Rea Family Ltd Partnership

704 acres

5 years

05/17/2012

17,600.00

1,002,167.00

üü

Check

06/29/2012

1301

Ottawa Dickinson

Rea Family Ltd Partnership

191 acres

5 years

06/29/2012

4,775.00

1,006,942.00

üü

Check

03/01/2012

1154

Ottawa Dickinson Saline

Janssen, Eldon & Darlene, TTEES

729 acres

5 years

03/01/2012

18,225.00

1,025,167.00

üü

Check

10/03/2011

1006

Saline

Mary Rasher

665 acres

5 years

10/03/2011

16,625.00

1,041,792.00

üü

Check

10/03/2011

1005

Saline

Morris Rasher

665 acres

5 years

10/03/2011

16,625.00

1,058,417.00

üü

Check

10/07/2011

1007

Saline

GARY J. MORGAN

160 acres

5 years

10/07/2011

4,000.00

1,062,417.00

üü

Check

10/07/2011

1009

Saline

GARY MYNATT

5 years

667.00

1,063,084.00

ratification of Mynatt/Weians lease

1/6 share of 160 acres (26.66)

Check

10/18/2011

1013

Saline

Jerrold E. Cossette

161 acres

5 years

10/18/2011

4,025.00

1,067,109.00

üü

Check

11/04/2011

1032

Saline

JERRY MALLON

82 acres

5 years

11/04/2011

2,050.00

1,069,159.00

üü

Check

11/08/2011

1034

Saline

ARNOLD E. TILLBERG

173 acres

5 years

11/08/2011

4,325.00

1,073,484.00

üü

Check

11/19/2011

1038

Saline

DENNISE R. MATHESON

87 acres

5 years

11/17/2011

2,175.00

1,075,659.00

üü

Check

11/22/2011

1042

Saline

ASA G. KENISON, JR

41 acres

5 years

11/22/2011

1,025.00

1,076,684.00

üü

Check

11/22/2011

1041

Saline

LARRY S. KENISON

41 acres

5 years

11/22/2011

1,025.00

1,077,709.00

üü

Check

11/22/2011

1045

Saline

RANDY C. CROUGH

149 acres

5 years

11/22/2011

3,725.00

1,081,434.00

üü

Check

11/22/2011

1044

Saline

TIMOTHY E. CROUGH

15 acres

5 years

11/22/2011

375.00

1,081,809.00

üü

Check

12/02/2011

1051

Saline

RANDY C. CROUGH

3 acres

5 years

11/22/2011

75.00

1,081,884.00

üü

Check

12/02/2011

1050

Saline

TIMOTHY E. CROUGH

1 acres

5 years

11/22/2011

25.00

1,081,909.00

üü

Check

12/13/2011

1091

Saline

GARRY K. JOHNSON

403 acres

5 years

12/13/2011

10,075.00

1,091,984.00

üü

Check

12/15/2011

1094

Saline

GARRY K. JOHNSON

161 acres

5 years

12/13/2011

4,025.00

1,096,009.00

üü

Check

02/08/2012

1141

Saline/Ottawa

David M. Janssen

163 acres

5 years

02/08/2012

4,092.00

1,100,101.00

üü

Paid for 163.66 ac/, which is correct

Check

02/08/2012

1142

Saline/Ottawa

Steven L. Janssen

201 acres

5 years

02/08/2012

5,040.00

1,105,141.00

üü

Paid for 201.66 ac/, which is correct

Check

03/28/2012

1161

Saline

Eastridge Development Inc.

245 acres

5 years

03/28/2012

6,125.00

1,111,266.00

üü

Check

10/07/2011

1008

Saline

MOLLY EMERY

667.00

1,111,933.00

ratification of Mynatt/Weians lease

1/6 share of 160 acres (26.66)

Check

10/18/2011

1014

Saline

Jean Ann Wadsworth

667.00

1,112,600.00

ratification of Mynatt/Weians lease

1/6 share of 160 acres (26.66)

Check

10/25/2011

1017

Saline

LAVERNA M. KIRN

82 acres

5 years

10/25/2011

2,050.00

1,114,650.00

üü

Check

10/26/2011

1018

Saline

MARY KAY BIXBY

667.00

1,115,317.00

ratification of Mynatt/Weians lease

1/6 share of 160 acres (26.66)

Check

11/22/2011

1043

Saline

CORCORAN FARM (c/o Barbara Tapscott)

163 acres

5 years

11/22/2011

4,075.00

1,119,392.00

Barbara Tapscott name on lease

Corcoran Farm c/o Barbara Tapscott

Total Direct Oil Lease Purchases $1,119,392.00

PRIDE OIL & GAS PROPERTIES, INC. PURCHASE FBO OF CHISHOLM PARTNERS II AND ASSIGNED TO DALA PETROLEUM CORP. ON MAY 21, 2014

10/03/2011

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 1

03/2011

WIRE

Clay & Dickinson

Steffen Trust Bruce D

480 acres

5 years

9/20/2011

12,000.00

üü

10/03/2011

WIRE

Clay & Dickinson

Steffen Trust Ladonna M

480 acres

5 years

9/20/11

12,000.00

24,000.00

üü

10/03/2011

WIRE

Clay & Dickinson

Coulsor Clayton Marjorie

160 acres

5 years

9/27/2011

4,000.00

28,000.00

üü

10/03/2011

WIRE

Clay & Dickinson

Gibbs Larry and Laura

511.35 acres

5 years

9/22/11

12,783.80

40,783.80

üü

10/03/2011

WIRE

Clay & Dickinson

Steenbock Trust Marvin

316 acres

5 years

9/22/2011

32,900.00

73,683.80

üü

10/03/2011

WIRE

Clay & Dickinson

Steenbock Trust Audrey

400 acres

5 years

9/22/2011

10,000.00

83,683.80

üü

10/17/2011

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 2

83,683.80

10/17/2011

WIRE

Clay & Dickinson

Lefert Fam Trst L&R

514 acres

5 years

9/26/2011

12,850.00

96,533.80

üü

10/17/2011

WIRE

Clay & Dickinson

Lefert Linda

514 acres

5 years

9/26/2011

12,850.00

109,383.80

üü

10/17/2011

WIRE

Clay & Dickinson

Hern Virgil

160 acres

5 years

10/04/2011

4,000.00

113,383.80

üü

10/17/2011

WIRE

Clay & Dickinson

Hern Danny R

160 acres

5 years

10/04/2011

4,000.00

117,383.80

üü

10/17/2011

WIRE

Clay & Dickinson

Steenbock Wm & Nancee

400 acres

5 years

10/03/2011

10,000.00

127,383.80

üü

10/17/2011

WIRE

Clay & Dickinson

Sylverster Trust Lois

160 acres

5 years

9/30/2011

4,000.00

131,383.80

üü

10/17/2011

WIRE

Clay & Dickinson

Craig Family Trust Derald

178 acres

5 years

9/20/2011

4,450.00

135,833.80

üü

10/17/2011

WIRE

Clay & Dickinson

Forsyth Roger & Marla

10.01 acres

5 years

10/04/2011

250.25

136,084.05

üü

10/17/2011

WIRE

Clay & Dickinson

Forsyth John W

280 acres

5 years

10/04/2011

7,000.00

143,084.05

üü

10/17/2011

WIRE

Clay & Dickinson

Forsyth Roger & Marla

280 acres

5 years

10/04/2011

7,000.00

150,084.05

üü

10/17/2011

WIRE

Clay & Dickinson

Kobetich Ted & Jody

153.2 acres

5 years

10/04/2011

3,830.00

153,914.05

üü

10/17/2011

WIRE

Clay & Dickinson

Kobetich Lonnie & Lisa

153.84 acres

5 years

10/04/2011

3,845.98

157,760.03

üü

10/17/2011

WIRE

Clay & Dickinson

Kobetich Ted & Jody

188.72 acres

5 years

10/04/2011

4,718.01

162,478.04

üü

10/17/2011

WIRE

Clay & Dickinson

Kobetich Robert & Judith

188.72 acres

5 years

10/04/2011

4,718.01

167,196.05

üü

10/17/2011

WIRE

Clay & Dickinson

Kobetich Lonnie & Lisa

188.72 acres

5 years

10/04/2011

4,718.01

171,914.06

üü

10/31/2011

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 3

171,914.06

10/31/2011

WIRE

Clay & Dickinson

Yenni Vernon & Kathleen

868 acres

5 years

10/14/2011

21,700.00

193,614.06

üü

10/31/2011

WIRE

Clay & Dickinson

Bond James & Donna

472 acres

5 years

9/23/2011, 9/26/2011

11,800.00

205,414.06

üü

10/31/2011

WIRE

Clay & Dickinson

Lovett Jerry

240 acres

5 years

10/19/2011

6,000.00

211,414.06

üü

11/14/2011

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 4

211,414.06

11/14/2011

WIRE

Clay & Dickinson

Shorman Martin & Belinda

320 acres

5 years

10/25/2011

8,000.00

219,414.06

üü

11/14/2011

WIRE

Clay & Dickinson

Steenbock Curtis & Kristine

320 acres

5 years

9/22/2011

8,000.00

227,414.06

üü

11/14/2011

WIRE

Clay & Dickinson

Shorman Irven & Laura

112 acres

5 years

10/25/2011

2,800.00

230,214.06

üü

11/23/2011

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.:VIA REPORT 5

230,214.06

11/23/2011

WIRE

Clay & Dickinson

Shorman Martin & Belinda

199 acres

5 years

10/25/2011

4,975.00

235,189.06

üü

11/23/2011

WIRE

Clay & Dickinson

Lewis Duane

426 acres

5 years

11/18/2011

10,650.00

245,839.06

üü

11/23/2011

WIRE

Clay & Dickinson

Shorman Brower Della

40 acres

5 years

10/25/2011

1,000.00

246,839.06

üü

11/23/2011

WIRE

Clay & Dickinson

Bebermeyer Arlan & Carolyn

160 acres

5 years

10/09/2011

4,000.00

250,839.06

üü

12/12/2011

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 6

250,839.06

12/12/2011

WIRE

Clay & Dickinson

Bennett Keith & Virginia

160 acres

5 years

11/10/2011

4,000.00

254,839.06

üü

12/12/2011

WIRE

Clay & Dickinson

Bebermeyer Kalen

80 acres

5 years

11/09/2011

2,000.00

256,839.06

üü

12/12/2011

WIRE

Clay & Dickinson

Thurlow William & Helen

388.5 acres

5 years

11/18/2011

9,712.50

266,551.56

üü

12/12/2011

WIRE

Clay & Dickinson

Neaderhiser Rev Trust

320 acres

5 years

11/16/2011

8,000.00

274,551.56

üü

12/27/2011

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 7

274,551.56

12/27/2011

WIRE

Clay & Dickinson

Heigele Alan & Sandra

160 acres

5 years

11/16/2011

4,000.00

278,551.56

üü

12/27/2011

WIRE

Clay & Dickinson

GDL Family Trust

240 acres

5 years

12/05/2011

6,000.00

284,551.56

üü

12/27/2011

WIRE

Clay & Dickinson

Shorman Judy

352 acres

5 years

10/25/2011

8,800.00

293,351.56

üü

12/27/2011

WIRE

Clay & Dickinson

Debenham Fam Trust dtd 5/19/99

292.86 acres

5 years

11/08/2011

7,321.50

300,673.06

üü

12/27/2011

WIRE

Clay & Dickinson

Debenham Trust Harold

160 acres

5 years

11/08/2011

4,000.00

304,673.06

üü

12/27/2011

WIRE

Clay & Dickinson

Debenham Fam Trust

74.18 acres

5 years

11/08/2011

1,854.50

306,527.56

üü

12/27/2011

WIRE

Clay & Dickinson

Debenham Trust Harold

74.18 acres

5 years

11/08/2011

1,854.50

308,382.06

üü

12/27/2011

WIRE

Clay & Dickinson

Bennett Family Trust

180 acres

5 years

11/10/2011

4,500.00

312,882.06

üü

12/27/2011

WIRE

Clay & Dickinson

Greenwood Trust Barbara

240 acres

5 years

11/30/2011

6,000.00

318,882.06

üü

12/27/2011

WIRE

Clay & Dickinson

Bennett Trust Robt

320 acres

5 years

11/10/2011

8,000.00

326,882.06

üü

12/27/2011

WIRE

Clay & Dickinson

Henry Linda J Rev Tr

235 acres

5 years

11/30/2011

5,875.00

332,757.06

üü

12/27/2011

WIRE

Clay & Dickinson

Bebermeyer Trust Shirley

115.992 acres

5 years

12/09/2011

2,899.80

335,656.86

üü

12/27/2011

WIRE

Clay & Dickinson

Bebermeyer Trust Kenneth

115.992 acres

5 years

12/09/2011

2,899.81

338,556.67

üü

01/23/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 8

338,556.67

Beginning with Report 8, all debit transactions include the $15 bank draft fee

01/23/2012

WIRE

Clay & Dickinson

Shivers Larry

388 acres

5 years

1/11/2012

9,715.00

348,271.67

üü

01/23/2012

WIRE

Clay & Dickinson

OBERG Farms Ltd Pship

560 acres

5 years

12/05/2011

14,015.00

362,286.67

üü

01/23/2012

WIRE

Clay & Dickinson

ICEF OBERG Inc.

111.27 acres

5 years

12/05/2011

2,796.70

365,083.37

üü

02/06/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 9

365,083.37

02/06/2012

WIRE

Clay & Dickinson

Matson Trust Laron

159.75 acres

5 years

11/16/2011

4,008.75

369,092.12

üü

02/06/2012

WIRE

Clay & Dickinson

Matson Doug & Evelyn

159.75 acres

5 years

4,008.75

373,100.87

üü

02/06/2012

WIRE

Clay & Dickinson

Thurlow Randall & Coleen

698 acres

5 years

12/12/2011

17,465.00

390,565.87

üü

02/06/2012

WIRE

Clay & Dickinson

Norboe Michael

157 acres

5 years

12/02/2011

3,940.00

394,505.87

üü

02/06/2012

WIRE

Clay & Dickinson

Hostetler Dennis & Dixie

451 acres

5 years

1/27/2012

11,290.00

405,795.87

üü

02/21/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 10

405,795.87

02/21/2012

WIRE

Clay & Dickinson

McGrath Daniel L

160 acres

5 years

1/20/2012

4,015.00

409,810.87

üü

02/21/2012

WIRE

Clay & Dickinson

Van Scoyoc Donal & Evelyn

75.71 acres

5 years

10/11/2011

1,907.75

411,718.62

üü

02/27/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC., VIA REPORT 11

411,718.62

02/27/2012

WIRE

Clay & Dickinson

Holt Trust Dale

1,340.84 acres

5 years

2/10/2012

33,521.00

445,239.62

üü

03/09/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 12

445,239.62

03/09/2012

WIRE

Clay & Dickinson

Kellen F Kopfer, et ux

80 acres

5 years

1/17/2012

2,015.00

447,254.62

üü

03/30/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 13

447,254.62

03/30/2012

WIRE

Clay & Dickinson

Bathhurst Farms LLC

666.1 acres

5 years

3/23/2012

16,667.50

463,922.12

üü

03/30/2012

WIRE

Clay & Dickinson

Steffen Bruce & Ladonna Trust

78.6 acres

5 years

3/24/2012

1,980.00

465,902.12

üü

03/30/2012

WIRE

Clay & Dickinson

Bennett Family Trust Keith & Virginia

157.20 acres

5 years

3/25/2012

3,945.00

469,847.12

üü

03/30/2012

WIRE

Clay & Dickinson

Forsyth Roger et al

77.90 acres

5 years

3/28/2012

1,962.50

471,809.62

üü

04/24/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 14

471,809.62

04/24/2012

WIRE

Clay & Dickinson

Elsasser Bruce & J

610 acres

5 years

3/27/2012

15,265.00

487,074.62

üü

04/24/2012

WIRE

Clay & Dickinson

Wuthnow Nathan

170.61 acres

5 years

1/27/2012

4,280.25

491,354.87

üü

04/24/2012

WIRE

Clay & Dickinson

David Gary Dean

80 acres

5 years

1/24/2012

2,015.00

493,369.87

üü

04/24/2012

WIRE

Clay & Dickinson

David Gary Alan

80 acres

5 years

1/24/2012

2,015.00

495,384.87

üü

04/24/2012

WIRE

Clay & Dickinson

Bebermeyer Arlan & Carolyn

156.4 acres

5 years

3/27/2012

3,925.00

499,309.87

üü

04/24/2012

WIRE

Clay & Dickinson

Bebermeyer Rylan & Anne

234.90 acres

5 years

3/31/2012

5,887.50

505,197.37

üü

04/27/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 15

505,197.37

04/27/2012

WIRE

Clay & Dickinson

Bebemeyer Daren Rev etr

233.6 acres

5 years

4/16/2012

5,855.00

511,052.37

üü

04/27/2012

WIRE

Clay & Dickinson

Law Bevin & Trudy

227.3 acres

5 years

3/28/2012

5,697.50

516,749.87

üü

04/27/2012

WIRE

Clay & Dickinson

Law Family Rev Tr

79 acres

5 years

3/28/2012

1,990.00

518,739.87

üü

04/27/2012

WIRE

Clay & Dickinson

Koelling Trust A & M

310 acres

5 years

4/24/2012

7,815.00

526,554.87

üü

04/27/2012

WIRE

Clay & Dickinson

Kramer K & W

142 acres

5 years

4/24/2012

5,565.00

532,119.87

üü

04/27/2012

WIRE

Clay & Dickinson

Holt Trust Dale

157.2 acres

5 years

4/24/2012

3,945.00

536,064.87

üü

05/18/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 16

536,064.87

05/18/2012

WIRE

Clay & Dickinson

Bennett Family trust Marvin & Ladonna

77.1 acres

5 years

4/23/2012

1,942.50

538,007.37

üü

05/18/2012

WIRE

Clay & Dickinson

Shetter Trust Lawrence

79.4 acres

5 years

4/4/2012

2,000.00

540,007.37

üü

05/18/2012

WIRE

Clay & Dickinson

Kogler Rev Tr

157 acres

5 years

4/20/2012

3,940.00

543,947.37

üü

05/18/2012

WIRE

Clay & Dickinson

Shetter Trust Lawrence

88.4 acres

5 years

4/24/2012

2,225.00

546,172.37

üü

05/18/2012

WIRE

Clay & Dickinson

Chadwell Trust Lyle & Mary

315.6 acres

5 years

5/2/2012

7,905.00

554,077.37

üü

05/18/2012

WIRE

Clay & Dickinson

Morse Trust Paul

221.7 acres

5 years

4/25/2012

5,557.50

559,634.87

üü

05/18/2012

WIRE

Clay & Dickinson

Law Thad C

235 acres

5 years

5/4/2012

5,890.00

565,524.87

üü

05/18/2012

WIRE

Clay & Dickinson

Barlett Kenneth, Kathy, Jeffery & Jennifer

129.83 acres

5 years

4/11/2012

3,260.75

568,785.62

üü

05/18/2012

WIRE

Clay & Dickinson

Law Family Rev Tr

350.3342 acres

5 years

5/4/2012

8,773.50

577,559.12

üü

05/18/2012

WIRE

Clay & Dickinson

Greenwood Trust Barbara

292.9 acres

5 years

5/12/2012

7,362.50

584,921.62

üü

05/18/2012

WIRE

Clay & Dickinson

Siebold Terry & Merna

107 acres

5 years

5/8/2012

2,690.00

587,611.62

üü

06/04/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 17

587,611.62

06/04/2012

WIRE

Clay & Dickinson

Law Lacey

76 acres

5 years

5/4/2012

1,915.00

589,526.62

üü

06/04/2012

WIRE

Clay & Dickinson

McCosh Trust Cynthia

300.4 acres

5 years

5/17/2012

7,525.00

597,051.62

üü

06/04/2012

WIRE

Clay & Dickinson

Coulson Larry & Marie

157.4 acres

5 years

5/11/2012

3,950.00

601,001.62

üü

06/04/2012

WIRE

Clay & Dickinson

Siebold Thomas & Linda

107 acres

5 years

5/8/2012

2,690.00

603,691.62

üü

06/04/2012

WIRE

Clay & Dickinson

Law Sandra

545.66 acres

5 years

5/8/2012

13,656.50

617,348.12

üü

06/04/2012

WIRE

Clay & Dickinson

Kendall Michael & Shelia

160 acres

5 years

5/14/2012

4,015.00

621,363.12

üü

06/04/2012

WIRE

Clay & Dickinson

Varney Dianne

74.5 acres

5 years

5/9/2012

1,877.50

623,240.62

üü

06/04/2012

WIRE

Ottawa

Hern Danny Ray

150 acres

5 years

6/1/2012

3,765.00

627,005.62

üü

06/15/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 18

627,005.62

06/15/2012

WIRE

Clay & Dickinson

Whitehair John & Gale

80 acres

5 years

5/24/2012

2,015.00

629,020.62

üü

06/15/2012

WIRE

Clay & Dickinson

Rettie Helen Rev Trust

299.6 acres

5 years

5/25/2012

7,505.00

636,525.62

üü

Clay & Dickinson

Hern Danny Ray

5 years

3,765.00

640,290.62

Repeat entry;

no lease

Repeat entry;

no check

06/15/2012

WIRE

Clay & Dickinson

Gibson David and Mary

19.81 acres

5 years

4/25/2012

510.25

640,800.87

üü

06/15/2012

WIRE

Clay & Dickinson

Kamm Karen

311.78 acres

5 years

5/16/2012

7,809.00

648,609.87

üü

06/15/2012

WIRE

Clay & Dickinson

Gfeller K, Bell S, & Padgett J

400 acres

5 years

5/24/2012

10,015.00

658,624.87

üü

06/15/2012

WIRE

Clay & Dickinson

Luthi Theodore & connie

229 acres

5 years

5/15/2012

5,740.00

664,364.87

üü

06/15/2012

WIRE

Clay & Dickinson

Hoover Eldon & Belda

75.9 acres

5 years

5/4/2012

1,912.50

666,277.37

üü

06/15/2012

WIRE

Clay & Dickinson

Steffen Trust Bruce

119.5 acres

5 years

6/7/2012

3,002.50

669,279.87

üü

06/15/2012

WIRE

Clay & Dickinson

Steffen Trust Ladonna

119.5 acres

5 years

6/7/2012

3,002.50

672,282.37

üü

06/29/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 19

672,282.37

06/29/2012

WIRE

Clay & Dickinson

Hammond Francis

155 acres

5 years

6/5/2012

3,890.00

676,172.37

üü

06/29/2012

WIRE

Clay & Dickinson

Sylvester Trust Lois Jean

73 acres

5 years

6/7/2012

1,840.00

678,012.37

üü

06/29/2012

WIRE

Clay & Dickinson

Sutter Donald

312 acres

5 years

6/7/2012

7,815.00

685,827.37

üü

06/29/2012

WIRE

Clay & Dickinson

Kobetich Ted & Judy, Robt & Judith & Lonnie & Lisa

304.2 acres

5 years

5/24/2012

7,615.00

693,442.37

üü

06/29/2012

WIRE

Clay & Dickinson

McGrath Daniel Audrey

80 acres

5 years

6/12/2012

2,015.00

695,457.37

üü

06/29/2012

WIRE

Clay & Dickinson

Bergmeier William & Kathy

313 acres

5 years

5/7/2012

7,840.00

703,297.37

üü

06/29/2012

WIRE

Clay & Dickinson

Romberger Rodger & Rich & Debra

235 acres

5 years

5/7/2012

5,890.00

709,187.37

üü

07/16/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 20

709,187.37

07/16/2012

WIRE

Clay & Dickinson

Nichols Family Trust

307.9 acres

5 years

5/29/2012

7,712.50

716,899.87

üü

07/16/2012

WIRE

Clay & Dickinson

Acker Family Trust

160 acres

5 years

6/14/2012

4,015.00

720,914.87

üü

07/27/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 21

720,914.87

07/27/2012

WIRE

Clay & Dickinson

Heigele Lois & Delores Rev Tr

312 acres

5 years

7/3/2012

7,815.00

728,729.87

üü

07/27/2012

WIRE

Clay & Dickinson

Heigele Philip & Janet

540 acres

5 years

7/3/2012

13,515.00

742,244.87

üü

07/27/2012

WIRE

Clay & Dickinson

Heigele Alan & Sandra

157 acres

5 years

7/4/2012

3,940.00

746,184.87

üü

07/27/2012

WIRE

Clay & Dickinson

Heigele Alan & Sandra

265.5 acres

5 years

07/16/2012

6,652.50

752,837.37

üü

07/27/2012

WIRE

Clay & Dickinson

Heigele Philip & Janet

117.5 acres

5 years

07/16/2012

2,952.50

755,789.87

üü

08/30/2012

WIRE

Clay & Dickinson

PRIDE OIL & GAS PROP.,INC.: VIA REPORT 22

5 years

755,789.87

08/30/2012

WIRE

Clay & Dickinson

Greenwood Trust Barbara

79 acres

5 years

7/27/2012

1,990.00

757,779.87

üü

08/30/2012

WIRE

Clay & Dickinson

Rush Eric

237 acres

5 years

7/27/2012

5,940.00

763,719.87

üü

08/30/2012

WIRE

Clay & Dickinson

Alaxander Robert

79.5 acres

5 years

8/3/2012

2,002.50

765,722.37

üü

08!30/2012

V\IIRE

Clay &Drckmson

AlexanderV\Illlram

79 5 acres

5 years

8!3/2012

2.002 50

767.724 87

üü

08!30/2012

V\IIRE

Clay &Drckmson

Alexander Russell &Mary

315 acres

5 years

8!3/2012

7.890 00

775.614 87

üü

111D9!2012

V\IIRE

Clay &Drckmson

PRIDE OIL & GAS PROP. INC. VIA REPORT23

775.614 87

üü

111D9!2012

V\IIRE

Clay &Drckmson

MrllerMrchael

157 acres

5 years

10!9/2012

3.940 00

779.554 87

üü

Total Pride Oil & Gas Properties Inc Purchases $779,554.87

TOTAL CHISHOLM PARTNERS II OIL LEASE PURCHASES

ASSIGNED TO DALA PETROLEUM CORP. ON MAY 21, 2014 $ 1,898,946.87

Exhibit 10.6

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Exhibit 10.7

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[EXHIBIT107018.JPG]

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[EXHIBIT107031.JPG]

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Exhibit 10.8

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Exhibit 10.9

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Exhibit 10.10

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EXECUTIVE EMPLOYMENT AGREEMENT (this “ Agreement ”) is entered into on the date signed by Executive below to be effective as of May 1, 2014 (the “ Effective Date ”), between DALA PETROLEUM CORP. (the “ Employer ” or “Company”) and EVERETT WILLARD GRAY II (“ Executive ”).

Term; Title; Duties .

1.1

Term . The term of employment under this Agreement shall begin on the Effective Date and, unless sooner terminated in accordance with Section 3.1 , shall conclude on the first anniversary of the Effective Date (the “ Initial Term ”). Thereafter, this Agreement shall automatically renew on a year-to-year basis unless, within sixty (60) days of the expiration of the Initial Term or any subsequent “Renewal Term,” either party provides written notice of that party’s intention to allow the Agreement to expire.

1.2

Title . Executive shall have the title as set forth in Exhibit A .

1.3

Duties . Executive shall have such authority and duties as are usual and customary for the position described in Section 1.2 , and shall perform such other services and duties as the Employer may from time to time designate consistent with such position. Executive shall devote Executive’s reasonable best efforts and such business time to the operations, business, and affairs of the Employer as may be reasonably necessary for the discharge of Executive’s duties; provided , however , that nothing expressed or implied in this Agreement, except Section 4 hereof, shall be deemed to restrict or otherwise limit Executive’s conditional right to: (i) serve as an officer or member of the board of directors or other similar governing body of such entities as may be timely disclosed by Executive to the Employer; (ii) serve as a director of, or a member of a committee of the directors of, any non-profit organization, or engage in other charitable, community or religious activities; or (iii) engage in personal or family passive investment activities. Executive’s right to perform those services listed in Section 1.3(i) and (ii) is subject to the Employer’s written, pre-approval of such activities. With respect to any such services being performed at the time of execution of this Agreement, Executive shall notify Employer of such services to secure its written approval. In the unlikely event that Employer disapproves of such service, Executive will promptly cease serving on such board (and/or will notify the board that he or she is unable to accept the position).

Compensation .

2.1

Salary . In consideration of the services rendered by Executive hereunder, the Employer shall pay Executive a base salary (as may be adjusted from time to time in the Employer’s discretion, the “ Base Salary ”) set forth in the attached Exhibit A .

2.2

Bonus . Executive may receive an annual bonus, the amount of which to be determined in the sole discretion of the Employer, in an amount no greater than the lesser of 20% of EBITDA or 50% of annual base salary.

2.3

Benefits . In addition to the compensation set forth in Sections 2.1 and 2.2 , Executive shall be entitled to participate in all health, savings, retirement and pension plans, if any, applicable generally to other similarly situated executives of the Employer as determined by the Employer from time to time.

Termination of Employment .

3.1

Termination . Executive’s employment will terminate upon expiration of the Initial Term or any Renewal Term. Executive’s employment may also be terminated as follows:

(a)

Death . Executive’s employment shall automatically terminate upon the death of Executive.

(b)

Disability . In the event of any mental or physical disability of Executive rendering him/her unable to perform Executive’s duties hereunder for (i) a continuous period of at least 90 days or (ii) 180 days out of any consecutive 12-month period, and the further determination that the disability is permanent as to Executive’s ability to return to work with or without a reasonable accommodation in Executive’s full capacity (a “ Disability ”), Executive’s employment shall terminate automatically.

(c)

By the Employer for Cause . Executive’s employment may be terminated by the Employer for Cause (as defined below) effective upon written notice to Executive. Such notice shall set forth in reasonable detail the facts and circumstances alleged to constitute Cause and the specific section(s) of the definition of Cause relied upon. As used herein, the term “ Cause ” means Executive’s:

(i)

grossly negligent or willful breach of Executive’s duties or failure to perform Executive’s obligations under this Agreement;

(ii)

refusal or willful failure to follow the reasonable instructions of the Employer concerning duties or actions consistent with Executive’s position;

(iii)

breach of any Employer rule or policy, or other willful act or omission that is reasonably likely to have a material adverse impact on the Employer;

(iv)

commission of fraud, embezzlement, or other similar act of dishonesty, or any violation of local, state, or federal laws, rules, or regulations that impairs or injures the reputation of, or otherwise harms, the Employer;

(v)

diversion or misappropriation of business opportunities from the Employer; or

(vi)

unauthorized disclosure of material Confidential Information (hereinafter defined).

(d)

By the Employer without Cause . Employer may terminate Executive’s employment at any time without Cause effective upon 14 days’ prior written notice to Executive. Employer retains the right after providing such notice to require Executive to cease employment at any earlier time, in which case Employer shall remain obligated to pay notice pay in an amount equal to Executive’s Base Salary (at the same monthly rate as paid immediately prior to such notice) during any remaining portion of the notice period.

(e)

By Executive Voluntarily . Executive may terminate employment at any time effective upon at least 30 days’ prior written notice to the Employer. Employer retains the right after receiving such notice to waive some or all of this notice period and require Executive to cease employment immediately with no further obligation to Executive.

(f)

By Executive in Connection with a Change in Control . If, within twelve (12) months following a Change in Control of the Company (as defined in Exhibit A hereto), Executive suffers a material diminution of title, responsibilities and/or base compensation, Executive may resign his employment and receive Separation Pay as outlined in Exhibit A. Executive must provide 30 days’ prior written notice to the Employer of his intent to terminate employment under this Section and the specific facts supporting his reasons for termination. The Company may elect to accept Employee’s resignation and waive some or all of 30-day notice period, or may elect to remedy or cure the alleged diminution within the 30-day notice period. Any Separation Pay following a Change in Control is conditioned on the execution and non-revocation of a general release of claims in the form attached as Exhibit B and Executive’s current and continued compliance with his obligations in both this Agreement as well as the General Release.

3.2

Termination Payments and Benefits .

(a)

Termination for Cause by the Employer or Voluntarily by Executive . If Executive’s employment is terminated either by the Employer for Cause pursuant to Section 3.1(c), or voluntarily by Executive pursuant to Section 3.1(e) , then the Employer shall have no obligation to pay to Executive anything beyond (i) earned but unpaid salary through the end of Executive’s employment, and (ii) reimbursement for all funds advanced in connection with Executive’s employment for reasonable expenses incurred by Executive and approved by Employer through the end of Executive’s employment.

(b)

Termination without Cause . If Executive’s employment is terminated by the Employer without Cause pursuant to Section 3.1(d), then Employer shall have no obligation to pay to Executive anything beyond (i) earned but unpaid salary through the end of Executive’s employment, (ii) reimbursement for all funds advanced in connection with Executive’s employment for reasonable expenses incurred by Executive and approved by Employer through the end of Executive’s employment, and (iii) “ Separation Pay ” as defined in the attached Exhibit A . Separation Pay under Section 3.2(b) is conditioned upon Executive’s execution and non-revocation of a valid and binding general release of all claims in a form substantially similar to the release agreement attached hereto at Exhibit B , as well as current and continued compliance with Executive’s obligations under this Agreement and the General Release.

(c)

Termination due to Disability . If Executive’s employment is terminated due to the Disability of Executive pursuant to Section 3.1(b) , then the Employer shall have no obligation to pay to Executive anything beyond (i) earned but unpaid salary through the end of Executive’s employment, and (ii) reimbursement for all funds advanced in connection with Executive’s employment for reasonable expenses incurred by Executive and approved by Employer through the end of Executive’s employment.

(d)

Termination due to Death . If Executive’s employment is terminated due to Executive’s death, then the Employer shall have no obligation to pay to Executive’s estate anything beyond (i) earned but unpaid salary through the end of Executive’s employment, and (ii) reimbursement for all funds advanced in connection with Executive’s employment for reasonable expenses incurred by Executive and approved by Employer through the end of Executive’s employment.

(e)

No Other Benefits . Except as specifically provided in this Section 3.2 , Executive shall not be entitled to any compensation, severance or other benefits from the Employer (other than as may be required by applicable statute or regulation) upon the expiration or termination of this Agreement for any reason whatsoever.

(f)

Public Statement of Termination . If Executive’s employment terminates for any reason, the Employer and Executive shall agree upon a public statement pertaining to Executive’s termination of employment, and the terms of such statement shall not be subject to subsequent modification by either party hereto unless required by applicable law; provided , however , that if the Employer and Executive are unable in good faith to agree on such statement, the Employer may make such public statements as are required to comply with applicable law, if any.

Restrictive Covenants . As used herein, “ Restrictive Covenants ” refers to the matters discussed in Section 4 . As a material condition to the Employer’s entering into this Agreement with Executive, Executive agrees to the following Restrictive Covenants. Executive agrees and acknowledges that the Restrictive Covenants are reasonable to protect legitimate business interests of the Employer and are material to the Employer.

4.1

Confidential Information .

(a)

Access . To assist Executive in the performance of Executive’s duties hereunder, Executive will receive certain confidential and proprietary information and materials owned by the Employer, its affiliates and/or third persons (including Clients (defined below) and prospective Clients who have furnished such information and materials to the Employer under obligations of confidentiality) (“Confidential Information”) (defined below).

(b)

Definitions

(i)

“ Confidential Information” means information of a confidential nature (whether labeled “confidential” or not) disclosed to or known by Executive as a direct or indirect consequence of or through Executive’s employment by the Employer about the Employer or its operations, technical data, business or affairs, including, but not limited to, lease-related terms and/or other related information, Client lists and prospective Client lists, referral sources (defined below), financial data regarding the Employer or its Clients or prospective Clients, business strategies, information related to the negotiation and/or terms of actual or potential oil and gas leases, pricing information, market studies, internal business practices and operations, information management, procedures and services. “ Confidential Information ” excludes any information that is generally available to the public, other than due to a breach of this Agreement or other confidentiality agreement or obligation.

(ii)

“ Client(s) ” mean(s) any individual, principal, proprietorship, partnership, corporation, trust, foundation, association or other entity to whom services have been provided by the Employer or are provided during Executive’s employment.

(iii)

“ Restricted Period ” means the time period during Executive’s employment or other association with the Employer, if any, and continuing for a time period of twenty-four (24) months after the termination thereof, regardless of the reason for termination.

(c)

Non-Disclosure . At all time during and after Executive’s employment with the Employer, Executive shall hold in strict confidence and shall not directly or indirectly disclose, disseminate, publicize, use, copy or make lists of any Confidential Information, except to the extent authorized in writing by the Employer or required by any court or administrative agency of competent jurisdiction, other than to an authorized employee of the Employer or to a person to whom disclosure is, or use of which is, reasonably necessary or appropriate in connection with the performance by Executive of Executive’s duties to the Employer. If Executive is compelled by law, subpoena, or other lawful process to disclose any Confidential Information, then Executive shall give prompt written notice of such fact to the Employer so that the Employer may, if it so desires, seek a protective order or other governmental or judicial relief, at the Employer’s expense, to prevent disclosure of the Confidential Information.

(d)

Terms of Agreement Confidential . Executive shall hold in strict confidence and shall not directly or indirectly disclose, disseminate, or publicize, this Agreement, its terms, or the negotiations leading to this Agreement, except to Executive’s legal advisors, accountants, or financial institutions (collectively “ Advisors ”). Executive shall inform his Advisors of the confidential nature of this Agreement and shall be responsible for any breach of this Section 4.1(d) by any of Executive’s Advisors.

4.2

Return of Documents . All records, files, notes or other documents or materials, whether in written or electronic form, and all copies thereof, relating to the Employer or its operations, business or affairs that Executive shall prepare, use or be provided with in connection with Executive’s employment with the Employer, shall be and shall remain the sole and exclusive property of the Employer. Executive shall promptly return to the Employer all such records, files, notes or other documents or materials and copies thereof in Executive’s possession or under Executive’s custody or control upon the termination of Executive’s employment with the Employer or such earlier time or times as the Employer may request.

4.3

Works Made For Hire . Executive agrees that any and all written materials, software and writings (“Work”), which are developed by Executive for Employer’s use during the term of this Agreement, shall be deemed a “work made for hire” within the meaning of the United States Copyright Act, Title 17, United States Code, which vests all copyright interest in and to the Work in Employer. Similarly, all rights to discoveries, ideas, inventions, improvements and innovations (including, all data and records pertaining thereto) related to the Executive’s operations, business and affairs, whether or not capable of being registered as a copyright, trademark or patent, and whether or not reduced to writing, that Executive may discover, invent or originate during Executive’s employment with the Employer, shall be the sole and exclusive property of the Employer.

4.4

Non-Disparagement . At all times during and after Executive’s employment, Executive shall not, directly or indirectly, make or cause to be made any disparaging, denigrating, derogatory, negative, misleading, or false statement orally or in writing to any person, including clients or prospective clients, competitors and advisors to the Employer and members of the investment community or press, about (i) the Employer or its members, managers, officers, employees, agents, or clients, or (ii) the business strategy or plans, policies, practices, or operations of the Employer.

4.5

Non-Solicitation . During the Restricted Period, Executive shall not, directly or indirectly, (i) solicit, entice, persuade or induce any employee or consultant of the Employer to terminate or reduce his or her employment or relationship with the Employer or to become employed by any person other than the Employer; or (ii) solicit, entice, persuade or induce any party to any active or contemplated oil and gas lease, Client, or previously identified prospective Client to terminate, alter or limit its, his or her relationship with the Employer or, in the case of any such person or entity, not to enter into a business relationship or lease agreement with the Employer, or otherwise interfere with the Employer’s existing business relationships and/or activities, and/or known prospective business relationships and/or activities.

4.6

Non-Competition .

(a)

Acknowledgement . Executive acknowledges and agrees that (i) the Employer is engaged in a highly competitive business; (ii) the Employer has made substantial investments to develop its business interests and goodwill and to provide special training and/or access to Confidential Information to Executive for the performance of Executive’s duties hereunder; (iii) the success of the Employer’s business in the marketplace depends upon its goodwill and reputation for quality and dependability; (iv) the limitations as to time, geographical area, and scope of activity to be restrained in Section 4.6(b) are reasonable and are not greater than necessary to protect the goodwill and other business interests of the Employer; and (v) the investments made by the Employer are worthy of protection and the Employer’s need for protection afforded by Section 4.6(b) is greater than any hardship Executive might experience by complying with the terms thereof.

(b)

Competitive Activities . During the Restricted Period, Executive shall not, directly or indirectly, engage or participate (whether as principal, agent, employee, employer, consultant, investor or partner), make any financial investment in, or become employed by or render advisory services to or for any person or other business enterprise (other than the Employer and its affiliates) that renders or is engaged in the business of owning, managing, operating, or otherwise engaging in, directly or indirectly, an oil and gas exploration and production business, including providing any other professional or administrative services associated with such business (collectively, “ Competitive Activities ”) anywhere within a 20-mile radius of a property where Employer has an interest, had an interest at any time during Executive’s employment, or is known (or should be known) by Executive to be actively contemplating an interest; provided , however , that the foregoing covenant shall not be construed to preclude Executive from making any investment in the securities of any entity, whether or not engaged in competition with the Employer, to the extent that such securities are actively traded on a national securities exchange or in the over-the-counter market in the United States or any foreign securities exchange and such investment does not exceed one percent of the issued and outstanding shares or other ownership interests in such entity or give Executive the right or power to control or participate directly in the making of policy decisions of such entity. By way of further clarification, nothing herein authorizes or permits Executive to engage in Competitive Activities during employment, regardless of the location of such Competitive Activities. Competitive Activities during employment are strictly prohibited.

(c)

Reformation . Without limitation of the generality of Section 5.3 , if an arbitrator or court of competent jurisdiction determines that any portion of Section 4.6(b) is invalid or unenforceable, the remainder of Section 4.6(b) shall not thereby be affected and shall be given full force and effect without regard to the invalid or unenforceable provisions. Without limitation of the generality of Section 5.3 , if any such court or arbitrator construes any of the provisions of Section 4.6(b) , or any part thereof, to be unreasonable because of the duration or scope of such provision, then such court or arbitrator shall have the power to reduce the duration or scope of such provision and to enforce such provision as so reduced.

4.7

Enforcement . Without limitation of the generality of Section 4.8 , Executive agrees that a breach or threatened breach on his part of the Restrictive Covenants will cause such damage to the Employer as will be irreparable and for that reason Executive further agrees that the Employer shall be entitled as a matter of right to an injunction, without the necessity of filing a bond or other security, out of any arbitration or court of competent jurisdiction, restraining any further violation of the Restrictive Covenants by Executive, or by Executive’s employer, employees, partners, or agents, or by any entity by or through which Executive directly or indirectly is engaging in or attempting the actions which violate the Restrictive Covenants. The right to injunctive relief shall be cumulative and in addition to any and all other remedies the Employer may have, including, specifically, recovery of damages.

4.8

Extension of Restricted Period for Injunctive Relief . If Executive violates the Restrictive Covenants and the Employer brings legal action for injunctive or other relief under preceding Section 4.7 , the Restricted Period shall be tolled so that the Employer shall not be deprived of the benefit of the full period of the Restrictive Covenants as a result of the time involved in obtaining the relief.

4.9

Reasonableness of Restrictions . Executive expressly acknowledges and agrees that the Restrictive Covenants are reasonable as to both scope and time. Executive further agrees that the Restrictive Covenants shall be construed in such a manner as to be enforceable under applicable laws if an arbitrator or court of competent jurisdiction determines that a more limited scope or time is required. Without limitation of the generality of Section 5.3 , in the event an arbitrator or court of competent jurisdiction determines that the Restrictive Covenants do not meet the requirements of §15.50(a) of the Texas Business & Commerce Code (“ TBCC ”), then the Employer and Executive agree that the Employer is deemed to have requested reformation by the court pursuant to § 15.51(c) of the TBCC.

4.10

Notice to Third Parties . Executive expressly agrees to notify any prospective employer or affiliate in a business competitive with the Employer of the Restrictive Covenants, and authorizes the Employer to make contact with, and discuss the nature and obligations of the Restrictive Covenants with, any person or affiliate reasonably believed by the Employer to be engaged or about to be engaged in an act that would constitute a violation of the Restrictive Covenants. Executive hereby waives, and releases the Employer from, any claims whatsoever arising in connection with the Employer’s contact or discussions with such person or affiliate.

4.11

Confidential Information of Prior Employers . Executive will not divulge to the Employer or otherwise use any trade secrets or confidential information obtained from or otherwise belonging to any prior employer. Executive agrees to provide the Employer with copies of any confidentiality or trade secret agreements that Executive has signed as well as any other agreement that would preclude or limit the Executive’s ability to perform services for the Employer under this Agreement.

Additional Provisions

5.1

Waiver of Breach . Employer’s waiver of any breach of any provision of this Agreement by Executive shall not operate or be constituted as a waiver of any subsequent breach by Executive.

5.2

Successors and Assigns . The rights and obligations of Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Employer. Executive may not assign this Agreement or any rights arising under it.

5.3

Severability . In the event that any provision hereof shall be rendered illegal or unenforceable, such event shall not affect the validity or enforceability of the other provisions hereof. In the event of any legal or arbitration proceeding to determine the rights and liabilities of the parties pursuant to this Agreement, the parties hereto agree that this Agreement may be modified, amended, or reformed by the tribunal conducting such proceeding for the purposes of best effectuating the purposes of this Agreement and as needed to be reasonable and enforceable under applicable law.

5.4

Governing Law and Forum Selection . This Agreement shall be governed by and construed under the laws of the State of Texas applicable to contracts to be executed and performed in the State of Texas. The Parties agree to submit to the jurisdiction of the State of Texas and that any dispute arising out of this Agreement or Executive’s employment that is not subject to arbitration shall be litigated and/or arbitrated in Dallas, Texas.

5.5

Notices . Any notice to be given hereunder shall be in writing and delivered personally or sent by certified mail return receipt requested, postage prepaid, addressed to the party concerned at the address indicated below or to such other address as such party may subsequently give notice of hereunder in writing:

To:

Employer

Westcott Products Corp.

112 Loraine South

Suite 266

Midland, Texas 79701

To: Executive

E. Will Gray II

P.O. Box 5375

Midland, Texas 79704

5.6

Descriptive Headings, Gender and Number . Titles to paragraphs herein are for information purposes only and shall not be used for interpretation of this Agreement. Whenever the context herein requires it, the gender of all words used herein, include the masculine, feminine, and neuter, and the number of all words shall include the singular and plural.

5.7

Multiple Counterparts . This Agreement may be executed in a number of identical counterparts, each of which for all purposes shall be deemed an original, and all of which constitute, collectively, one agreement; but in making proof of this Agreement, it shall not be necessary to produce or account for more than one such counterpart.

5.8

Amendments . No change, modification, waiver, discharge, amendment, or addition to the Employment Agreement shall be binding unless it is in writing and signed by the Employer and Executive.

5.9

Entire Agreement . The provisions set forth herein (together with any agreements referenced herein) shall constitute the entire agreement of the undersigned parties with respect to the subject matters contained herein, and all prior written and oral agreements are hereby revoked.

5.10

Arbitration . Except as otherwise provided below, or in order to obtain injunctive and/or equitable relief as permitted under Section 4.7 above, all Claims (hereinafter defined) arising hereunder or otherwise related to Executive’s employment with Employer shall be finally resolved by arbitration administered by the American Arbitration Association (“ AAA ”) under and in accordance with its Employment Arbitration Rules, and judgment on the award rendered by the arbitrator may be entered by any court having competent jurisdiction in accordance with this Agreement. Arbitration must be initiated within 180 days of the date the Claim arises, unless a longer time period for commencing an action is provided under federal or state law.

(a)

“ Claim(s) ” as used in this Agreement, shall mean and refer to claims, disputes, controversies, demands, causes of action (whether arising under state or federal statutes, equity or the common law), damages, claims or demands for equitable relief, disputes over whether a claim is a Claim or arising out of the negotiation, execution, delivery (including the fraudulent inducement thereof), or performance of this Agreement, disputes regarding the validity or enforceability of the arbitration provisions of this Agreement and other matters for which this Agreement specifically provides for arbitration.

(b)

Claims shall be identified by the aggrieved party by notice of dispute in writing to the other party setting forth with particularity the issues responsible for the dispute. Upon receipt of such notice, the parties shall attempt in good faith to resolve the dispute and, if they fail to resolve the dispute, shall mediate such dispute pursuant to Section 5.10(f) below prior to submitting the dispute to arbitration. In the event that the parties cannot amicably resolve the issues prior to or as a result of mediation, the dispute shall be submitted to arbitration.

(c)

The arbitration shall take place in Dallas, Texas. The party initiating arbitration shall request a list of eleven (11) impartial arbitrators from the office of the AAA in Dallas, Texas. From this list, the parties will alternately strike arbitrators (with the party initiating arbitration making the first strike) until one name is left. The parties agree to facilitate the arbitration by: (i) conducting arbitration hearings to the greatest extent possible on successive, contiguous days; and (ii) observing strictly the time periods established by the AAA or by the arbitrator(s) for the submission of evidence and briefs. Discovery in the arbitration shall be as limited as reasonably possible. The arbitration, including the hearing and record of the proceedings, are confidential and shall not be open to the public unless all parties agree in writing or as otherwise required by applicable law.

(d)

Any up-front fees payable to the arbitrator(s) or like up-front fees shall be divided equally between the parties unless otherwise agreed upon by the parties or provided by the AAA rules. The prevailing party shall be reimbursed its costs, including reasonable attorneys’ fees and arbitration expenses proportionate to the degree of its success from the other party.

(e)

The parties acknowledge and agree that arbitration in accordance with this Section shall be their sole and exclusive remedy. In the event that a party files a lawsuit over a Claim, the other party shall give notice of the existence of the Agreement and if the lawsuit is not dismissed within ten (10) days receipt of such notice, the party filing the lawsuit shall be liable for all costs and attorneys’ fees incurred in dismissing the lawsuit.

(f)

Claims shall be submitted to mediation (assuming other good faith attempts to resolve the dispute have failed) prior to submitting such claim to arbitration pursuant to this Section 5.10 . The mediation shall take place in Dallas, Texas, unless another location is agreed by the parties. If the parties are unable to agree upon a mediator, each party shall select a mediator, which mediators in turn shall select the mediator of the dispute. Any mediation shall be nonbinding and anything presented in any mediation shall be subject to Federal Rule of Evidence 408. The parties shall mediate in good faith and use reasonable efforts to reach a resolution of the matter.

5.11

Survival Clause . The terms and conditions of employment set forth in Sections 3 , 4 , and 5 shall survive and remain in full force and effect following termination of Executive’s employment (for any reason) and the Restricted Period.

5.12

Intention to Comply . The parties intend for this Agreement, and any payments made pursuant to it, to comply with the requirements of Code section 409A and to the extent of any ambiguity herein, such provision shall be construed in a manner that shall comply with Code section 409A. The parties agree to amend this Agreement to the extent necessary to comply with, the requirements of Code section 409A (and the 409A Regulations and any other guidance issued under 409A).

IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the day and year first above written.


		EMPLOYER :

		DALA PETROLEUM CORP.

		/s/
Date:	May 1, 2014	Clarence Cottman, III, Chairman of the Board


		/s/
		Jonathan S. Wimbish, Director


		EXECUTIVE : Everett Willard Gray II


Date:	May 1, 2014	/s/
		E. Will Gray II

EXHIBIT A

1.2

Title : Chief Executive Officer

2.1

Salary : Pre-tax ( i.e. , gross) monthly base salary at the annual rate of $175,000. Such base salary shall be paid in pro rata amounts in accordance with the Employer’s regular payroll practices.

3.1 (f) “ Separation Pay ” based on the termination of Executive’s employment based on a Change of Control shall be for a period of twelve (12) months after the date of termination of employment. “Change of Control” means: (i) any sale, exchange, or other transfer of all or substantially all of the assets of the Company to any entity or person other than a current partner or affiliate of the Employer, or (ii) the acquisition by any entity or person other than a current partner or affiliate of the power, directly or indirectly, to vote or direct the voting of the Employer’s interests having more than 50% of the ordinary voting power for the Partnership.

3.2(b)

“ Separation Pay ” based on the termination of Executive’s employment without Cause, is an amount equal to Executive’s monthly Base Salary for a period of the lesser of: (a) six (6) months, or (b) the time, if any, remaining in the Initial Term or any subsequent Renewal Term.

Separation Pay of any kind is payable in equal installments beginning on the Employer’s first payroll date following the Effective Date of Executive’s Separation Agreement and General Release.

EXHIBIT B

[FORM OF] SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and Release (this “ Agreement ”) contains the terms and compromises between EVERETT WILLARD GRAY (“ Executive ”) and WESTCOTT PRODUCTS CORPORATION including its partners and officers (the “ Employer ”). Capitalized terms used and not defined herein shall have the meanings ascribed to such terms in the Executive Employment Agreement (the “ Employment Agreement ”).

Release . Subject to and in accordance with the terms of the Employment Agreement, and in consideration of the Separation Pay and other benefits to be paid to Executive under the Employment Agreement:

(a)

Executive understands and agrees that Executive is accepting the Separation Pay and other benefits, to which Executive is not otherwise entitled, as a full and complete settlement and compromise of any and all differences and disputes between the Employer and Executive, including but not limited to disputes arising from Executive’s employment or the termination of that employment, and that Executive will not seek any further compensation for any other claimed damage, costs or attorneys’ fees in connection with these or any other matters or events that have occurred as of the date of this Agreement. Executive acknowledges that the Separation Pay is good and valuable consideration for the release and other covenants Executive is making in this Agreement and is in addition to any consideration to which Executive may already be entitled.

(b)

As a material inducement for the Employer to pay the Separation Pay, Executive does hereby release the Employer and each of its directors, officers, shareholders, investors, partners, parents, predecessors, successors, affiliates, assigns, agents, current and former employees, attorneys, related entities, and all persons acting by, through, under, or in concert with any of them (collectively, the “Employer Releasees”) from any and all claims, charges, complaints, liabilities or obligations of any kind whatsoever, whether known or unknown, which Executive may have, now has, or has ever had arising from Executive’s employment with the Employer or the termination of that employment, or any other matter or event that may have occurred as of the date of this Agreement. This release includes any claims under federal, state, or local law, including but not limited to, claims under the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, as amended by the Civil Rights Act of 1991, the Rehabilitation Act of 1973, the Americans With Disabilities Act, the Family and Medical Leave Act, the Pregnancy Discrimination Act, the Texas Commission on Human Rights Act, the Texas Labor Code, and the Employee Retirement Income Security Act. Notwithstanding the foregoing, nothing herein shall release the Employer of its obligations in any employment-related or other agreement that survive the termination or conclusion of Executive’s employment.

(c)

Executive further agrees that he will not file any complaint, petition, lawsuit, or charge against the Employer Releasees, or any of its officers, directors, employees, shareholders, owners, subsidiaries, affiliates, successors or assigns with any local, state, or federal agency or court, except for the enforcement of this Agreement or a challenge to the validity of the waiver of Executive’s ADEA claims.

(d)

Executive agrees that if Executive breaches this Agreement and initiates a legal proceeding or files a claim with a federal, state or local agency, Executive shall be liable for any and all expenses incurred by the person or entity who has to defend the action, including reasonable attorney’s fees, except for an action challenging the validity of the waiver of Executive’s ADEA claims.

(e)

Executive acknowledges and agrees that, as a condition of this Agreement, he is waiving both known and unknown claims against the Employer Releasees, arising up to the date of execution of this Agreement.

Obligations of Executive . Executive acknowledges, ratifies and agrees to comply with the Restrictive Covenants set forth in Section 4 of the Employment Agreement, including, without limitation, the covenants of confidentiality, non-solicitation, non-competition, and non-disparagement provisions. Executive represents and warrants to Employer that Executive has returned to the Employer all records, files, notes or other documents or materials of Employer and copies thereof that were in Executive’s possession or under Executive’s custody or control.

EXHIBIT B

Future Litigation . Executive agrees that if he/she is solicited or contacted by any law firm or agent of any law firm regarding the Employer or his/her employment or other association with the Employer, or if he/she is ordered or subpoenaed to testify or produce information in connection with any claim against the Employer, he/she will immediately notify the Employer. Executive also agrees to make himself/herself fully and reasonably available to assist the Employer and its representatives with any investigation or with its prosecution and/or defense of any legal proceedings involving matters of which he/she may have relevant knowledge. Should Executive be named, in his individual capacity, as a defendant in a lawsuit based solely on duties he performed at Employer’s instruction or directly related to his job duties with Employer, Employer agrees to defend an indemnify Executive. Executive understands and agrees that Employer’s obligation to defend and indemnify does not include acts involving Executive’s gross negligence, intentional torts, misconduct, or other intentional, unlawful actions.

Confidentiality . Executive agrees that the terms of this Agreement are strictly confidential and may not be disclosed directly or indirectly to any person or entity, except as necessary for tax preparation purposes, to inform Executive’s spouse, if any, or in consultation with Executive’s legal counsel.

Voluntary Execution . Executive further understands and agrees that Executive:

(a)

has read this Agreement carefully and completely;

(b)

understands and knowingly and voluntarily agrees to the terms, conditions, and waivers set forth in this Agreement;

(c)

is hereby advised in writing to consult with an attorney of Executive’s choice prior to executing this Agreement and has had ample opportunity and sufficient time to seek such advice;

(d)

agrees that the Separation Pay provided herein is consideration to which Executive would not otherwise receive but for execution of this release;

(e)

may take up to twenty-one (21) days to consider whether Executive desires to execute this Agreement (with the understanding that any changes made hereto at the request of Executive do not re-start the 21-day consideration period); and

(f)

has a period of seven (7) days after executing this Agreement to revoke this Agreement. Any such revocation must be in writing and hand delivered or sent via certified mail to Clarence Cottman, 1010 Tenth St., Golden, CO 80401. Executive understands that, upon the expiration of such seven (7) calendar day revocation period, this entire Agreement will be binding upon Executive and will be irrevocable.

No Representations . Executive represents and acknowledges that in entering and executing this Agreement, Executive has not relied upon any representations or statements made Employer, or by its agents, representatives, or attorneys of any other party, with regard to the subject matter, basis, or effect of this Agreement.

Severability . Should any court of competent jurisdiction or arbitrator declare any provision of this Agreement to be wholly or partially illegal, invalid, or unenforceable, the offending provision shall be stricken and all remaining provisions shall remain in full force and effect and shall be unaffected by such declaration.

No Admission of Liability . Neither this Agreement nor the payment of any Separation Pay shall in any way be construed as an admission by the Employer of any improper actions or liability whatsoever as to Executive or any other person, and the Employer specifically disclaims any liability to or improper actions against Executive or any other person, on the part of itself, its employees or its agents.

EXHIBIT B

Governing Law/Forum Selection Clause . This Agreement shall be governed by and construed under the laws of the State of Texas applicable to contracts to be executed and performed in the State of Texas. The Parties agree to submit to the jurisdiction of the State of Texas and that any dispute arising out of this Agreement or Executive’s employment shall be litigated and/or arbitrated in Dallas County, Texas. Additionally, the terms of Section 5.10 of the Employment Agreement (regarding Arbitration) are incorporated herein by reference.

PLEASE READ CAREFULLY. THIS SEPARATION AGREEMENT INCLUDES THE RELEASE OF ALL CLAIMS AGAINST THE EMPLOYER ARISING OUT OF EXECUTIVE’S EMPLOYMENT WITH THE EMPLOYER OR THE TERMINATION THEREOF, INCLUDING ALL CLAIMS ARISING UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT .

IN WITNESS WHEREOF, Executive enters into this Separation Agreement.


Signature



Name [printed]

Date:

EXHIBIT B

Exhibit 10.11

THIS CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM (THE “MEMORANDUM”) IS NOT TO BE SHOWN OR GIVEN TO ANY PERSON OTHER THAN THE PERSON WHOSE NAME APPEARS HEREON AND IS NOT TO BE PRINTED OR REPRODUCED IN ANY MANNER WHATSOEVER. FAILURE TO COMPLY WITH THIS DIRECTIVE CAN RESULT IN A VIOLATION OF THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). ANY FURTHER DISTRIBUTION OR REPRODUCTION OF THIS CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM, IN WHOLE OR IN PART, OR THE DIVULGENCE OF ANY OF ITS CONTENTS BY AN OFFEREE IS UNAUTHORIZED.

Private Placement Memorandum

WESTCOTT PRODUCTS CORPORATION,

and its operating subsidiary,

DALA PETROLEUM CORP.

immediately following a Merger

Up to $2,500,000

($2,000,000 Minimum Offering)

________________________

Up to 2,500 Units

(2,000 Units Minimum Offering)

________________________

$1,000 per Unit

________________________

Each Unit Consisting of

One Share of

SERIES A 6% CONVERTIBLE PREFERRED STOCK

AND

1,429 Warrants to Each Purchase One Share of

COMMON STOCK

for $1.35 per share

________________________

May 28, 2014

No. ____ Issued to:_________________________

TABLE OF CONTENTS


*REFERENCES*	1
*SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS*	1
*OVERVIEW AND EXECUTIVE SUMMARY*	4
*SUMMARY OF THE OFFERING*	5
*USE OF PROCEEDS*	8
*CAPITALIZATION TABLE AND DILUTION*	8
*RISK FACTORS*	9
*THE COMPANY*	18
*MANAGEMENT*	20
*DESCRIPTION OF CAPITAL STOCK*	22
*DIVIDEND POLICY*	23
*RELATED PARTY TRANSACTIONS*	23
*PLAN OF PLACEMENT*	23
*FINANCIAL STATEMENTS*	23
*WHO MAY INVEST*	23
*SUBSCRIPTION PROCEDURES*	25
*ADDITIONAL INVESTOR INFORMATION*	25
EXHIBIT A
ESCROW AGREEMENT
EXHIBIT B
COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION
EXHIBIT C
MERGER DOCUMENTS
EXHIBIT D
SECURITIES PURCHASE AGREEMENT
EX. A TO SECURITIES PURCHASE AGREEMENT: CERTIFICATE OF DESIGNATION OF SERIES A 6% CONVERTIBLE PREFERRED STOCK
EX. B TO SECURITIES PURCHASE AGREEMENT: REGISTRATION RIGHTS AGREEMENT
EX. C TO SECURITIES PURCHASE AGREEMENT: FORM OF COMMON STOCK PURCHASE WARRANT
EX. D TO SECURITIES PURCHASE AGREEMENT: FORM OF OPINION LETTER

All communications or inquiries relating to this Memorandum and this Offering should be directed to:

Westcott Products Corp.

455 East 500 South, Suite 205

Salt Lake City, Utah 84111

Telephone (Office): (832) 270-6479

Dala Petroleum Corp.

Attn: E. Will Gray II

P.O. Box 5375

Midland, Texas 79704

Telephone: (832)270-6479

NOTICE

“This Offering is subject to the closing of the Merger described herein. Officers and directors of Westcott Products Corporation (see the caption “References” on page 1) whose terms of office expire on the Effective Time of the Merger shall have no responsibility to any offeree under this Private Placement Memorandum for any information, representation or warranty or otherwise that is contained in this Private Placement Memorandum regarding the Company, post-Merger, including, without limitations, any information about Dala Petroleum Corp.; such directors and officers shall be responsible only for representations and warranties about the Company, pre-Merger.”

REFERENCES

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained in this Memorandum discuss future expectations, contain projections of results of operations or financial condition, or state other “forward-looking” information. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue,” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on the expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the control of management. Therefore, the actual results could differ materially from the forward-looking statements contained in this Memorandum. Important factors that may cause the actual results to differ from the forward-looking statements, projections or other expectations include, but are not limited to, the following:

our ability to raise sufficient capital to implement our business plan;

risks generally associated with the exploration and development of oil and gas reserves;

whether we will be able to develop or acquire additional oil and gas leasehold interests;

competition from larger, more established companies with far greater economic and human resources than us;

our ability to attract and retain customers and quality employees and consultants;

the effect of changing economic conditions;

changes in government regulations, tax rates and similar matters;

lack of operating history;

risks that are not generally recoverable from third parties or insurance;

risks relating to contracting substantially all of the operations and revenue generating activities to a third party; and

availability and cost of credit.

We do not promise to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect statements made in this Memorandum.

THE CLOSING OF THIS OFFERING AND THE RELEASE OF THE MINIMUM OFFERING PROCEEDS IS SUBJECT TO THE CLOSING AND EFFECTIVE DATE OF THE MERGER. SEE THE DESCRIPTION OF THE MERGER IN THE “COMPANY” SECTION BEGINNING ON PAGE 21 HEREIN.

THESE SECURITIES BEING OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK. SEE “RISK FACTORS” FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED PRIOR TO PURCHASING THE SECURITIES OFFERED BY THIS MEMORANDUM.

No person has been authorized to give any information or to make any representations in connection with the offer made by this Memorandum, nor has any person been authorized to give any information or make any representations other than those contained in this Memorandum, and if given or made, such information or representations must not be relied upon. This Memorandum does not constitute an offer to sell or solicitation of an offer to buy in any jurisdiction in which such offer or solicitation would be unlawful, or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Memorandum nor any sale made hereunder shall, under any circumstances, creates an implication that there has been no change in the affairs of the Company since the date hereof.

This Memorandum is submitted on a confidential basis for use by a limited number of prospective investors solely in consideration of the purchase of the Units described herein in a private placement. The acceptance of this Memorandum constitutes an agreement on the part of the recipient hereof and the recipient’s representatives to maintain the confidentiality of the information contained herein. This Memorandum may not be reproduced in whole or in part. The use of this Memorandum for any purpose other than the evaluation of the investment in the Units described herein is not authorized and is prohibited. This Memorandum and all other material delivered to prospective investors shall be returned to the Company if: (a) you do not subscribe to purchase any Units; (b) your subscription is not accepted; (c) this Offering is terminated or withdrawn; or (d) upon request of Westcott Products Corp.

This Memorandum does not purport to be all-inclusive or to contain all the information that a prospective investor may desire in determining whether to subscribe to purchase any Units.

Prospective investors should not construe the contents of this Memorandum or any other communications from Westcott Products Corp. or any of its affiliates, officers, employees, or professional representatives as being legal, tax or financial advice. Each prospective investor should consult his or her own counsel, accountant or business advisors concerning an investment in the Units offered hereby.

Prior to the closing of the Offering, Westcott Products Corp. will afford prospective investors or their representatives and advisors the opportunity to ask questions of, and receive answers from, Westcott Products Corp. or from persons acting on its behalf concerning the terms and conditions of this Offering and to obtain additional information about Westcott Products Corp.

Westcott Products Corp. reserves the right to withdraw this Offering at any time and to reject any commitment to subscribe for the Units in whole or in part and allot to any prospective investor less than the full amount of Units sought by such prospective investor.

THIS OFFERING OF THE UNITS IS BEING MADE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND SIMILAR PROVISIONS UNDER STATE SECURITIES LAWS FOR AN OFFER AND SALE OF SECURITIES, WHICH DOES NOT INVOLVE A PUBLIC OFFERING.

THE UNITS OFFERED HEREBY HAVE NOT BEEN REGISTERED WITH OR APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), ANY STATE OR FOREIGN SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE OR FOREIGN SECURITIES COMMISSION OR REGULATORY AUTHORITY PASSED UPON THE ACCURACY OR ADEQUACY OF THIS MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

THE UNITS MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER THE SECURITIES ACT, AND/OR APPLICABLE LOCAL LAWS IN COUNTRIES OUTSIDE THE U.S. AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. YOU SHOULD BE AWARE THAT YOU WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. CERTIFICATES EVIDENCING THE UNITS WILL BEAR A LEGEND, IN FORM AND SUBSTANCE SATISFACTORY TO WESTCOTT PRODUCTS CORP., TO THE FOREGOING EFFECTS.

THE UNITS ARE BEING OFFERED TO A LIMITED NUMBER OF PROSPECTIVE INVESTORS WHO QUALIFY AS “ACCREDITED INVESTORS” UNDER RULE 501(a) OF REGULATION D OF THE SECURITIES ACT. BECAUSE THE UNITS ARE OFFERED ONLY TO ACCREDITED INVESTORS, THIS MEMORANDUM DOES NOT CONTAIN ALL INFORMATION THAT WOULD BE REQUIRED TO BE DISCLOSED UNDER RULE 502 OF REGULATION D OR THE SECURITIES ACT IF THE OFFERING WAS MADE TO PERSONS OTHER THAN ACCREDITED INVESTORS.

CERTAIN OF THE INFORMATION CONTAINED HEREIN CONCERNING ECONOMIC TRENDS AND PERFORMANCE IS BASED UPON OR DERIVED FROM INFORMATION PROVIDED BY THIRD-PARTY CONSULTANTS AND OTHER INDUSTRY SOURCES; HOWEVER, WE CANNOT GUARANTEE THE ACCURACY OF SUCH INFORMATION AND HAVE NOT INDEPENDENTLY VERIFIED THE ASSUMPTIONS UPON WHICH PROJECTIONS OF FURTHER TRENDS AND PERFORMANCE ARE BASED.

THIS MEMORANDUM INCLUDES CERTAIN STATEMENTS, ESTIMATES, PROJECTIONS AND OTHER FORWARD-LOOKING STATEMENTS, WITH RESPECT TO THE ANTICIPATED FUTURE PERFORMANCE OF WESTCOTT PRODUCTS CORP. OUR INDEPENDENT AUDITORS HAVE NEITHER EXAMINED NOR COMPILED THE PROJECTIONS AND ACCORDINGLY DO NOT EXPRESS AN OPINION OR ANY OTHER FORM OF ASSURANCE WITH RESPECT THERETO. THE STATEMENTS, ESTIMATES, PROJECTIONS AND OTHER FORWARD-LOOKING STATEMENTS ARE BASED UPON VARIOUS ASSUMPTIONS BY MANAGEMENT THAT MAY NOT PROVE TO BE CORRECT. SUCH ASSUMPTIONS ARE INHERENTLY SUBJECT TO SIGNIFICANT UNCERTAINTIES AND CONTINGENCIES, MANY OF WHICH ARE BEYOND OUR CONTROL. NO REPRESENTATION IS MADE, AND NO ASSURANCE CAN BE GIVEN, THAT WE CAN OR WILL ATTAIN SUCH RESULTS. ACTUAL RESULTS ARE LIKELY TO VARY, PERHAPS MATERIALLY, FROM OUR PROJECTIONS.

THIS MEMORANDUM CONTAINS SUMMARIES OF THE UNITS AND OF CERTAIN DOCUMENTS AND AGREEMENTS RELATING TO THIS OFFERING AND THE MERGER. ALL SUCH SUMMARIES ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE ACTUAL DOCUMENTS. ANY PURCHASE OF THE UNITS SHOULD BE MADE ONLY AFTER A COMPLETE AND THOROUGH REVIEW OF THE PROVISIONS OF SUCH AGREEMENTS. IF ANY OF THE TERMS, CONDITIONS OR OTHER PROVISIONS OF SUCH AGREEMENTS ARE INCONSISTENT WITH OR CONTRARY TO THE DESCRIPTION OR TERMS IN THIS MEMORANDUM, SUCH AGREEMENT OR, IF APPROPRIATE, THE RESTATED AND AMENDED ARTICLES OF INCORPORATION WILL CONTROL.

NEITHER THE DELIVERY OF THIS MEMORANDUM AT ANY TIME NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, IMPLY THAT INFORMATION CONTAINED HEREIN IS CORRECT AT ANY TIME SUBSEQUENT TO THE DATE HEREOF.

OVERVIEW AND EXECUTIVE SUMMARY

Westcott Products Corp. (“Westcott” or the “Company”), a Delaware corporation, is a fully reporting “shell company” as defined in SEC Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is listed for stock quotations on the Over-The-Counter Bulletin Board. Pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), Westcott will form a new, wholly-owned Nevada subsidiary which will merge with and into Dala Petroleum Corp. (“Dala”) and Dala will be the surviving company under the Merger and become a wholly-owned subsidiary of Westcott upon the closing and “Effective Date” of the Merger. Following the Merger, and the completion of the Offering, the Company’s operations will be those of Dala. Dala has the rights to engage in oil exploration and development on approximately 300 leases in north central Kansas with total acreage of approximately 80,000 acres (the “Property”). Dala will operate as an early-stage oil exploration company focused on the Property, which has oil potential at depths of less than 6,000 feet.

The proceeds of this Offering will be deposited into our legal counsel’s escrow account and held until the minimum Offering amount is reached and the Merger occurs. Following the Merger, the Offering will continue until the maximum amount is reached or the Offering is otherwise terminated by the Company.

More detailed information on the Company, the Merger, and the Company operations after the Merger can be found in “The Company” section of this Memorandum beginning on Page 21.

SUMMARY OF THE OFFERING


Securities Offered	We are offering, at price of $1,000 per Unit, up to 2,500 Units, each Unit consisting of one share of Series A 6% Convertible Preferred stock and 1,429 warrants for common stock at an exercise price of $1.35 that expires three years from the Effective Date. The Effective Date is defined as the earliest date of the following to occur: (a) an initial registration statement has been declared effective by the SEC, (b) all of the underlying shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for us to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year anniversary of the offering date provided that a holder of underlying shares is not an Affiliate, all of the underlying shares may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the underlying shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.. See “Description of Capital Stock.” The Minimum Offering Amount of the Offering is $2,000,000, and the Maximum Offering Amount is $2,500,000.

Proceeds Held in Escrow	The proceeds of this Offering will be deposited into our legal counsel’s escrow account and held until the minimum Offering amount is met and the Merger occurs. The Offering will continue following the Merger until the maximum Offering is reached. If the minimum Offering amount is not raised by June 1, 2014 (unless extended by the Company), and/or if the Merger does not occur during the Offering Period, all proceeds will be returned to the Investor from the escrow account.


Rights and Preferences of Preferred Stock	Holders of Series A 6% Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 6% per annum, payable quarterly on January 1, April 1, July 1, and October 1, in cash from legally available funds or, at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock. Each share of Series A 6% Convertible Preferred Stock is convertible at any time at the option of the Holder into common stock at the conversion price of $0.70 per common share based on the total dollar amount invested (subject to adjustment as set forth in the Series A 6% Convertible Preferred Stock Certificate of Designation) Unless waived by the Holder, at no time will the Holder be able to convert the Series A 6% Convertible Preferred Stock into common stock that is equal to more than 4.99% of the total issued and outstanding shares of common stock of the Company (the “Conversion Limitation”). If the Holder gives the Company at least 61 days’ written notice, then the Holder may convert up to 9.99% of the total issued and outstanding shares of common stock of the Company. The Certificate of Designation of the Series A 6% Convertible Preferred Stock is attached as Exhibit A to the Securities Purchase Agreement attached hereto as Exhibit D.

Minimum Investment	$100,000 per investor. The Company may reduce the minimum investment per investor in its sole discretion.

Net Proceeds	$2,500,000 if all 2,500 Units are sold, without deducting possible commissions, fees and certain expenses incurred in connection with the Offering. See “Use of Proceeds.

Offering Period	The Offering Period will expire on the earlier of (i) the sale of all of the Units or (ii) June 1, 2014. The Company in its sole discretion may extend the Offering Period for up to two additional 30-day periods without notice.

Securities of the Company Outstanding:

Before the Offering	2,500,000 shares of common stock.

After the Merger	12,500,000 shares of common stock.

After the Offering (Minimum raise)	18,814,286 shares of common stock, assuming all shares of Series A 6% Convertible Preferred Stock are converted, all stock options are exercised and all warrants are exercised.

After the Offering (Maximum raise)	20,242,858 shares of common stock, assuming all shares of Series A 6% Convertible Preferred Stock are converted, all stock options are exercised and all warrants are exercised.

Use of Proceeds	The net proceeds of this Offering will primarily be used for drilling, seismic tests, technical services, and general working capital, including general and administrative expenses. See “Use of Proceeds” on Page 9 for a more detailed, itemized list.


Restriction on Units	The Units have not been registered for sale with the SEC and are restricted from resale.

Voting Rights	The shares of Series A 6% Convertible Preferred Stock shall not have any voting rights.

Dividend Rights	The holders of our Series A 6% Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 6% per annum, payable quarterly on January 1, April 1, July 1, and October 1, in cash from legally available funds or in common stock. The holders of our common stock are entitled to receive dividends, if any, as may be declared by our Board of Directors, in its sole discretion; however, we do not intend to pay any dividends in the foreseeable future.

Risk Factors	This Offering involves a high degree of risk. See “Risk Factors” on Page 11.

Registration Rights	Within sixty days of the Closing of the Offering, the Company shall file a Registration Statement registering all Registrable Securities (as defined in the Registration Rights Agreement) including the shares of common stock issuable upon conversion of the shares of Series A 6% Convertible Preferred Stock, the warrant shares offered herein, and any shares that may be paid to the Holder as dividends on the Series A 6% Convertible Preferred Stock. The Company shall cause the Registration Statement to become effective within 180 days following the filing date (in the event of a “full review” by the SEC) or 150 days (if there is not a “full review” by the SEC). All fees associated with the Registration shall be borne by the Company. The Company may incur certain cash penalties if the terms and timelines of the Registration Rights Agreement are not met. The Registration Rights Agreement is attached as Exhibit B to the Securities Purchase Agreement that is attached hereto as Exhibit D.

Suitability Standards	We will sell Units only to those investors who are “Accredited Investors,” as such term is defined in Rule 501(a) of Regulation D who meet certain suitability requirements, in our sole discretion. Please see the “Who May Invest” section on Page 27 for more detailed information on these requirements.

Determination of Offering Price	The Offering Price of $1,000 per Unit has been arbitrarily determined by the Company. Said Offering Price was selected because the Company believes it can sell the Units at that price. The Offering Price has no relation to the value of the Company or its assets, nor does it represent a value or resale price.

Dilution	Investors in this Offering will suffer an immediate and substantial dilution of approximately $0.4421 or 63% per share from the Offering Price of $0.70 per common share (on a fully-diluted basis assuming conversion of the Series A 6% Convertible Preferred shares being sold as Units in this Offering). See the “Capitalization Table and Dilution” section on Page 10 of this Memorandum.

USE OF PROCEEDS

We are offering a minimum of 2,000 Units and a maximum of 2,500 Units at a price of $1,000 per Unit for minimum gross offering proceeds of $2,000,000 and maximum gross offering proceeds of $2,500,000. The following table sets forth the use of proceeds assuming all the Units offering in the Maximum Offering are sold.

Assuming Sale of Maximum Offering


	Minimum Offering		Percentage of Proceeds of Minimum Offering	Maximum Offering		Percentage of Proceeds of Maximum Offering
Gross Offering Proceeds ⁽¹⁾	$	2,000,000	100%	$	2,500,000	100%
Expense allowances, fees and offering expenses ⁽²⁾	$	240,000	12.0%	$	240,000	9.6%
Net proceeds	$	1,760,000		$	2,260,000

Drilling (Dry Hole Cost)	$	450,000	22.5%	$	450,000	18.0%
Completion Costs (est. four wells)	$	250,000	12.5%	$	250,000	10.0%
Seismic (Stage I)	$	252,000	12.6%	$	414,000	16.6%
Seismic (Stage II)	$	300,000	15.0%	$	462,000	18.5%
Technical Services	$	300,000	15.0%	$	462,000	18.5%
General and Administrative ⁽³⁾	$	208,000	10.4%	$	222,000	8.9%
Total Application of Net Proceeds	$	2,000,000	100%	$	2,500,000	100%

⁽¹⁾ We are offering the Units on a “best efforts” basis up to the Maximum Offering.

The foregoing represents our best estimate of the allocation of the proceeds of this Offering based on our present plans and business conditions. However, there can be no assurance that unforeseen events or changes in business conditions will not result in the application of proceeds of this Offering in a manner other than is described in this Memorandum. Any such reallocation of the net proceeds of this Offering would be substantially limited to the categories set forth above. We believe we will have sufficient working capital for twelve months if we sell the Maximum Offering. Pending such uses, we may invest such funds in short-term, interest-bearing securities where there is appropriate safety of principal or in interest-bearing bank accounts.

CAPITALIZATION TABLE AND DILUTION

The Company has an authorized capital of 100,000,000 shares divided into 50,000,000 shares of common stock with a par value of $0.001 per share and 50,000,000 shares of preferred stock with a par value of $0.01, with 3,000,000 of the 50,000,000 shares of preferred stock designated as Series A 6% Convertible Preferred Stock of which none are outstanding.

Capitalization Table


	Post-Merger, Pre-Offering	Assuming Minimum Offering $2,000,000	% Ownership	Assuming Maximum Offering $2,500,000	% Ownership
Dala Petroleum	12,500,000	12,500,000	81.40%	12,500,000	77.78%
Offering - Post Conversion of Preferred Shares		2,857,143	18.60%	3,571,429	22.22%
SUB-TOTAL		15,357,143	100%	16,071,429	100%

Fully-Diluted
Dala Petroleum	12,500,000	12,500,000	66.44%	12,500,000	61.75%
Offering- Post Conversion of Preferred Shares		2,857,143	15.19%	3,571,429	17.64%
Offering Warrants		2,857,143	15.19%	3,571,429	17.64%
Employee Options	400,000	400,000	2.13%	400,000	1.98%
Director Options	200,000	200,000	1.06%	200,000	0.99%
TOTAL	13,100,00	18,814,286	100%	20,242,858	100%

Dilution

The net tangible book value of the Company, as of the second quarter ended March 31, 2014, based upon the balance sheet in the Form 10-Q filed with the SEC on May 15, 2014 and included in Exhibit B, is approximately $(0.044) per share; the net tangible book value of the combined company, post-Merger with Dala but before the Offering, is approximately $1,898,946, or $0.1519 per share; assuming the sale of all of the Offering Shares in the Offering, the net tangible book value of the Company following the Offering will be approximately $4,398,946, or $0.2588 per share; accordingly, investors in this Offering will suffer an immediate and substantial dilution of approximately $0.4412 per share, or 63%, from the Offering Price of $0.70 per common share (on a fully-diluted basis assuming conversion of the Series A 6% Convertible Preferred shares being sold as Units in this Offering but not exercise of the warrants). The principal reason for the dilution is the difference in the price paid by Dala Petroleum for shares of the Company in the Merger (which is the value of the lease acquired by the Company in the Merger), or $0.1519 per share, when compared with the Offering Price of the Offering Shares, or $0.70 per share (on a fully-diluted basis assuming conversion of the Series A 6% Convertible Preferred shares being sold as Units in this Offering but not exercise of the warrants). No value is or has been attributed to the Company as an “operating business” in making these computations, though management considered this and other factors is determining the Offering Price of the Offering Shares. See the heading “Determination of Offering Price” in the “Summary of the Offering” section on Page 5.

RISK FACTORS

The Units offered are speculative, involve a high degree of risk, and should only be purchased by persons who can afford to lose their entire investment. Prospective purchasers should carefully consider, among other things, the following risk factors concerning the business of the Company and this Offering prior to making an investment decision. Each prospective investor should also carefully consider the risk factors associated with the Company’s business.

Investing in the Units involves substantial risk. Post-Merger, we will operate in a rapidly changing environment that involves a number of risks, some of which are beyond our control. The following risk factors could have a material adverse effect on our business, financial position, results of operations, and cash flows or viability. These risk factors may not include all of the important risks that could affect our business or our industry that could cause our future financial results to differ materially from historic or expected results, or that could cause the market price of our common stock to fluctuate or decline. Because of these and other factors, past financial performance should not be considered an indication of future performance.

Risks Related to the Company

Extremely Limited Assets ; No Source of Revenue

The Company has virtually no assets and has had no revenue for over the past twenty years or to the date hereof. Nor will the Company receive any revenues until it completes an acquisition, reorganization or merger, at the earliest. The Company can provide no assurance that any acquired business, including the business acquired in the Merger with Dala, will produce any material revenues for the Company or its stockholders or that any such business will operate on a profitable basis. Although management intends to apply any proceeds it may receive through the issuance of stock or debt to a suitable acquisition, subject to the criteria identified above, such proceeds will not otherwise be designated for any more specific purpose. The Company can provide no assurance that any use or allocation of such proceeds will allow it to achieve its business objectives.

Auditor’s ‘Going Concern’ Opinion

The Independent Auditor’s Report issued in connection with the audited financial statements of our Company for the last two fiscal years expresses “substantial doubt about its ability to continue as a going concern,” due to our Company’s status as a start up and our lack of profitable operations.

Management to Devote Insignificant Time to Activities of Our Company

Members of our Company’s management are not required to devote their full time to the affairs of our Company. Because of their time commitments, as well as the fact that our Company has no business operations, the members of management currently devote one hour a week to the activities of our Company, until such time as our Company has identified a suitable acquisition target, which we think we have in Dala.

No Established Market for Common Stock ; No Market for Shares

On June 14, 2007, our common stock was approved for trading on the OTC Bulletin Board of the NASD under the symbol “ WSPD. ” Since that time, there have been few trades and a limited volume of shares sold on the OTC Bulletin Board. Since September 30, 2013, only two hundred shares have traded on the OTC Bulletin Board. There is currently no established trading market for such shares and there can be no assurance that such a market will ever develop or be maintained. Any market price for shares of common stock of our Company is likely to be very volatile, and numerous factors beyond the control of our Company may have a significant effect. In addition, the stock markets generally have experienced, and continue to experience, extreme price and volume fluctuations which have affected the market price of many small capital companies and which have often been unrelated to the operating performance of these companies. These broad market fluctuations, as well as general economic and political conditions, may adversely affect the market price of our Company’s common stock in any market that may develop. Sales of “restricted securities” under Rule 144 may also have an adverse effect on any market that may develop.

Risks of “Penny Stock”

Our Company ’ s common stock may be deemed to be “ penny stock ” as that term is defined in Section 240.3a511 of the Exchange Act. Penny stocks are stocks (i) with a price of less than five dollars per share ; (ii) that are not traded on a “ recognized ” national exchange ; (iii) whose prices are not quoted on the NASDAQ automated quotation system (NASDAQlisted stocks must still meet requirement (i) above) ; or (iv) in issuers with net tangible assets less than $2,500,000 (if the issuer has been in continuous operation for at least three years) or $5,000,000 (if in continuous operation for less than three years), or with average revenues of less than $6,000,000 for the last three years.

Moreover, Rule 15g9 of the Securities and Exchange Commission requires brokerdealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the brokerdealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives ; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions ; (iii) provide the investor with a written statement setting forth the basis on which the brokerdealer made the determination in (ii) above ; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives. Compliance with these requirements may make it more difficult for investors in our Company’s common stock to resell their shares to third parties or to otherwise dispose of them.

Need for any Governmental Approval of Principal Products of Services

Because our Company currently produces no products or services, we are not presently subject to any governmental regulation in this regard. However, in the event that our Company engages in a merger or acquisition transaction with an entity that engages in such activities, we will become subject to all governmental approval requirements to which the merged or acquired entity is subject. The oil exploration industry, the industry the Company will be engaged in post-Merger, is a highly-regulated industry, and the Company will need to obtain certain government approvals for its operations.

We may not be able to effectively manage our growth.

expand our products effectively or efficiently or in a timely manner;

allocate our human resources optimally;

meet our capital needs;

identify and hire qualified employees or retain valued employees; or

incorporate effectively the components of any business or product line that we may acquire in our effort to achieve growth.

Our inability or failure to manage our growth and expansion effectively could harm our business and materially and adversely affect our operating results and financial condition.

We will be required to attract and retain top quality talent to compete in the marketplace.

We believe our future growth and success will depend in part on our ability to attract and retain highly skilled managerial, product development, sales and marketing, and finance personnel. There can be no assurance of success in attracting and retaining such personnel. Shortages in qualified personnel could limit our ability to increase sales of existing products and services and launch new product and service offerings.

We will be subject to evolving and expensive corporate governance regulations and requirements. Our failure to adequately adhere to these requirements or the failure or circumvention of our controls and procedures could seriously harm our business.

Risks Related to Our Operations Post-Merger

Oil and gas price fluctuations in the market may adversely affect the results of our operations.

Actual quantities of recoverable oil and gas reserves and future cash flows from those reserves most likely will vary from our estimates.

the quality and quantity of available data;

the interpretation of that data;

the accuracy of various mandated economic assumptions; and

the judgment of the persons preparing the estimate.

Our operations will require significant expenditures of capital that may not be recovered.

Compliance with, or breach of, environmental laws can be costly and could limit our operations.

Our ability to conduct continued operations is subject to satisfying applicable regulatory and permitting controls. Our current permits and authorizations and ability to get future permits and authorizations may be susceptible on a going forward basis, to increased scrutiny, greater complexity resulting in increased costs, or delays in receiving appropriate authorizations.

We are subject to changing laws and regulations and other governmental actions that can significantly and adversely affect our business.

We may not produce any oil or gas.

We are an exploratory company and although the Property has been thoroughly explored and tested, we may not actually discover or produced any oil or gas.

The oil and gas we produce may not be readily marketable at the time of production.

the extent of local production and imports of oil and gas,

the proximity and capacity of pipelines and other transportation facilities,

fluctuating demand for oil and gas,

the marketing of competitive fuels, and

the effects of governmental regulation of oil and gas production and sales.

Natural gas associated with oil production is often not marketable due to demand or transportation limitations and is often flared at the producing well site. Pipeline facilities do not exist in certain areas of exploration and, therefore, any actual sales of discovered oil and gas might be delayed for extended periods until such facilities are constructed.

We may encounter operating hazards that may result in substantial losses.

We face strong competition from larger oil and gas companies, which could result in adverse effects on our business.

Our operations are subject to various litigation that could have an adverse effect on our business.

We may be affected by global climate change or by legal, regulatory, or market responses to such change.

Risks Related to the Offering

Our stock price may be volatile, which may result in losses to our shareholders.

variations in our operating results;

changes in expectations of our future financial performance, including financial estimates by securities analysts and investors;

changes in operating and stock price performance of other companies in our industry;

additions or departures of key personnel; and

future sales of our common stock.

Our common shares may become thinly traded and you may be unable to sell at or near ask prices, or at all.

We cannot predict the extent to which an active public market for trading our common stock will be sustained.

Because the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause the value of your investment to decline.

Our shares are classified as penny stocks and are covered by Section 15(g) of the Exchange Act which imposes additional sales practice requirements on brokers-dealers who sell our securities in this offering or in the aftermarket. For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf. Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock. This could prevent you from reselling your shares and may cause the value of your investment to decline.

Financial Industry Regulatory Authority (FINRA) sales practice requirements may limit your ability to buy and sell our common stock, which could depress the price of our shares.

Volatility in Our Common Share Price May Subject Us to Securities Litigation.

Our business is subject to changing regulations related to corporate governance and public disclosure that have increased both our costs and the risk of noncompliance.

We will incur increased costs and compliance risks as a result of becoming a public company.

Sales of our currently issued and outstanding stock may become freely tradable pursuant to Rule 144 and may dilute the market for your shares and have a depressive effect on the price of the shares of our common stock.

THE COMPANY

The Pre-Merger Company

Westcott Products Corp. (“Westcott” or the “Company”), a Delaware corporation, is a fully reporting “shell company” as defined in sec Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which is listed for stock quotations on the Over-The-Counter Bulletin Board. More information on our history is included in the historical filings as filed with the SEC (available publicly at www.sec.gov). We have also included our recent filings with the SEC for the past 12 months with this Memorandum as Exhibit B.

The Merger

On January 8, 2014, we entered into a Letter of Intent with Chisholm Partners II, LLC (“Chisholm II”), the sole shareholder of Dala Petroleum Corp. (“Dala”), to complete an Agreement and Plan of Merger (the “Plan of Merger” or the “Merger”) in connection with the closing of this Offering.

Pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), a copy which is attached to this Memorandum as Exhibit C, Westcott will form a new, wholly-owned Nevada subsidiary, Dala Acquisition Corp., which will merge with and into Dala and Dala will be the surviving company under the Merger and become a wholly-owned subsidiary of Westcott upon the closing and “Effective Date” of the Merger. The closing of the Merger is subject to the satisfaction of certain conditions, including the receipt of not less than the minimum proceeds of this Offering. If the closing of the Merger takes place, Westcott will issue 10,000,000 shares of its common stock in exchange for all of the outstanding shares of Dala common stock. Post-Merger, there would then be 12,500,000 outstanding shares of Westcott common stock; pre-Merger Westcott stockholders would own approximately 2,500,000 of these shares or approximately 20% of the outstanding voting securities of the combined companies.

A transaction like the proposed Merger between Dala Acquisition Corp. and Dala whereby a majority of the shares of Westcott will be issued to Dala shareholders is described as a “reverse” merger because the acquired company (Dala) usually has substantially greater assets than the acquiring publicly-held company (Westcott), and the shareholders of the acquired company are usually issued a controlling interest in the acquiring company by reason of the difference in the relative values of the companies. This perceived value is speculative at best; and the shares of Westcott outstanding at the closing of the Merger, estimated to be approximately 2,500,000 shares, result in a dilution of the interest of Dala shareholders in Company, immediately on Closing.

Securities issued to the shareholders of the acquired company (Dala) in these types of transactions generally are “restricted securities” that cannot be immediately publicly traded, whereas many of the shares of the publicly-held company (Westcott) may be presently publicly tradeable, excluding shares presently owned by directors, officers or other “affiliates,” and further excluding shares that are presently designated as “restricted securities.” This liquidity difference is a distinct advantage to the pre-Merger shareholders of Westcott that Dala shareholders do not share.

Within four business days of the closing of the Merger, Westcott will prepare and file with the SEC a Form 8-K that will include significant disclosures and descriptions of the post-Merger business operations of Westcott and Dala, including the “Form 10 Information” required to be filed with the SEC when a company ceases being a shell company as provided in Item 5.01(8) of SEC Form 8-K and subparagraph (i) of SEC Rule 144.

The Post-Merger Company

Following the Merger, and the completion of the Offering, the Company’s operations will be those of Dala. Dala has the rights to engage in oil exploration and development on approximately 300 leases in north central Kansas with total acreage of approximately 80,000 acres (the “Property”). The cost of the 300 lease assets was $1,898,946, and the Company believes the lease assets will be booked at the cost, excluding any technical work that has already been done.

In partnership with Chisholm II, an exploration and production company focused on the acquisition of Kansas oil leasehold interests and exploration and development and Dala’s sole shareholder prior to the Merger and the closing of the Offering, Dala has an inventory of drill-ready oil prospects. Most of the prospects are supported by modern seismic and are a combination of field extensions, step out locations and offsets to existing production. The initial eight prospects range in potential from one hundred thousand to one-half million barrels of oil, and are expected to be drilled and tested over the next 12 months. Another eight plus prospects are currently being developed by Dala and Chisholm II. Together, the companies will continue to acquire new leases and seismic in support of the ongoing programs. This prospect development is being conducted by two teams of geologists and geophysicists in Denver, CO. One team focuses on western Kansas, where they have 10 years of experience and a successful track record; and the second team focuses on a high potential exploration area where Dala’s 80,000 acres are located. This team has already generated two field offset prospects for Dala, using high resolution 2-D seismic data.

Dala and Chisholm II have spent the last three years assembling a substantial land position over a shallow, conventional oil play in north central Kansas. The "Play" or exploration concept is located across a three county area and is geographically defined by the boundaries of the productive North American Rift System. The land position is concentrated over a lightly explored portion of the Rift, bordered immediately on the south by over 400 million barrels of rift-related oil fields, and to the north by significant new discoveries in southeast Nebraska, where per well productive rates of 400-600 barrels per day have recently been reported. This Play concept was developed by a team of highly experienced international geologists, geophysicists and land experts, who applied regional geologic theory, proprietary geophysical data bases and high resolution seismic. Based on adjacent productive analogies, the expected field target size in this exploration area is from 1-17 million barrels of recoverable oil, with individual per well rates estimated to be from 200-800 barrels of oil per day, depending upon the reservoir.

[EXHIBIT1011002.GIF]

In addition to the Play, Dala will begin an eight well drilling program with working interests ranging between 12.5% - 25% in order to provide operating income while further validating the thesis of the 80,000 acres. This additional Kansas non-operated opportunity is provided under the Chisholm II agreement in support of unlocking the value of the separate 80,000 acres. With two permitted wells at 12.5% working interests each and six additional wells at 25% working interests each, management believe net barrel oil reserves are approximately 500K and aggregate initial production rates could range between 120 barrels of oil per day to 400 barrels of oil per day. If successful, this initiative will provide operating capital and data critical to unlocking the potential value of the 80,000 acres.

MANAGEMENT

Directors and Executive Officers

There has been one significant change to the Company’s Board of Directors since the filing of our last Annual Report on Form 10-K. On February 12, 2014, E. Will Gray was elected to serve as a director of the Company. The following sets forth information about our directors and executive officers as of the date of this report and the anticipated directors and executive officers of the Company post-Merger.

Pre-Merger:


NAME	AGE	POSITION

Wayne Bassham	55	President & Director
Todd Albiston	55	Vice President & Director
E. Will Gray II	38	Secretary & Director

Wayne Bassham, our current President will resign pursuant to the Merger Agreement. For more information on his background and business experience, please see the Company’s Annual Report on Form 10-K included as Exhibit B.

Todd Albiston, our Vice President will resign pursuant to the Merger Agreement. For more information on his background and business experience, please see the Company’s Annual Report on Form 10-K included as Exhibit B.

E. Will Gray II, our Secretary and Director, is a seasoned oil executive who has operated in excess of over 300+ wells within Southeastern New Mexico, West Texas, and Oklahoma. Mr. Gray was the CEO and Chairman of Cross Border Resources, Inc. (formerly Doral Energy Corp) from December 10, 2008 to May 31, 2012. While serving as the Chairman and CEO of Cross Border Resources, Mr. Gray arranged for over $80MM in debt and equity financing for the Company from both Macquarie Bank Limited and Texas Capital Bank. Additionally, Mr. Gray has been solely responsible for $73MM worth of A&D transactions since 2008 comprising of a mix of both operated and non-operated assets within the Permian Basin. Subsequent to Cross Border Resources, Mr. Gray served in the capacity as EVP & Head of Capital Markets and Business Development for Resaca Exploitation, a Torch Energy portfolio company headquartered in Houston, Texas. Mr. Gray received his B.S. in Business Management from Texas State University in 1998. While attending Texas State University, Mr. Gray was a member of the Men’s Varsity Golf Team on which he earned Southland Conference All-Academic honors and was a member of the 1997 Southland Conference Golf Championship Team.

Post-Merger:


NAME	AGE	POSITION

E. Will Gray II	39	Chief Executive Officer & Director
Clancy Cottman	57	Chairman of the Board
Jonathan S. Wimbish	43	Director
Callie Jones	32	Secretary

Clancy Cottman will serve as the Chairman of our Board of Directors. Mr. Cottman is a Managing Partner of Chisholm Partners, LLC. Mr. Cottman has over 30 years experience in the oil and gas industry with a focus on joint ventures, acquisitions and project development. He is Chairman and CEO of NiMin Energy. Mr. Cottman has held various senior management positions at PetroFalcon, Benton Oil and Gas Company and Sun Exploration and Production. He has negotiated numerous oil and gas contracts and arranged multiple energy debt and equity financings in North America and internationally. He holds a BA from Rochester Institute of Technology and an MBA from the University of Rhode Island. Clancy is a Certified Petroleum Landman.

Jonathan S. Wimbish, CFA, will serve as a Director to the Company post-Merger. Mr. Wimbish is an advisor to Chisholm Partners II, LLC, a partner of Kensington Investment Counsel, a registered investment advisor, and CFO of NiMin Energy. Prior to these activities, Mr. Wimbish was a Portfolio Manager, Managing Director and Co-Founder of Marketus, LLC, an equity-focused hedge fund management company. He managed all energy and industrial investments from its founding in 2002. Mr. Wimbish was also a Managing Director and Portfolio Manager at ING Furman Selz Asset Management and Analyst with Husic Capital Management. He began his career at MasterCard International and held roles of increasing responsibility. He is on the selection committee for the Sharpe Fellows program at University of California at Los Angeles and is a guest lecturer at the Marshall School of Business at University of Southern California. Mr. Wimbish holds a BA in Economics from UCLA, an MBA from Columbia Business School and is a CFA Charterholder.

Callie Jones will serve as the Secretary of the Company post-Merger. Ms. Jones is a partner in Brunson Chandler & Jones, PLLC, a law firm that was established in 2013. She has practiced law since 2006 Her practice includes advising clients on a variety of corporate matters such as securities law, mergers & acquisitions, private placements, public offerings of equity, initial public offerings, and exchange offers. She has worked with individuals, start-up companies and national corporations as well as clients located in foreign countries. She holds a BA in English from the University of Utah and a JD from the J. Reuben Clark Law School at Brigham Young University.

Director Compensation

Currently, our directors receive no annual compensation for their service on the Board of Directors. Upon acceptance of the position of Secretary and Director of the Company, Mr. Gray purchased 890,000 shares of restricted common stock of the Company.

It is anticipated that Mr. Gray will receive options for 400,000 restricted common shares under a qualified stock ownership plan along with the proposed new directors of the Company receiving options for an aggregate of 200,000 restricted common shares under the qualified stock ownership plan.

DESCRIPTION OF CAPITAL STOCK

Common Stock

Prior to the Merger, there will be 2,500,000 shares of common stock of the Company issued and outstanding. As consideration for the Merger, Chisholm II, the sole shareholder of Dala, will receive 10,000,000 restricted shares of Westcott. Immediately following the Merger, there will be 12,500,000 shares of common stock issued and outstanding in the Company without conversion of any Series A 6% Convertible Preferred Stock (or exercise of any stock options or warrants) into common stock, 18,814,286 shares of common stock issued and outstanding, assuming all shares of Series A 6% Convertible Preferred Stock are converted, all stock options are exercised and all warrants are exercised, and 20,242,858 shares of common stock issued and outstanding, assuming all shares of Series A 6% Convertible Preferred Stock are converted, all stock options are exercised and all warrants are exercised.

Preferred Stock

Prior to the Offering, no shares of Series A 6% Convertible Preferred Stock have been issued. Through the Offering, the Company is offering up to 2,500 shares of Series A 6% Convertible Preferred Stock.

The Series A 6% Convertible Preferred Stock has been designated with certain rights, preferences and limitations. Holders of Series A 6% Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 6% per annum, payable quarterly on January 1, April 1, July 1, and October 1, in cash from legally available funds or, at the Company’s option, in duly authorized, validly issued, fully paid and non-assessable shares of common stock. Each share of Series A 6% Convertible Preferred Stock is convertible at any time at the option of the Holder into common stock at the conversion price of $.70 per common share based on the actual dollar amount invested (subject to adjustment as set forth in the Series A 6% Convertible Preferred Stock Certificate of Designation) Unless waived by the Holder, at no time will the Holder be able to convert the Series A 6% Convertible Preferred Stock into common stock that is equal to more than 4.99% of the total issued and outstanding shares of common stock of the Company (the “Conversion Limitation”). If the Holder gives the Company at least 61 days’ written notice, then the Holder may convert up to 9.99% of the total issued and outstanding shares of common stock of the Company.

Stock Options

The Company intends to grant 600,000 shares of common stock to its officers and directors at an exercise price of $0.70 per share as part of the Merger.

Holders of Common Stock and Preferred Stock

We had approximately 553 common stockholders of record as of May 16, 2014. No preferred shares have been issued prior to the Offering.

DIVIDEND POLICY

The Series A 6% Convertible Preferred Stock offered as part of this offering will pay a dividend of six percent (6%) per annum, payable quarterly on January 1, April 1, July 1, and October 1 in cash or in kind, as further described in the Certificate of Designation included as Exhibit A to the Securities Purchase Agreement attached hereto as Exhibit D.

RELATED PARTY TRANSACTIONS

Dala has entered into a service agreement with Chisholm II, giving Dala the rights to use Chisholm II’s existing technical exploration team to further explore and develop the Property.

Pacific Oil & Gas LLC, a shareholder of Chisholm II, is owned in part by Clancy Cottman, our Chairman.

PLAN OF PLACEMENT

There are no placement agents in this Offering.

The proceeds of this Offering will be deposited into our legal counsel’s escrow account and held until the Merger occurs. The Units are being offered until the earlier of (i) the sale of all the Units or (ii) June 1, 2014.

The Units are being offered hereby solely to accredited investors and, as described above, by the Company. We may reject any subscription. If this Offering is over-subscribed, we will determine which subscriptions will be accepted. If we do not accept a subscription, for whatever reason, the amount paid will be returned promptly without deduction or interest. Investors must make arrangements to deliver subscription funds in cash, check, cashier’s check, or wire transfer to us at the time of subscription. The minimum investment for each investor is $100,000, although we may accept subscriptions for lesser amounts in our sole and absolute discretion. Subject to certain limited exceptions applicable in some states, all subscriptions are binding on the subscriber and may not be revoked or canceled after our receipt.

FINANCIAL STATEMENTS

We encourage you to review the financial statements of the Company filed with our Annual Report on Form 10-K filed on November 27, 2013 and our Form 10-Q filed on February 14, 2014 and attached hereto as Exhibit B.

WHO MAY INVEST

The Units are being offered through this Memorandum without registration under the Securities Act pursuant to the exemption from the registration requirements of such Act provided by Section 4(2) thereof and Rule 506 of Regulation D promulgated thereunder (“Rule 506”). Rule 506 restricts the number and nature of purchasers of securities offered pursuant to the Rule.

Nature of Purchasers

In order for us to qualify our offering as a Rule 506 offering, we will sell Units only to those investors who are “Accredited Investors,” as such term is defined in Rule 501(a) of Regulation D who meet certain suitability requirements, in our sole discretion.

Accredited Investors are those investors who meet at least one of the following standards or others set forth in Rule 501(a) of Regulation D, which are described in more detail in the Securities Purchase Agreement which is attached as Exhibit D to this Memorandum:

(a)

$1,000,000 Net Worth. The investor is a natural person and his net worth, either individually or jointly with his spouse, exceeds $1,000,000, not including any equity in his home or primary residence;

(b)

$200,000 Income. The investor is a natural person who has had individual income ¹ from all sources (without including any income of his spouse unless such spouse is a co-purchaser) in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same level of income in the current year;

(c)

Partnership, Corporate or other Entity Investors. In general, a partnership, corporation, revocable or grantor trust or unincorporated association is deemed to be an Accredited Investor if all of the equity owners of that entity (or in the case of a revocable or grantor trust, all persons with the power to revoke the trust) qualify as Accredited Investors under subparagraph (a) or (b) above; and

(d)

Trust or Employee Benefit Plan Investors. In general, an employee benefit plan or trust will qualify as an Accredited Investor if (i) the entity is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974, and the investment decision is made by a Plan fiduciary, as defined in Section 3(21) of such Act which is a bank, savings and loan association, insurance company or registered investment advisor, or (ii) the entity is a qualified profit sharing or defined contribution Plan, the Plan provides for segregated accounts for each Plan participant, the governing documents of the Plan provide that each participant may direct the trustee to invest his or her funds in the investment vehicles of his or her choice and the purchase of Units is made pursuant to an exercise by the Plan participant, who is an Accredited Investor under Subparagraph (a) or (b) above, of such power to direct the investments of his or her segregated account; or (iii) it is a revocable trust and each person with the power to revoke the trust qualifies as an Accredited Investor under subparagraph (a) or (b) above.

General Suitability Standards

Units will be sold, in the discretion of the Company, only to a person (i) who purchases at least 100 Units, unless the Company, in its sole discretion, permits the purchase of fewer Units; (ii) who represents in writing that he qualifies as an Accredited Investor; (iii) who complies with the terms of the Securities Purchase Agreement; (iv) who represents that he has been furnished and has carefully read and relied solely on the information contained in this Memorandum, including all exhibits, amendments and supplements hereto; (v) whose overall commitment to investments which are not readily marketable is not disproportionate to his net worth, and whose acquisition of the Units will not cause such overall commitment to become excessive; and (vi) who has no need for liquidity with respect to his investment in the Units and is capable of suffering the loss of his entire investment in any Units purchased.

¹⁽⁾ “Individual income” means adjusted gross income, as reported for federal income tax purposes, less any income attributable to a spouse or to property owned by a spouse, increased by the following amounts (but not including any amounts attributable to a spouse or to property owned by a spouse unless such spouse is a co-purchaser): (i) contributions to a profit sharing or defined benefit plan made on behalf of the individual, to the extent of his vested interest under the plans, (ii) the amount of any interest income received which is tax-exempt under Section 103 of the Internal Revenue Code of 1986, as amended (the “Code”), (iii) the amount of losses claimed as a Member in a limited partnership (as reported on Schedule E of Form 1040) and (iv) any deduction claimed for depletion under Section 611 et seq. of the Code.

A breach by an investor of any of his representations made to the Company, which results in a loss of the registration exemption provided by Regulation D or other exemption will cause such investor to be liable to the Company for all damages and to losses proximately caused thereby.

The bases for establishing the foregoing standards include the relative lack of liquidity of the Units, the risks inherent in an investment in the Units and possible adverse tax consequences of a premature sale of any Units. The foregoing standards represent minimum requirements for a prospective purchaser and the Company reserves the right to reject any subscription notwithstanding compliance with these standards or to apply more stringent suitability standards. Units may also be sold to corporations, partnerships, limited liability companies, employee benefit plans (in limited circumstances), trusts, and other entities meeting the foregoing requirements.

SUBSCRIPTION PROCEDURES

The minimum investment amount is $100,000 for 100 Units, unless the Company, in its sole discretion, permits the purchase of fewer Units. In order to subscribe to purchase the Units, a prospective investor must:

Complete and execute the Securities Purchase Agreement and deliver it along with payment in the form of a check made payable to “Brunson Chandler & Jones, PLLC IOLTA Trust Account” to the following:

Brunson Chandler & Jones, PLLC

Attention: Callie Jones

175 South Main Street

Fifteenth Floor

Salt Lake City, Utah 84111

Pay the amount for the Units subscribed ($1,000 multiplied by the number of Units to be purchased) by check or wire transfer. Payments by check should be made payable to “Brunson Chandler & Jones, PLLC IOLTA Trust Account” and delivered to the address noted above. Payments by wire transfer should be made as follows:

Name of Bank:

U.S. Bank

Address:

170 South Main Street, Salt Lake City, Utah 84111

Name of Account:

Brunson Chandler & Jones, PLLC IOLTA Trust Account

Account Number:

153152343783

ABA Number:

124302150

Swift Number:

USBKUS44IMT

Beneficiary:

Westcott Products Corp.

We reserve the right, in our sole discretion, to reject the subscription of any potential investor in whole or in part. Prospective investors will be notified of the acceptance or rejection of their subscriptions within ten (10) days of receipt of payment and a completed Securities Purchase Agreement. If we reject the subscription, we will promptly refund the subscriber’s funds without interest thereon.

Corporations, partnerships, trustees, agents or other persons acting in a representative capacity are required, except at our discretion, to furnish with the Securities Purchase Agreement, further evidence that such investor has the authority to invest in the Units or an opinion of counsel acceptable to us to the effect that such investor has such authority.

ADDITIONAL INVESTOR INFORMATION

Prospective investors will be given the opportunity to ask questions of and obtain information about us and the terms and conditions of the Offering, as set forth in this Memorandum, and may arrange for such opportunity by contacting the Company. Furthermore, upon receipt of a written request, we will provide any prospective investor with copies of documents referred to in this Memorandum to the extent such documents are in our possession or can be acquired by us without unreasonable effort or expense.

EXHIBIT A

ESCROW AGREEMENT

EXHIBIT B

COMPANY FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION

We are currently subject to the informational requirements of the Exchange Act. In accordance with the Exchange Act, we have and will file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information, once filed with the SEC, may be inspected without charge at the public reference section of the SEC at Judiciary Plaza, 100 F Street, N.E., Washington, DC 20549. Copies of this material may also be obtained from the SEC at prescribed rates and are available on the SEC’s website at http://www.sec.gov .

We have included the following documents that we have filed with the Securities and Exchange Commission during the last year as Exhibit B to this Memorandum:

(i)

Quarterly Report on Form 10-Q filed on May 15, 2014;

(ii)

Quarterly Report on Form 10-Q filed on February 14, 2014;

(iii)

Annual Report filed on Form 10-K filed on November 27, 2013;

(iv)

Quarterly Report on Form 10-Q filed on July 31, 2013;

(v)

Quarterly Report on Form 10-Q filed on April 26, 2013; and

Exhibit D

EXHIBIT C

MERGER DOCUMENTS

Exhibit E

EXHIBIT D

SECURITIES PURCHASE AGREEMENT AND EXHIBITS

(including Certificate of Designation for Series A 6% Convertible Preferred Stock, Registration Rights Agreement, Common Stock Purchase Warrant, and Opinion Letter)

Exhibit E

Exhibit 10.12

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “ Agreement ”) is dated as of June 3, 2014, between Westcott Products Corporation, a Delaware corporation (the “ Company ”), and each purchaser identified on the signature pages hereto (each, including its successors and assigns, a “ Purchaser ” and collectively, the “ Purchasers ”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “ Securities Act ”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Purchaser, and each Purchaser, severally and not jointly, desires to purchase from the Company, securities of the Company as more fully described in this Agreement.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agree as follows:

ARTICLE I.

DEFINITIONS

1.1

Definitions . In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Certificate of Designation (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:

“ Acquiring Person ” shall have the meaning ascribed to such term in Section 4.7.

“ Action ” shall have the meaning ascribed to such term in Section 3.1(j).

“ Board of Directors ” means the board of directors of the Company.

“ Certificate of Designation ” means the Certificate of Designation to be filed prior to the Closing by the Company with the Secretary of State of Delaware, in the form of Exhibit A attached hereto.

“ Closing ” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

“ Closing Date ” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto, and all conditions precedent to (i) the Purchasers’ obligations to pay the Subscription Amount and (ii) the Company’s obligations to deliver the Securities, in each case, have been satisfied or waived.

“ Closing Statement ” means the Closing Statement in the form on Annex A attached hereto.

“ Commission ” means the United States Securities and Exchange Commission.

“ Common Stock ” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.

“ Common Stock Equivalents ” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“ Company Counsel ” means Leonard Burningham (for Westcott Products Corporation), with offices located at 455 East 500 South, Suite 205, Salt Lake City, Utah 84111 and Brunson Chandler & Jones, PLLC (for Dala Petroleum Corp.) with offices located at 175 South Main Street, 15 ^th Floor, Salt Lake City, Utah, 84111.

“ Conversion Price ” shall have the meaning ascribed to such term in the Certificate of Designation.

“ Conversion Shares ” shall have the meaning ascribed to such term in the Certificate of Designation.

“ Disclosure Schedules ” shall have the meaning ascribed to such term in Section 3.1.

“ EGS ” means Ellenoff Grossman & Schole LLP, with offices located at 150 East 42nd Street, New York, New York 10017.

“ Effective Date ” means the earliest of the date that (a) the initial Registration Statement has been declared effective by the Commission, (b) all of the Underlying Shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year anniversary of the Closing Date provided that a holder of Underlying Shares is not an Affiliate of the Company, all of the Underlying Shares may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders a standing written unqualified opinion that resales may then be made by such holders of the Underlying Shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.

“ Evaluation Date ” shall have the meaning ascribed to such term in Section 3.1(r).

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“ Exempt Issuance ” means the issuance of (a) shares of Common Stock or options to employees, officers or directors of the Company pursuant to any stock or option plan duly adopted for such purpose, by a majority of the non-employee members of the Board of Directors or a majority of the members of a committee of non-employee directors established for such purpose, (b) securities upon the exercise or exchange of or conversion of any Securities issued hereunder and/or other securities exercisable or exchangeable for or convertible into shares of Common Stock issued and outstanding on the date of this Agreement, provided that such securities have not been amended since the date of this Agreement to increase the number of such securities or to decrease the exercise price, exchange price or conversion price of such securities, (c) securities issued pursuant to acquisitions or strategic transactions approved by a majority of the disinterested directors of the Company, provided that any such issuance shall only be to a Person (or to the equityholders of a Person) which is, itself or through its subsidiaries, an operating company or an owner of an asset in a business synergistic with the business of the Company and shall provide to the Company additional benefits in addition to the investment of funds, but shall not include a transaction in which the Company is issuing securities primarily for the purpose of raising capital or to an entity whose primary business is investing in securities, and (d) no more than 300,000 shares of restricted Common Stock (subject to adjustment for forward and reverse stock splits and the like), in the aggregate, issued without registration rights for investor relations purposes.

“ FCPA ” means the Foreign Corrupt Practices Act of 1977, as amended.

“ GAAP ” shall have the meaning ascribed to such term in Section 3.1(h).

“ Indebtedness ” shall have the meaning ascribed to such term in Section 3.1(aa).

“ Intellectual Property Rights ” shall have the meaning ascribed to such term in Section 3.1(o).

“ Legend Removal Date ” shall have the meaning ascribed to such term in Section 4.1(c).

“ Liens ” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

“ Lock-Up Agreement ” means the Lock-Up Agreement, dated as of the date hereof, by and among the Company and the directors and officers of the Company and Dala, and the Persons listed on Schedule A hereto, in the form of Exhibit E attached hereto.

“ Material Adverse Effect ” shall have the meaning assigned to such term in Section 3.1(b).

“ Material Permits ” shall have the meaning ascribed to such term in Section 3.1(m).

“ Maximum Rate ” shall have the meaning ascribed to such term in Section 5.17.

“ Merger ” means the closing of the acquisition of 100% of the issued and outstanding capital stock of Dala Petroleum Corp., a Nevada corporation (“Dala”), by the Company pursuant to that certain Agreement and Plan of Merger among the Company, Dala Acquisition Corp. and Dala dated June 2, 2014.

“ Merger 8-K ” shall have the meaning ascribed to such term in Section 3.1(y).

“ Participation Maximum ” shall have the meaning ascribed to such term in Section 4.12(a).

“ Preferred Stock ” means the up to 2,775 shares of the Company’s 6% Series A Convertible Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto.

“ Pre-Notice ” shall have the meaning ascribed to such term in Section 4.12(b).

“ Pro Rata Portion ” shall have the meaning ascribed to such term in Section 4.12(e).

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“ Public Information Failure ” shall have the meaning ascribed to such term in Section 4.3(b).

“ Public Information Failure Payments ” shall have the meaning ascribed to such term in Section 4.3(b).

“ Purchaser Party ” shall have the meaning ascribed to such term in Section 4.10.

“ Registration Rights Agreement ” means the Registration Rights Agreement, dated the date hereof, among the Company and the Purchasers, in the form of Exhibit B attached hereto.

“ Registration Statement ” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale of the Underlying Shares by each Purchaser as provided for in the Registration Rights Agreement.

“ Required Approvals ” shall have the meaning ascribed to such term in Section 3.1(e).

“ Required Minimum ” means, as of any date, the maximum aggregate number of shares of Common Stock then issued or potentially issuable in the future pursuant to the Transaction Documents, including any Underlying Shares issuable upon exercise in full of all Warrants or conversion in full of all shares of Preferred Stock, ignoring any conversion or exercise limits set forth therein, and assuming that any previously unconverted shares of Preferred Stock are held until the fifth anniversary of the Closing Date and all dividends are paid in shares of Common Stock until such five year anniversary.

“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.

“ SEC Reports ” shall have the meaning ascribed to such term in Section 3.1(h).

“ Securities ” means the Preferred Stock, the Warrants, the Warrant Shares and the Underlying Shares.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“ Short Sales ” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).

“ Stated Value ” means $1,000 per share of Preferred Stock.

“ Subscription Amount ” shall mean, as to each Purchaser, the aggregate amount to be paid for the Preferred Stock purchased hereunder as specified below such Purchaser’s name on the signature page of this Agreement and next to the heading “Subscription Amount,” in United States dollars and in immediately available funds.

“ Subsequent Financing ” shall have the meaning ascribed to such term in Section 4.12(a).

“ Subsequent Financing Notice ” shall have the meaning ascribed to such term in Section 4.12(b).

“ Subsidiary ” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.

“ Trading Day ” means a day on which the principal Trading Market is open for trading.

“ Transaction Documents ” means this Agreement, the Certificate of Designation, the Warrants, the Registration Rights Agreement, the Lock-Up Agreement, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.

“ Transfer Agent ” means American Registrar & Transfer Co., the current transfer agent of the Company, with a mailing address of 342 E 900 S, Salt Lake City, Utah 84111 and a facsimile number of (801)363-9066, and any successor transfer agent of the Company.

“ Variable Rate Transaction ” shall have the meaning ascribed to such term in Section 4.13(b).

“ VWAP ” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board and if prices for the Common Stock are then reported in the “Pink Sheets” published by Pink OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchasers of a majority in interest of the Securities then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.

“ Warrants ” means, collectively, the Common Stock purchase warrants delivered to the Purchasers at the Closing in accordance with Section 2.2(a) hereof, which Warrants shall be exercisable immediately and have a term of exercise equal to three years from the Effective Date, in the form of Exhibit C attached hereto.

“ Warrant Shares ” means the shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE II.

PURCHASE AND SALE

2.1

Closing . On the Closing Date, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchasers, severally and not jointly, agree to purchase, up to an aggregate of $2,775,000 of shares of Preferred Stock with an aggregate Stated Value for each Purchaser equal to such Purchaser’s Subscription Amount as set forth on the signature page hereto executed by such Purchaser, and Warrants as determined by pursuant to Section 2.2(a). The aggregate number of shares of Preferred Stock sold hereunder shall be up to 2,775. Each Purchaser shall deliver to the Company, via wire transfer or a certified check, immediately available funds equal to its Subscription Amount and the Company shall deliver to each Purchaser its respective shares of Preferred Stock and Warrants as determined pursuant to Section 2.2(a), and the Company and each Purchaser shall deliver the other items set forth in Section 2.2 deliverable at the Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the Closing shall occur at the offices of EGS or such other location as the parties shall mutually agree.

2.2

Deliveries .

(a)

On or prior to the Closing Date, the Company shall deliver or cause to be delivered to each Purchaser the following:

(i)

this Agreement duly executed by the Company;

(ii)

a legal opinion of Company Counsel, substantially in the form of Exhibit D attached hereto;

(iii)

a certificate evidencing a number of shares of Preferred Stock equal to such Purchaser’s Subscription Amount divided by the Stated Value, registered in the name of such Purchaser and evidence of the filing and acceptance of the Certificate of Designation from the Secretary of State of Delaware;

(iv)

a Warrant registered in the name of such Purchaser to purchase up to a number of shares of Common Stock equal to 100% of such Purchaser’s Subscription Amount divided by $0.70, with an exercise price equal to $1.35, subject to adjustment therein;

(v)

the Lock-Up Agreements; and

(vi)

the Registration Rights Agreement duly executed by the Company.

(b)

On or prior to the Closing Date, each Purchaser shall deliver or cause to be delivered to the Company, as applicable, the following:

(i)

this Agreement duly executed by such Purchaser;

(ii)

such Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company; and

(iii)

the Registration Rights Agreement duly executed by such Purchaser.

2.3

Closing Conditions .

(a)

The obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:

(i)

the accuracy in all material respects on the Closing Date of the representations and warranties of the Purchasers contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);

(ii)

all obligations, covenants and agreements of each Purchaser required to be performed at or prior to the Closing Date shall have been performed; and

(iii)

the delivery by each Purchaser of the items set forth in Section 2.2(b) of this Agreement.

(b)

The respective obligations of the Purchasers hereunder in connection with the Closing are subject to the following conditions being met:

(i)

the accuracy in all material respects when made and on the Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);

(ii)

all obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;

(iii)

the minimum aggregate Subscription Amount hereunder shall be $2,000,000 to be held in escrow by Company’s counsel prior to the Closing (or another escrow or attorney trust account reasonably acceptable to the Company) to be delivered to the Company upon satisfaction of the Closing conditions hereunder, including the completion of the both filing of the Merger and the filing of the Merger 8-K;

(iv)

the Merger shall have occurred and the Company shall have delivered the Purchasers evidence thereof, and filed the Merger 8-K with the Commission;

(v)

the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;

(vi)

there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and

(vii)

from the date hereof to the Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market and, at any time prior to the Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of such Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties of the Company . Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to each Purchaser:

(a)

Subsidiaries . All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a) . The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.

(b)

Organization and Qualification . The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “ Material Adverse Effect ”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

(c)

Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(d)

No Conflicts . The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

(e)

Filings, Consents and Approvals . The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.6 of this Agreement, (ii) the filing with the Commission pursuant to the Registration Rights Agreement, (iii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Underlying Shares for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “ Required Approvals ”).

(f)

Issuance of the Securities . The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved from its duly authorized capital stock a number of shares of Common Stock for issuance of the Underlying Shares at least equal to the Required Minimum on the date hereof.

(g)

Capitalization . The capitalization of the Company is as set forth on Schedule 3.1(g) , which Schedule 3.1(g) shall also include (x) the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof and (y) a pro-forma capitalization after giving effect to the Merger and the transactions contemplated hereby. The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any

Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

(h)

SEC Reports; Financial Statements . The Company has filed all reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “ SEC Reports ”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“ GAAP ”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

(i)

Material Changes; Undisclosed Events, Liabilities or Developments . Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i) , no event, liability, fact, circumstance, occurrence or development has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

(j)

Litigation . There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “ Action ”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k)

Labor Relations . No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(l)

Compliance . Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

(m)

Regulatory Permits . The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“ Material Permits ”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

(n)

Title to Assets . The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

(o)

Intellectual Property . The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or required for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “ Intellectual Property Rights ”). None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(p)

Insurance . The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Subscription Amount. Neither the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant increase in cost.

(q)

Transactions With Affiliates and Employees . Except as set forth in the SEC Reports, none of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company.

(r)

Sarbanes-Oxley; Internal Accounting Controls . The Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “ Evaluation Date ”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.

(s)

Certain Fees . No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

(t)

Private Placement . Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

(u)

Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.

(v)

Registration Rights . Other than each of the Purchasers, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.

(w)

Listing and Maintenance Requirements . The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such electronic transfer.

(x)

Application of Takeover Protections . The Company and the Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchasers as a result of the Purchasers and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchasers’ ownership of the Securities.

(y)

Disclosure . Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representation in effecting transactions in securities of the Company. Attached hereto as Schedule 3.1(y) is a copy of a Current Report on Form 8-K (the “ Merger 8-K ”) that the Company will file with the Commission in connection with the Merger within four business days of the date hereof (which Current Report contains, among other information, risk factors concerning the post-Merger Company, audited and pro-forma financial statements required to be filed therewith and all “Form 10 Information” for purposes of Rule 144). All of the disclosure furnished by or on behalf of the Company to the Purchasers regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

(z)

No Integrated Offering . Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

(aa)

Solvency . Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. Schedule 3.1(z) sets forth as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments. For the purposes of this Agreement, “ Indebtedness ” means (x) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

(bb)

Tax Status . Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim.

(cc)

No General Solicitation . Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchasers and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

(dd)

Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of FCPA.

(ee)

Accountants . The Company’s accounting firm is set forth on Schedule 3.1(ee) of the Disclosure Schedules. To the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the fiscal year ending December 31, 2014.

(ff)

Seniority . As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Preferred Stock in right of payment, whether with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior only as to the property covered thereby).

(gg)

No Disagreements with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents.

(hh)

Acknowledgment Regarding Purchasers’ Purchase of Securities . The Company acknowledges and agrees that each of the Purchasers is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that no Purchaser is acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by any Purchaser or any of their respective representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchasers’ purchase of the Securities. The Company further represents to each Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

(ii)

Acknowledgment Regarding Purchaser’s Trading Activity . Anything in this Agreement or elsewhere herein to the contrary notwithstanding (except for Sections 3.2(f) and 4.15 hereof), it is understood and acknowledged by the Company that: (i) none of the Purchasers has been asked by the Company to agree, nor has any Purchaser agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open market or other transactions by any Purchaser, specifically including, without limitation, Short Sales or “derivative” transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities, (iii) any Purchaser, and counter-parties in “derivative” transactions to which any such Purchaser is a party, directly or indirectly, may presently have a “short” position in the Common Stock and (iv) each Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) one or more Purchasers may engage in hedging activities at various times during the period that the Securities are outstanding, including, without limitation, during the periods that the value of the Underlying Shares deliverable with respect to Securities are being determined, and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.

(jj)

Regulation M Compliance . The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.

(kk)

Stock Option Plans . Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects. Notwithstanding the foregoing, the Company in conjunction with the Merger the Company intends to grant qualified stock options to its Chief Executive Officer and Directors of the Company post-closing, the estimated number of such options to be issued are as set forth on Schedule 3.1(kk).

(ll)

Office of Foreign Assets Control . Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“ OFAC ”).

(mm)

U.S. Real Property Holding Corporation . The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.

(nn)

Bank Holding Company Act . Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “ BHCA ”) and to regulation by the Board of Governors of the Federal Reserve System (the “ Federal Reserve ”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.

(oo)

Money Laundering . The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “ Money Laundering Laws ”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company and any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.

(rr)

No Disqualification Events . With respect to Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act ("Regulation D Securities"), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities Act) connected with the Company in any capacity at the time of sale (each, an " Issuer Covered Person " and, together, " Issuer Covered Persons ") is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act (a " Disqualification Event "), except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished to the Purchasers a copy of any disclosures provided thereunder.

(ss)

Other Covered Persons The Company is not aware of any person (other than any Issuer Covered Person or Dealer Covered Person that has been or will be paid (directly or indirectly) remuneration for solicitation of purchasers in connection with the sale of any Regulation D Securities.

(tt)

Notice of Disqualification Events . The Company will notify the Purchasers in writing, prior to the Closing Date of (i) any Disqualification Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any Issuer Covered Person.

3.2

Representations and Warranties of the Purchasers . Each Purchaser, for itself and for no other Purchaser, hereby represents and warrants as of the date hereof and as of the Closing Date to the Company as follows (unless as of a specific date therein):

(a)

Organization; Authority . Such Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by such Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

(b)

Own Account . Such Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting such Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws). Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

(c)

Purchaser Status . At the time such Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants or converts any shares of Preferred Stock, it will be an “accredited investor” as defined in Rule 501under the Securities Act.

(d)

Experience of Such Purchaser . Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

(e)

General Solicitation . Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(f)

Certain Transactions and Confidentiality . Other than consummating the transactions contemplated hereunder, such Purchaser has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Purchaser, executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that such Purchaser first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the representation set forth above shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement. Other than to other Persons party to this Agreement, such Purchaser has maintained the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar transactions in the future.

The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect such Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1

Transfer Restrictions .

(a)

The Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an Affiliate of a Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and the Registration Rights Agreement and shall have the rights and obligations of a Purchaser under this Agreement and the Registration Rights Agreement.

(b)

The Purchasers agree to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:

[NEITHER] THIS SECURITY [NOR THE SECURITIES INTO WHICH THIS SECURITY IS [EXERCISABLE] [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE SECURITIES ISSUABLE UPON [EXERCISE] [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders (as defined in the Registration Rights Agreement) thereunder.

(c)

Certificates evidencing the Underlying Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Underlying Shares pursuant to Rule 144, (iii) if such Underlying Shares are eligible for sale under Rule 144 or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). The Company shall cause its counsel to issue a legal opinion to the Transfer Agent promptly if required by the Transfer Agent to effect the removal of the legend hereunder. If all or any shares of Preferred Stock are converted or any portion of a Warrant is exercised at a time when there is an effective registration statement to cover the resale of the Underlying Shares, or if such Underlying Shares may be sold under Rule 144 or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Underlying Shares shall be issued free of all legends. The Company agrees that at such time as such legend is no longer required under either clauses (i), (ii), (iii) or (iv) of the first sentence of this Section 4.1(c), it will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Underlying Shares, as applicable, issued with a restrictive legend (such third Trading Day, the “ Legend Removal Date ”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates for Underlying Shares subject to legend removal

hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser.

(d)

In addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Underlying Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Transfer Agent) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Legend Removal Date until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

(e)

Each Purchaser, severally and not jointly with the other Purchasers, agrees with the Company that such Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein, and acknowledges that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance upon this understanding.

4.2

Acknowledgment of Dilution . The Company acknowledges that the issuance of the Securities may result in dilution of the outstanding shares of Common Stock, which dilution may be substantial under certain market conditions. The Company further acknowledges that its obligations under the Transaction Documents, including, without limitation, its obligation to issue the Underlying Shares pursuant to the Transaction Documents, are unconditional and absolute and not subject to any right of set off, counterclaim, delay or reduction, regardless of the effect of any such dilution or any claim the Company may have against any Purchaser and regardless of the dilutive effect that such issuance may have on the ownership of the other stockholders of the Company.

4.3

Furnishing of Information; Public Information .

(a)

If the Common Stock is not registered under Section 12(b) or 12(g) of the Exchange Act on the date hereof, the Company agrees to cause the Common Stock to be registered under Section 12(g) of the Exchange Act on or before the 60 ^th calendar day following the date hereof. Until the earliest of the time that no Purchaser owns Securities, the Company covenants to maintain the registration of the Common Stock under Section 12(b) or 12(g) of the Exchange Act and to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act even if the Company is not then subject to the reporting requirements of the Exchange Act.

(b)

At any time during the period commencing from the 12 month anniversary of the date hereof and ending at such time that all of the Securities may be sold without the requirement for the Company to be in compliance with Rule 144(c)(1) and otherwise without restriction or limitation pursuant to Rule 144, if the Company shall fail for any reason to satisfy the current public information requirement under Rule 144(c) (a “ Public Information Failure ”) then, in addition to such Purchaser’s other available remedies, the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, by reason of any such delay in or reduction of its ability to sell the Securities, an amount in cash equal to one and a half percent (1.5%) of the aggregate Subscription Amount of such Purchaser’s Securities on the day of a Public Information Failure and on every thirtieth (30 ^th ) day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (a) the date such Public Information Failure is cured and (b) such time that such public information is no longer required for the Purchasers to transfer the Underlying Shares pursuant to Rule 144. The payments to which a Purchaser shall be entitled pursuant to this Section 4.3(b) are referred to herein as “ Public Information Failure Payments .” Public Information Failure Payments shall be paid on the earlier of (i) the last day of the calendar month during which such Public Information Failure

Payments are incurred and (ii) the third (3 ^rd ) Business Day after the event or failure giving rise to the Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated for partial months) until paid in full. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Public Information Failure, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

4.4

Integration . The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

4.5

Conversion and Exercise Procedures . Each of the form of Notice of Exercise included in the Warrants and the form of Notice of Conversion included in the Certificate of Designation set forth the totality of the procedures required of the Purchasers in order to exercise the Warrants or convert the Preferred Stock. Without limiting the preceding sentences, no ink-original Notice of Exercise or Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Exercise or Notice of Conversion form be required in order to exercise the Warrants or convert the Preferred Stock. No additional legal opinion, other information or instructions shall be required of the Purchasers to exercise their Warrants or convert their Preferred Stock. The Company shall honor exercises of the Warrants and conversions of the Preferred Stock and shall deliver Underlying Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.

4.6

Securities Laws Disclosure; Publicity . The Company shall, within four business days (New York City time) following the date hereof, but in any event prior to Closing, file (i) a Current Report on Form 8-K and press release disclosing the material terms of the transactions contemplated hereby, including the Transaction Documents as exhibits thereto and (ii) the Merger 8-K. From and after the issuance of such press release, the Company represents to the Purchaser that it shall have publicly disclosed all material, non-public information delivered to any of the Purchasers by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. The Company and each Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor any Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of any Purchaser, or without the prior consent of each Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except: (a) as required by federal securities law in connection with any registration statement contemplated by the Registration Rights Agreement and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under this clause (b).

4.7

Shareholder Rights Plan . No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that any Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that any Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchasers.

4.8

Non-Public Information . Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.

4.9

Use of Proceeds . Except as set forth on Schedule 4.9 attached hereto, the Company shall use the net proceeds from the sale of the Securities hereunder for working capital purposes and shall not use such proceed: (a) for the satisfaction of any portion of the Company’s debt (other than payment of trade payables and professional fees in the ordinary course of the Company’s business and prior practices and the debt specified on Schedule 4.9), (b) for the redemption of any Common Stock or Common Stock Equivalents, (c) for the settlement of any outstanding litigation or (d) in violation of FCPA or OFAC regulations.

4.10

Indemnification of Purchasers . Subject to the provisions of this Section 4.10, the Company will indemnify and hold each Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls such Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “ Purchaser Party ”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.10 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.

4.11

Reservation and Listing of Securities .

(a)

The Company shall maintain a reserve from its duly authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount as may then be required to fulfill its obligations in full under the Transaction Documents.

(b)

If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of Common Stock is less than 130% of (i) the Required Minimum on such date, minus (ii) the number of shares of Common Stock previously issued pursuant to the Transaction Documents, then the Board of Directors shall use commercially reasonable efforts to amend the Company’s certificate or articles of incorporation to increase the number of authorized but unissued shares of Common Stock to at least the Required Minimum at such time (minus the number of shares of Common Stock previously issued pursuant to the Transaction Documents), as soon as possible and in any event not later than the 75 ^th day after such date; provided that the Company will not be required at any time to authorize a number of shares of Common Stock greater than the maximum remaining number of shares of Common Stock that could possibly be issued after such time pursuant to the Transaction Documents.

(c)

The Company shall, if applicable: (i) in the time and manner required by the principal Trading Market, prepare and file with such Trading Market an additional shares listing application covering a number of shares of Common Stock at least equal to the Required Minimum on the date of such application, (ii) take all steps necessary to cause such shares of Common Stock to be approved for listing or quotation on such Trading Market as soon as possible thereafter, (iii) provide to the Purchasers evidence of such listing or quotation and (iv) maintain the listing or quotation of such Common Stock on any date at least equal to the Required Minimum on such date on such Trading Market or another Trading Market. The Company agrees to maintain the eligibility of the Common Stock for electronic transfer through the Depository Trust Company or another established clearing corporation, including, without limitation, by timely payment of fees to the Depository Trust Company or such other established clearing corporation in connection with such electronic transfer.

4.12

Participation in Future Financing .

(a)

From the date hereof until the date that the Preferred Stock is no longer outstanding, upon any issuance by the Company or any of its Subsidiaries of Common Stock, Common Stock Equivalents for cash consideration, Indebtedness or a combination of units hereof (a “ Subsequent Financing ”), each Purchaser shall have the right to participate in up to an amount of the Subsequent Financing equal to 100% of the Subsequent Financing (the “ Participation Maximum ”) on the same terms, conditions and price provided for in the Subsequent Financing.

(b)

At least five (5) Trading Days prior to the closing of the Subsequent Financing, the Company shall deliver to each Purchaser a written notice of its intention to effect a Subsequent Financing (“ Pre-Notice ”), which Pre-Notice shall ask such Purchaser if it wants to review the details of such financing (such additional notice, a “ Subsequent Financing Notice ”). Upon the request of a Purchaser, and only upon a request by such Purchaser, for a Subsequent Financing Notice, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to such Purchaser. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing, the amount of proceeds intended to be raised thereunder and the Person or Persons through or with whom such Subsequent Financing is proposed to be effected and shall include a term sheet or similar document relating thereto as an attachment.

(c)

Any Purchaser desiring to participate in such Subsequent Financing must provide written notice to the Company by not later than 5:30 p.m. (New York City time) on the fifth (5 ^th ) Trading Day after all of the Purchasers have received the Pre-Notice that such Purchaser is willing to participate in the Subsequent Financing, the amount of such Purchaser’s participation, and representing and warranting that such Purchaser has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice. If the Company receives no such notice from a Purchaser as of such fifth (5 ^th ) Trading Day, such Purchaser shall be deemed to have notified the Company that it does not elect to participate.

(d)

If by 5:30 p.m. (New York City time) on the fifth (5 ^th ) Trading Day after all of the Purchasers have received the Pre-Notice, notifications by the Purchasers of their willingness to participate in the Subsequent Financing (or to cause their designees to participate) is, in the aggregate, less than the total amount of the Subsequent Financing, then the Company may effect the remaining portion of such Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice.

(e)

If by 5:30 p.m. (New York City time) on the fifth (5 ^th ) Trading Day after all of the Purchasers have received the Pre-Notice, the Company receives responses to a Subsequent Financing Notice from Purchasers seeking to purchase more than the aggregate amount of the Participation Maximum, each such Purchaser shall have the right to purchase its Pro Rata Portion (as defined below) of the Participation Maximum. “ Pro Rata Portion ” means the ratio of (x) the Subscription Amount of Securities purchased on the Closing Date by a Purchaser participating under this Section 4.12 and (y) the sum of the aggregate Subscription Amounts of Securities purchased on the Closing Date by all Purchasers participating under this Section 4.12.

(f)

The Company must provide the Purchasers with a second Subsequent Financing Notice, and the Purchasers will again have the right of participation set forth above in this Section 4.12, if the Subsequent Financing subject to the initial Subsequent Financing Notice is not consummated for any reason on the terms set forth in such Subsequent Financing Notice within thirty (30) Trading Days after the date of the initial Subsequent Financing Notice.

(g)

The Company and each Purchaser agree that if any Purchaser elects to participate in the Subsequent Financing, the transaction documents related to the Subsequent Financing shall not include any term or provision whereby such Purchaser shall be required to agree to any restrictions on trading as to any of the Securities purchased hereunder or be required to consent to any amendment to or termination of, or grant any waiver, release or the like under or in connection with, this Agreement, without the prior written consent of such Purchaser.

(h)

Notwithstanding anything to the contrary in this Section 4.12 and unless otherwise agreed to by such Purchaser, the Company shall either confirm in writing to such Purchaser that the transaction with respect to the Subsequent Financing has been abandoned or shall publicly disclose its intention to issue the securities in the Subsequent Financing, in either case in such a manner such that such Purchaser will not be in possession of any material, non-public information, by the tenth (10th) Business Day following delivery of the Subsequent Financing Notice. If by such tenth (10th) Business Day, no public disclosure regarding a transaction with respect to the Subsequent Financing has been made, and no notice regarding the abandonment of such transaction has been received by such Purchaser, such transaction shall be deemed to have been abandoned and such Purchaser shall not be deemed to be in possession of any material, non-public information with respect to the Company or any of its Subsidiaries.

(i)

Notwithstanding the foregoing, this Section 4.12 shall not apply in respect of an Exempt Issuance.

4.13

Subsequent Equity Sales .

(a)

From the date hereof until one hundred and eighty (180) days after the Effective Date, neither the Company nor any Subsidiary shall issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of Common Stock or Common Stock Equivalents.

(b)

From the date hereof until such time as no Purchaser holds any of the Warrants, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents (or a combination of units thereof) involving a Variable Rate Transaction. “ Variable Rate Transaction ” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may issue securities at a future determined price. Any Purchaser shall be entitled to obtain injunctive relief against the Company to preclude any such issuance, which remedy shall be in addition to any right to collect damages.

(c)

Notwithstanding the foregoing, this Section 4.13 shall not apply in respect of an Exempt Issuance, except that no Variable Rate Transaction shall be an Exempt Issuance.

4.14

Equal Treatment of Purchasers . No consideration (including any modification of any Transaction Document) shall be offered or paid to any Person to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration is also offered to all of the parties to this Agreement. For clarification purposes, this provision constitutes a separate right granted to each Purchaser by the Company and negotiated separately by each Purchaser, and is intended for the Company to treat the Purchasers as a class and shall not in any way be construed as the Purchasers acting in concert or as a group with respect to the purchase, disposition or voting of Securities or otherwise.

4.15

Certain Transactions and Confidentiality . Each Purchaser, severally and not jointly with the other Purchasers, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will execute any purchases or sales, including Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6. Each Purchaser, severally and not jointly with the other Purchasers, covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release as described in Section 4.6, such Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) no Purchaser makes any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6, (ii) no Purchaser shall be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.6 and (iii) no Purchaser shall have any duty of confidentiality to the Company or its Subsidiaries after the issuance of the initial press release as described in Section 4.6. Notwithstanding the foregoing, in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions of such Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio managers managing other portions of such Purchaser’s assets, the covenant set forth above

shall only apply with respect to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered by this Agreement.

4.16

Form D; Blue Sky Filings . The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of any Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchasers at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any Purchaser.

4.17

Capital Changes . Until the one year anniversary of the Effective Date, the Company shall not undertake a reverse or forward stock split or reclassification of the Common Stock without the prior written consent of the Purchasers holding a majority in interest of the shares of Preferred Stock.

4.18

Most Favored Nation Provision . From the date hereof until such time as no Purchaser holds any of the Securities, in the event that the Company issues or sells any Common Stock or Common Stock Equivalents, if a Purchaser then holding Securities reasonably believes that any of the terms and conditions appurtenant to such issuance or sale are more favorable to such investors than are the terms and conditions granted to the Purchasers hereunder, upon notice to the Company by such Purchaser within five Trading Days after disclosure of such issuance or sale, the Company shall amend the terms of this transaction as to such Purchaser only so as to give such Purchaser the benefit of such more favorable terms or conditions. This Section 4.18 shall not apply with respect to an Exempt Issuance. The Company shall provide each Purchaser with notice of any such issuance or sale in the manner for disclosure of Subsequent Financings set forth in Section 4.12.

ARTICLE V.

MISCELLANEOUS

5.1

Termination . This Agreement may be terminated by any Purchaser, as to such Purchaser’s obligations hereunder only and without any effect whatsoever on the obligations between the Company and the other Purchasers, by written notice to the other parties, if the Closing has not been consummated on or before June 6, 2014; provided , however , that such termination will not affect the right of any party to sue for any breach by any other party (or parties).

5.2

Fees and Expenses . At the Closing, the Company has agreed to reimburse Alpha Capital (“Alpha”) the non-accountable sum of $35,000 for its legal fees and expenses, none of which has been paid prior to the Closing. Accordingly, in lieu of the foregoing payments, the aggregate amount that Alpha is to pay for the Securities at the Closing shall be reduced by $35,000 in lieu thereof. The Company shall deliver to each Purchaser, prior to the Closing, a completed and executed copy of the Closing Statement, attached hereto as Annex A . Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a Purchaser), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchasers.

5.3

Entire Agreement . The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.4

Notices . Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2 ^nd ) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.

5.5

Amendments; Waivers . No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchasers holding at least 67% in interest of the Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

5.6

Headings . The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

5.7

Successors and Assigns . This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser (other than by merger). Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchasers.”

5.8

No Third-Party Beneficiaries . This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.10 and this Section 5.8.

5.9

Governing Law . All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.10, the prevailing party

in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

5.10

Survival . The representations and warranties contained herein shall survive the Closing and the delivery of the Securities.

5.11

Execution . This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

5.12

5.13

Rescission and Withdrawal Right . Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights; provided , however , that in the case of a rescission of a conversion of the Preferred Stock or exercise of a Warrant, the applicable Purchaser shall be required to return any shares of Common Stock subject to any such rescinded conversion or exercise notice concurrently with the return to such Purchaser of the aggregate exercise price paid to the Company for such shares and the restoration of such Purchaser’s right to acquire such shares pursuant to such Purchaser’s Warrant (including, issuance of a replacement warrant certificate evidencing such restored right).

5.14

Replacement of Securities . If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

5.15

Remedies . In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.16

Payment Set Aside . To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.17

Usury . To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any time hereafter in force, in connection with any claim, action or proceeding that may be brought by any Purchaser in order to enforce any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “ Maximum Rate ”), and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date thereof forward, unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum Rate is paid by the Company to any Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall be applied by such Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner of handling such excess to be at such Purchaser’s election.

5.18

Independent Nature of Purchasers’ Obligations and Rights . The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance or non-performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser has been represented by its own separate legal counsel in its review and negotiation of the Transaction Documents. For reasons of administrative convenience only, each Purchaser and its respective counsel have chosen to communicate with the Company through EGS. EGS does not represent all of the Purchasers and only represents Alpha. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by any of the Purchasers.

5.19

Liquidated Damages . The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

5.20

Saturdays, Sundays, Holidays, etc.

If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.

5.21

Construction . The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

5.22

WAIVER OF JURY TRIAL . IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.

(Signature Pages Follow)

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.


WESTCOTT PRODUCTS CORPORATION		Address for Notice:

		112 Lorraine South, Suite 266
		Midland, TX 79701



By:	/s/ E. Will Gray II	Fax: (432)505-9746
	Name: E. Will Gray, II
	Title: Chief Executive Officer

With copies to (which shall not constitute notice):

Brunson Chandler & Jones, PLLC 175 South Main Street Fifteenth Floor Salt Lake City, Utah 84111 Leonard W. Burningham, Esq. 455 East 500 South, Suite 205 Salt Lake City, Utah 84111

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

Disclosure Schedules for Securities Purchase Agreement

3.1

Representations and Warranties of the Company .

(a)

Subsidiaries.

Dala Petroleum Corp., a Nevada corporation (“Dala”), became a wholly-owned subsidiary of the Company pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) when it merged into the Company’s wholly-owned subsidiary, Dala Acquisition Corp., a Nevada corporation formed for the sole purpose of the merger by which Dala became the surviving entity (the “Merger”).

(b)

Organization and Qualification.

No exceptions.

(c)

Authorization; Enforcement.

No exceptions.

(d)

No Conflicts.

No exceptions.

(e)

Filings, Consents and Approvals.

No exceptions.

(f)

Issuance of the Securities.

No exceptions.

(g)

Capitalization.

Authorized:

Common:

50,000,000 at $0.001 par value.

Preferred:

50,000,000 at $0.01 par value

Pre-Merger

Outstanding*:

Common*:

2,500,000

Preferred:

Post Merger*:

Common*:

12,500,000

Preferred:

Minimum Offering:

2,000 shares

Underlying Shares:

Common:

2,857,143 ($0.70 Conversion Price)**

Warrants:

2,857,143 ($1.35 Exercise Price)**

Maximum Offering:

2,500 shares***

Common: 3,571,429 ($0.70 Conversion Price)**

Warrants: 3,571,429 ($1.35 Exercise Price)**

Excepting, without qualification, claims related to the matters outlined in Company’s Definitive Information Statement dated November 28, 2006, which was filed with the Securities and Exchange Commission on such date, and which relate to shares held of record on two (2) missing pages of Company’s shareholder list from Mellon Securities Transfer dated on or about December 27, 1993, which claims are exclusively limited to the 8,800 shares held in escrow by Company current transfer agent, American Registrar & Transfer Co., Inc. (“American Registrar”) (such shares are reflected on current shareholder lists as being outstanding and in the name of American Registrar); and the 200,000 shares of Company’s common stock being deposited in escrow for a period of two (2) years by Jenson Services, Inc., a Utah corporation (“Jenson Services”), under the Agreement and pursuant to the Escrow Agreement referenced therein under Sections 5.4(d) and 6.4(e) thereof (such 8,800 and 200,000 shares being the “Escrowed Shares”).

Conversion prices of Preferred Stock and exercise prices of Warrants are on a per share or per warrant basis, each subject to adjustment as outlined in the Transaction Documents.

***

Subject to increase to 2,775 shares of Preferred Stock in the event of an over subscription, which, if all sold, would result in an additional 3,964,286 shares of common stock acquirable upon conversion of such shares of Preferred Stock at $0.70 per share; and 3,964,286 warrants to acquire that number of additional shares of common stock at an exercise price of $1.35 per share, subject to adjustment as outlined in the Transaction Documents.

Number of shares beneficially owned, and of record, by Affiliates of the Company as of the date hereof (post-Merger, pre-Offering and post-Offering): 8,140,000 shares.


Affiliate Shareholders	Number of Shares post- merger, pre-Offering	Percentage of issued and outstanding shares post-Merger, pre-Offering
Cottman Family Trust	1,650,000	13.2%
Orinoco Revocable Trust	1,830,000	14.64%
Terry Looper	1,410,000	11.28%
Oil & Gas Technology Consultants	960,000	7.68%
E. Will Gray II	1,290,000	10.00%
J&M Wimbish Family Trust	800,000	6.40%
Jonathan S. Wimbish	100,000	0.80%
Clancy Cottman	100,000	0.80%


Affiliate Shareholders	Number of Shares post- Merger, post-Offering	Percentage of issued and outstanding shares post- Merger, post- Offering (assuming minimum Offering, all preferred shares converted into common shares, all warrants exercised and all stock options exercised)	Percentage of issued and outstanding shares post- Merger, post-Offering (assuming maximum Offering, all preferred shares converted into common shares, all warrants exercised and all stock options exercised)
Cottman Family Trust	1,650,000	9.24%	8.66%
Orinoco Revocable Trust	1,830,000	10.25%	9.61%
Terry Looper	1,410,000	7.89%	7.40%
Oil & Gas Technology Consultants	960,000	5.37%	5.04%
E. Will Gray II	1,290,000	7.22%	6.77%
J&M Wimbish Family Trust	800,000	4.45%	4.20%
Jonathan S. Wimbish	100,000	0.56%	0.52%
Clancy Cottman	100,000	0.56%	0.52%

(h)

SEC Reports; Financial Statements.

No exceptions.

(i)

Material Changes; Undisclosed Events; Liabilities or Developments.

No exceptions.

(j)

Litigation.

No Exceptions.

(k)

Labor Relations.

No exceptions.

(l)

Compliance.

No exceptions.

(m)

Regulatory Permits.

No exceptions.

(n)

Title to Assets.

No exceptions.

(o)

Intellectual Property.

No exceptions.

(p)

Insurance.

No exceptions.

(q)

Transactions With Affiliates and Employees.

Clancy Cottman, who will serve as a director of the Company Post-Merger, is a member of Chisholm Partners II, LLC “Chisholm II”_), the sole shareholder of Dala Petroleum Corp. prior to the Merger. Accordingly, a family trust Mr. Cottman controls will receive 1,650,000 shares of the Company pursuant to the Merger.

The Company has entered into an employment agreement with its CEO, E. Will Gray II. He will receive a salary of $175,000 per year and a potential bonus no greater than the lesser of 20% of EBITDA or 50% of annual base salary.

At the Closing of the Merger, the Company will enter into a Master Services Agreement with Chisholm II pursuant to which Chisholm II will agreed to act as an independent contractor for the Company and provide services and personalle to develop, drill, operate, and maintain oil and gas wells and properties used to produce oil and gas within the State of Kansas for a period of twelve months. Chisholm II is the sole shareholder of Dala and Chisholm II’s managing director is Clancy Cottman, a director of the Company post-Merger.

At the Closing of the Merger, the Company entered into an Option Participation Agreemetn with Chisholm II, pursuant to which Chisholm II granted the Company the option, at the Company’s election, to participate for up to twenty-five percent (25%) of Chisholm II’s share of each drilling operation in search for oil or gas in the State of Kansas undertaken by Chisholm II. Chisholm II is the sole shareholder of Dala and Chisholm II’s managing director is Clancy Cottman, a director of the Company post-Merger.

_________

(r)

Sarbanes-Oxley; Internal Accounting Controls.

No exceptions.

(s)

Certain Fees.

No exceptions.

(t)

Private Placement.

No exceptions.

(u)

Investment Company.

No exceptions.

(v)

Registration Rights.

No exceptions.

(w)

Listing and Maintenance Requirements.

No exceptions.

(x)

Application of Takeover Protections.

No exceptions.

(y)

Disclosure.

The Private Placement Memorandum for the Offering and the “Merger 8-K” announcing the Merger and the Offering are attached hereto as Schedule 3.1(y).

(z)

No Integrated Offering.

No exceptions.

(aa)

Solvency

No exceptions.

(bb)

Tax Status.

No exceptions.

(cc)

No General Solicitation.

No exceptions.

(dd)

Foreign Corrupt Practices.

No exceptions.

(ee)

Accountants.

Mantyla McReynolds LLC

Five Gateway Center

178 Rio Grande Street

Suite 200

Salt Lake City, Utah 84101

(801)269-1818

Fax: (801)266-3481

info@mmacpa.com

(ff)

Seniority

No exceptions.

(gg)

No Disagreements with Accountants and Lawyers.

No exceptions.

(hh)

Acknowledgment Regarding Purchasers’ Purchase of Securities.

No exceptions.

(ii)

Acknowledgment Regarding Purchaser’s Trading Activity.

No exceptions.

(jj)

Regulation M Compliance.

No exceptions.

(kk)

Stock Option Plans.

The Company will grant stock options in connection with the Merger, as follows:

400,000 stock options granted to sole employee (E. Will Gray II) that vest over six years with an exercise price of $0.70. In the event that the Company is sold or there is a change of control, the stock options will automatically vest.

200,000 stock options granted to directors (100,000 to Clancy Cottman and 100,000 to Jonathan S. Wimbish) that vest over two years with an exercise price of $0.70. In the event that the Company is sold or there is a change of control, the stock options will automatically vest.

(ll)

Office of Foreign Assets Control.

No exceptions.

(mm)

U.S. Real Property Holding Corporation.

No exceptions.

(nn)

Bank Holding Company Act.

No exceptions.

(oo)

Money Laundering.

No exceptions.

(pp)

No Disqualification Events.

No exceptions.

(qq)

Other Covered Persons.

No exceptions.

(rr)

Notice of Disqualification Events.

No exceptions.

4.9

Use of Proceeds


Expense Description	Expense Amount
Current accounts payable in Westcott	$120,000
Legal expenses for Westcott	$25,000
Auditors’ fee for Merger 8-K review	$7,000
Legal expenses for Dala	$31,000
Travel expenses incurred to date by Will Gray	$4,152.64
Accounting and financial preparation fees for Dala	$6,834
Consulting fees for Dala leases	$10,538.56
Legal Expenses for Alpha Capital	$35,000

Schedule A

Shareholders Subject to Lock-Up Agreement


Shareholders subject to Lock-Up Agreement	Number of Shares post- Merger, pre-Offering	Percentage of issued and outstanding shares post-Merger, pre-Offering
Cottman Family Trust	1,650,000	13.2%
Orinoco Revocable Trust	1,830,000	14.64%
Terry Looper	1,410,000	11.28%
Oil & Gas Technology Consultants	960,000	7.68%
E. Will Gray II	1,290,000	10.00%
J&M Wimbish Family Trust	800,000	6.40%
Jonathan S. Wimbish	100,000	0.80%
Clancy Cottman	100,000	0.80%

Schedule 3.1(y)

Private Placement Memorandum

And Merger 8-K

[PURCHASER SIGNATURE PAGES TO WESTCOTT/DALA SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

Name of Purchaser: ____________________________________________________

Signature of Authorized Signatory of Purchaser : _______ /s/ ___________________

Name of Authorized Signatory: ____________________________________

Title of Authorized Signatory: _____________________________________

Email Address of Authorized Signatory: ___________________________________________

Facsimile Number of Authorized Signatory: _________________________________________

Address for Notice to Purchaser:

Address for Delivery of Securities to Purchaser (if not same as address for notice):

Subscription Amount:____________

Shares of Preferred Stock:____________

Warrant Shares:________________

EIN Number: _______________________

[SIGNATURE PAGES CONTINUE]

Annex A

CLOSING STATEMENT

Pursuant to the attached Securities Purchase Agreement, dated as of the date hereto, the purchasers shall purchase up to $______ of Preferred Stock and Warrants from Westcott Products Corporation, a Delaware corporation (the “ Company ”). All funds will be wired into an account maintained by the Company. All funds will be disbursed in accordance with this Closing Statement.

Disbursement Date:

June 3, 2014


I. PURCHASE PRICE

Gross Proceeds to be Received	$

II. DISBURSEMENTS
	$
	$
	$
	$
	$

Total Amount Disbursed:	$



WIRE INSTRUCTIONS :


Brunson Chandler & Jones Trust Account US BANK 170 South Main Street Salt Lake City, Utah 84111 Routing: 124302150 Account: 153152343783 Swift:USBKUS44IMT

Exhibit 10.13

ESCROW AGREEMENT

This Escrow Agreement (the “Agreement”), dated as of the 16th of April, 2014 (the “Effective Date”), is entered into by and between Westcott Products Corporation (the “Company”), Brunson Chandler & Jones, PLLC as escrow agent (“Escrow Agent”) and the Investor listed on the signature page attached hereto (“Investor”).

RECITALS

WHEREAS, the Company will be placing a unit comprised of shares of its Series A 6% Convertible Preferred Stock and warrants to acquire additional shares of its common stock (the “Units”) with certain investors (the “Investors”) in a private placement offering (the “Offering”) and desires to establish a non-interest bearing escrow account with Escrow Agent into which the Investors (or the Company on behalf of Investors) shall deposit checks and/or wire transfers for the payment of money in accordance with the terms herein;

WHEREAS, the Escrow Agent is willing to accept said checks and/or wire transfers for the payment of money in accordance with the terms herein;

WHEREAS, the Company plans to enter into an Agreement and Plan of Merger (the “Merger Agreement” and the “Merger”) with Dala Petroleum Corp. through a wholly-owned subsidiary to be formed for that sole purpose, the closing of which Merger is contingent upon a minimum Offering amount of at least $2,000,000. If the minimum Offering amount is raised, and the Merger Agreement is executed, and the Merger occurs, then the Escrow Agent shall disburse the funds to the Company as set forth herein;

WHEREAS, if the minimum Offering amount is not raised by June 1, 2014 (or any extended date authorized by the Company), then the Escrow Agent shall promptly return the funds to the Investor(s) as set forth herein; and

WHEREAS, the Company represents and warrants to the Escrow Agent that it has not stated to any individual or entity that the Escrow Agent’s duties will include anything other than those duties stated in this Agreement.

AGREEMENT

The parties, intending to be legally bound, hereby agree as follows:

DELIVERY OF ESCROW FUNDS

(a)(i) The Company shall deliver to the Escrow Agent checks received from each prospective Investor made payable to the order of the Brunson Chandler & Jones, PLLC IOLTA Trust Account (the “Escrow Account”), and delivered to the attention of Callie Jones at 175 South Main Street, Fifteenth Floor, Salt Lake City, Utah 84111or

(ii) The Escrow Agent shall receive money directly from prospective Investors by means of check or wire transfer. If by wire transfer, money shall be wired to Brunson Chandler & Jones, PLLC, 170 South Main Street, Salt Lake City, Utah, 84111, Routing: 124302150, Account: 153152343783,

Swift: USBKUS44IMT.

All such money shall be deposited into the Escrow Account (without the use of any subaccounts).

(b) The Escrow Agent shall have no duty or responsibility to enforce the collection or demand payment of any funds deposited into the Escrow Account. If, for any reason, any check deposited into the Escrow Account shall be returned unpaid to the Escrow Agent, the sole duty of the Escrow Agent shall be to return the check to the Company.

(c) Promptly after checks and wire transfers are delivered to the Escrow Agent from the Company or any Investor, the Company or the Investor, as applicable, shall provide the Escrow Agent with the Investor’s original subscription agreement, which shall include the Investor’s name, address and other applicable information (social security number or employer identification number, if appropriate). The Escrow Agent shall hold the subscription agreements pending release of the funds in the Escrow Account (the “Escrow Funds”) as provided in Section 2 below at which time the subscription agreements shall be released to the Company or the Investor as applicable in accordance with written instructions from the Company (which shall be delivered to the Escrow Agent promptly following the earlier to occur of the distribution of the Escrow Funds or the written request of the Escrow Agent).

RELEASE OF ESCROW FUNDS

The Escrow Funds shall be paid by the Escrow Agent in accordance with the following:

(a) In the event that the Company advises the Escrow Agent in writing that the private placement described in the Memorandum has been withdrawn, the Escrow Agent shall promptly return the funds paid by each prospective Investor, to said prospective Investor at the address specified in such Investor’s subscription agreement, without interest or deduction therefrom.

(b) If prior to 5 p.m. (New York City time) on June 1, 2014, the Escrow Agent receives written notification signed by the Company, if any, stating that the Offering termination date (the “Termination Date”) described in the placement memorandum or offering prospectus has been extended to a date stated therein, the Termination Date shall be so extended.

(c) If the Merger Agreement is not executed and the Merger contemplated therein does not occur prior to the Termination Date or any allowable extension periods, the Escrow Agent shall thereupon promptly return the Escrow Funds to the Investor(s) and close the Escrow Account.

(d) The Escrow Agent shall not be required to pay any uncollected funds or any funds which are not available for withdrawal.

ACCEPTANCE BY THE ESCROW AGENT

The Escrow Agent hereby accepts and agrees to perform its obligations hereunder, provided that:

(a) The duties and obligations of the Escrow Agent shall be determined solely by the express provisions of this Agreement, and the Escrow Agent shall not be liable except for the performance of such duties and obligations as are specifically set out in this Agreement, and no duties, obligations or responsibilities shall be inferred or implied against the Escrow Agent, and any permissive rights of the Escrow Agent hereunder shall not be construed as duties. The Escrow Agent shall not be required to inquire as to the performance or observation of any obligation, term or condition under any agreement or arrangement by the Company or any Investor. The Escrow Agent is not a party to, and is not bound by, any agreement or other document out of which this Agreement may arise, including, but not limited to, the any placement memorandum, offering prospectus, or subscription agreement. The Escrow Agent shall be under no liability to any party hereto by reason of any failure on the part of any party hereto or any maker, guarantor, endorser or other signatory of any document or any other person to perform such person’s obligations under any such document. The Escrow Agent shall not be bound by any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall give its prior written consent thereto. This Agreement shall not be deemed to create a fiduciary relationship between the parties hereto under state or federal law.

(b) The Escrow Agent shall not be responsible in any manner for the validity or sufficiency of this Agreement or of any property delivered hereunder, or for the value or collectability of any note, check or other instrument, if any, so delivered, or for any representations made or obligations assumed by any party other than the Escrow Agent. Nothing herein contained shall be deemed to obligate the Escrow Agent to deliver any cash, instruments, documents or any other property referred to herein, unless the same shall have first been received by the Escrow Agent, and in the case of a check, has cleared and immediately available funds are available to the Escrow Agent, pursuant to this Agreement.

(c) The Escrow Agent may execute or perform any duties under this Agreement either directly or through agents, designees, nominees, and assignees, and shall not be responsible for the actions of any such party appointed with due care.

(d) The Escrow Agent may request that the Company deliver a certificate setting forth the names of individuals and or titles of officers authorized at such time to take specific actions pursuant to this Agreement and shall be entitled to rely upon such certificate until a new certificate is delivered to Escrow Agent. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall be under no duty to inquire or investigate the validity, accuracy or content of any such document.

(e) The Escrow Agent shall not be liable for any error of judgment, or for any act done or step taken or omitted by it in good faith or for any mistake in act or law, or for anything which it may do or refrain from doing in connection herewith, except its own gross negligence or willful misconduct.

(f) The parties hereto agree that should any dispute arise with respect to the payment, ownership or right of possession of the Escrow Account, or if the Escrow Agent is uncertain as to its rights or duties hereunder, the Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, except for its willful misconduct or gross negligence, all or any part of the Escrow Account until such dispute or uncertainty shall have been settled either by mutual agreement by the parties concerned or by the final order, decree or judgment of a court or other tribunal of competent jurisdiction in the United States of America, and a notice executed by the parties to the dispute or their authorized representatives shall have been delivered to the Escrow Agent setting forth the resolution of the dispute. The Escrow Agent shall be under no duty whatsoever to institute, defend or partake in such proceedings; provided, however, the Escrow Agent may, in its sole discretion, commence an interpleader action or seek other judicial relief or orders as it may deem, in its sole discretion, necessary. The costs and expenses, including attorney fees, incurred in connection with any such proceeding shall be paid by, and shall be deemed an expense of the Company.

(g) The Escrow Agent shall never be required to use or advance its own funds or otherwise incur financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be obligated to take any action which in its reasonable judgment would involve it in expense or liability unless it has been furnished with an indemnity or other security reasonably satisfactory to it.

(h) In no event shall the Escrow Agent be liable, directly or indirectly, for any special, indirect or consequential damages, even if the Escrow Agent has been advised of the possibility of such damages and regardless of the form of action.

(j) The Escrow Agent shall not be responsible for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes, terrorist attacks or other disasters.

(k) The Escrow Agent is authorized to obey and comply, in any manner it deems appropriate, with all writs, order, judgments, awards, decrees issued or process entered by any court, agency, arbitrator, or tribunal with respect to this Agreement.

(i) The agreements set forth in this Section 3 shall survive the resignation or removal of the Escrow Agent, the termination of this Agreement and the payment of all amounts hereunder.

FEES AND INDEMNIFICATION OF ESCROW AGENT

(a) The Company agrees to pay the Escrow Agent $500 as compensation for its services as Escrow Agent, and to reimburse the Escrow Agent for all costs, fees and expenses incurred by the Escrow Agent in the performance of its duties hereunder.

Wire Instructions:

Brunson Chandler & Jones Trust Account

US BANK

170 South Main Street

Salt Lake City, Utah 84111

Routing: 124302150

Account: 153152343783

Swift: USBKUS44IMT

(b) The Company will reimburse and indemnify the Escrow Agent for, and hold it harmless against, any loss, liability, claim, cost, damage or expense, including but not limited to attorney fees and costs, incurred without gross negligence or willful misconduct on the part of the Escrow Agent and arising out of or in conjunction with its acceptance of, or the performance of its duties and obligations under, this Agreement, as well as the costs and expenses of defending against any claim or liability arising out of or relating to this Agreement. The Company agrees to indemnify the Escrow Agent for any transfer or other taxes the Escrow Agent is obligated to pay on behalf of Company or any Investor, respectively, in connection with this Agreement. Any payments of income from the Escrow Funds shall be subject to withholding regulations then in force with respect to U.S. taxes. It is understood that the Escrow Agent shall be responsible for income reporting only with respect to income earned on investment of the Escrow Funds and is not responsible for any other tax reporting.

(c) The Escrow Agent shall have a lien upon the Escrow Funds (and all earnings thereon or additions thereto) held in the Escrow Account for any costs, expenses, fees or indemnification obligations that may arise under this Agreement that are not timely paid in full to the Escrow Agent (“Owed Amounts”). The Escrow Agent shall be entitled to debit and retain that portion of the Escrow Funds equal to such Owed Amounts, until all such Owed Amounts have been paid in full. If property or securities are held in the Escrow Account, the Escrow Agent shall be entitled to sell, convey or otherwise dispose of such property or securities for such purpose.

(d) The terms and obligations of this Section 4 shall survive the termination of this Agreement, the payment of all amounts hereunder and the resignation or removal of the Escrow Agent.

RESIGNATION OF THE ESCROW AGENT

The Escrow Agent shall have the right to resign upon 30 days written notice to the Company. In the event of such resignation, Company shall appoint a successor escrow agent hereunder by delivering to the Escrow Agent a written notice of such appointment. Upon receipt of such notice, the Escrow Agent shall deliver to the designated successor escrow agent all money and other property held hereunder and shall thereupon be released and discharged from any and all further responsibilities whatsoever under this Agreement; provided, however, the Escrow Agent shall not be deprived of its compensation earned prior to such time. If no successor escrow agent shall have been designated by the date specified in the Escrow Agent’s notice, all obligations of the Escrow Agent hereunder shall nevertheless cease and terminate and the Escrow Agent’s sole responsibility thereafter shall be to keep safely all property then held by it and to deliver the same to a person designated by the other parties hereto. Additionally, if no successor escrow agent shall have been designated, the Escrow Agent may (i) at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor escrow agent, or (ii) deposit the Escrow Funds with a court of competent jurisdiction and thereafter have no further responsibilities or duties in connection therewith.

TERMINATION

This Agreement, except for the terms hereof that expressly survive, shall terminate upon the distribution of all Escrow Funds and the release of any subscription agreements held hereunder or the written agreement of the parties hereto; provided, however, if the Agreement is terminated based upon the written agreement of the parties hereto, the termination shall not become effective until such time as all Escrow Funds (including any interest posted in arrears) and subscription agreements are distributed.

MISCELLANEOUS

(a) This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings (written or oral) of the parties in connection herewith.

(b) This Agreement shall not be revoked, rescinded, amended, or modified as to any of its terms or conditions except by a writing signed by the parties hereto.

(c) Any notice or other communication under this Agreement shall be in writing and shall be considered given when delivered personally, upon receipt of confirmation from the transmitting equipment if sent by facsimile or email, two days after being sent by a major overnight courier, or five days after being mailed by certified mail, return receipt requested, to the parties at their respective addresses set forth below (or at such other address as a party may specify by notice to the other):

If to Company, to:

Westcott Products Corporation

4685 South Highland Drive, Suite 202

Salt Lake City, Utah 84117

With a copy to:

Leonard W. Burnngham, Esq.

455 East 500 South, Suite 205

Salt Lake City, Utah 84111

If to the Escrow Agent, to:

Brunson Chandler & Jones, PLLC

Attn: Callie Jones

175 S. Main St., 15 ^th Floor

Salt Lake City, UT 84111

The parties hereto authorize the Escrow Agent to rely upon and comply with instructions or directions sent via unsecured facsimile or email transmission and Escrow Agent shall not be liable for any loss, liability or expense of any kind incurred by the Company or any third party due to Escrow Agent’s reliance upon and compliance with instructions or directions given by unsecured facsimile or email transmission, provided, however, that such losses have not arisen from the gross negligence or willful misconduct of the Escrow Agent, it being understood that the failure of the Escrow Agent to verify or confirm that the person providing the instructions or directions, is, in fact, an authorized person does not constitute gross negligence or willful misconduct.

(d) This Agreement shall be governed by and construed in accordance with the laws of the State of Utah without reference to or application of its rules or principles of conflicts of law. Each of the parties hereto hereby irrevocably agrees that any action, suit or proceedings against any of them by any of the other aforementioned parties with respect to this Agreement shall be brought before the exclusive jurisdiction of the federal or state courts located in Salt Lake County, State of Utah, unless all the parties hereto agree in writing to any other jurisdiction. Each of the parties hereto hereby submits to such exclusive jurisdiction. Each party consents to service of process by certified or registered mail, return receipt requested, directed to the address last specified for notices. All parties hereto agree to waive the right to trial by jury to the fullest extent permitted by law. To the extent that in any jurisdiction, the Company may be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (whether before or after judgment) or other legal process, each hereby irrevocably agrees not to claim, and hereby waives such immunity.

(e) This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, administrators, executors, successors, and assigns. Notwithstanding any other provision contained herein, if the Escrow Agent consolidates with, merges or converts into, or transfers all or substantially all of its business to another entity, the successor without any further act shall be the successor Escrow Agent hereunder.

(f) The failure of any party at any time or times to require performance of any provision hereunder shall in no way affect the right of such party at a later time to enforce the same. The rights and remedies conferred upon the parties hereto shall be cumulative, and the exercise or waiver or any such right or remedy shall not preclude or inhibit the exercise of any additional rights or remedies. The waiver of any right or remedy hereunder shall not preclude the subsequent exercise of such right or remedy.

(g) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

(h) Nothing in this Agreement shall confer any rights, either express or implied, upon any person or entity, other than the parties hereto and their respective successors, permitted assigns, heirs, executors, personal representatives, administrators, and legal representatives.

(i) If any provisions of this Agreement shall be declared by any court of competent jurisdiction illegal, void or unenforceable, the other provisions shall not be affected, but shall remain in full force and effect.

(j) The headings of the sections contained in this Agreement are solely for convenience or reference and shall not affect the meaning or interpretation of this Agreement.

(k) The Company represents and warrants (a) that this Agreement has been duly authorized, executed and delivered on its behalf and constitutes its legal, valid and binding obligation and (b) that the execution, delivery and performance of this Agreement by the Company does not and will not violate any applicable law or regulation.

(l) The parties hereto shall furnish the Escrow Agent upon execution of this Agreement, and as subsequently required, all appropriate U.S. tax forms and other information in order for the Escrow Agent to comply with U.S. tax or other regulations.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above.


COMPANY:		INVESTOR:



/s/		/s/
Name: E. Will Gray		Name:
Title: Secretary		Amount Invested in Offering:
		Address:

ESCROW AGENT :

BRUNSON CHANDLER & JONES, PLLC



/s/
Name: Callie Jones
Title: Partner

Exhibit 10.14

Exhibit 5.4(d)

Escrow Agreement

This Escrow Agreement (the “Agreement” ) is made this 3rd day of June, 2014, by and between Westcott Products Corporation, a Delaware corporation ( “Parent”) ; Jenson Services, Inc., a Utah corporation ( “Jenson Services” ); and Brunson Chandler & Jones, (the “Escrow Agent” ).

RECITALS:

WHEREAS, Parent has entered into an Agreement and Plan of Merger (the “Merger Agreement” ) between Parent; Dala Acquisition Corp., a Nevada corporation and a wholly-owned subsidiary of Parent ( “Merger Subsidiary” ); Dala Petroleum, Inc., a Nevada corporation ( “Company” ) and wholly-owned subsidiary of Chisholm Partners II, LLC, a Louisiana limited liability company (“ Company Shareholder ” or “ Sole Company Shareholder ”); and Company Shareholder; and

WHEREAS, Jenson Services has agreed to deposit 200,000 shares of $0.001 par value common stock of Parent comprised of “restricted securities” as defined in Securities and Exchange Commission (the “SEC” ) Rule 144 (the “Escrowed Shares” ) to be held by the Escrow Agent for a period of two (2) years (the “Escrow Period”) as security for any claim against Parent related to its outstanding capitalization as described in Parent’s Information Statement dated and mailed to its shareholders on November 29, 2006, and filed with the SEC on November 28, 2006 (“Parent Information Statement” ), or otherwise related to its capitalization, or any material breach of Parent’s representations and warranties contained in Section 3 of the Merger Agreement; and

WHEREAS, as a result of the “Re-capitalization” approved in the Parent Information Statement, the then outstanding common stock of Parent was reverse split on a basis of 250,000 for one, with each fractional share being rounded up to the nearest whole share, and immediately thereafter, a 200 for one dividend was declared, pro rata to all shareholders, with a mandatory exchange required to receive the dividend, and with appropriate adjustments to the capital accounts of Parent, and the Re-capitalization and deposit of the Escrowed Shares are believed to be more than sufficient to satisfy any claim for shares related to the capitalization issues outlined in the Information Statement ; and

WHEREAS, the Escrow Agent has agreed to hold the Escrowed Shares for all purposes of this Agreement;

NOW, THEREFORE, IT IS AGREED:

Deposit, Use and Return of Escrowed Shares

1.1

Jenson Services hereby deposits the Escrowed Shares with the Escrow Agent, to be held, disbursed, transferred, conveyed, cancelled or otherwise utilized by Parent for a period of two (2) years as security for any claim against Parent related to its outstanding capitalization as described in Parent Information Statement or otherwise related to its capitalization, or any material breach of Parent’s representations and warranties contained in Section 3 of the Merger Agreement. Jenson Services shall require its authorized officers to sign such stock certificates as may be required by Parent or Escrow Agent to implement this Agreement and the utilization of the Escrowed Shares as contemplated hereunder, including having its officers duly authorized in appropriate corporate resolutions and the obtaining of “Medallion Signature Guarantees” of such signatures on any such stock certificates.

1.2

The Escrow Agent is empowered, without further qualification, to deliver to Parent the number of Escrowed Shares requested of Parent’s Board of Directors (the “Board” ) to satisfy any claim made for shares of common stock by any person not listed on Parent’s shareholders list as of the Effective Date of the Merger Agreement (as defined therein), based solely on such Board’s good faith determination that any such claim is supported by reasonable evidence and should be honored.

1.3

The Escrow Agent is also empowered to deliver to Parent, subject to 15 days notice being provided to Jenson Services the (the “Demand Notice”) to allow it to cure any material default in any representations and warranties of Parent in Section 3 of the Merger Agreement, such portion of the Escrowed Shares as shall be equal to the damages actually caused by any such breach to Parent, with the valuation of the Escrowed Shares for any such purpose being: (i) during the first year of the Escrow Period, 50% of the average trading price of Parent common stock on its most recognized national market for the previous 10 days prior to the Demand Notice to Jenson Services, and (ii) during the second year of the Escrow Period, 100% of the average trading price of Parent common stock on its most recognized national market for the previous 10 days prior to the Demand Notice to Jenson Services (the “Determined Value” ).

1.4

Any Escrowed Shares remaining at the end of the Escrow Period after satisfaction of any claims in Sections 1.1, 1.2 and 1.3, shall be promptly returned to Jenson Services.

Escrow Agent Duties and Responsibilities

2.1

The duties and obligations of the Escrow Agent shall be determined solely by the express provisions of this Agreement, and the Escrow Agent shall not be liable except for the performance of such duties and obligations as are specifically set out in this Agreement, and no duties, obligations or responsibilities shall be inferred or implied against the Escrow Agent, and any permissive rights of the Escrow Agent hereunder shall not be construed as duties. The Escrow Agent shall not be required to inquire as to the performance or observation of any obligation, term or condition under any agreement or arrangement by Parent of Jenson Services. The Escrow Agent is not a party to, and is not bound by, any agreement or other document out of which this Agreement may arise, including, but not limited to the Merger Agreement transaction documents. The Escrow Agent shall be under no liability to any party hereto by reason of any failure on the part of any party hereto or any maker, guarantor, endorser or other signatory of any document or any other person to perform such person’s obligations under any such document. The Escrow Agent shall not be bound by any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall give its prior written consent thereto. This Agreement shall not be deemed to create a fiduciary relationship between the parties hereto under state or federal law.

2.2

The Escrow Agent shall not be responsible in any manner for the validity or sufficiency of this Agreement or of any property delivered hereunder, or for the value or collectability of any note, check or other instrument, if any, so delivered, or for any representations made or obligations assumed by any party other than the Escrow Agent. Nothing herein contained shall be deemed to obligate the Escrow Agent to deliver any cash, instruments, documents or any other property referred to herein, unless the same shall have first been received by the Escrow Agent, and in the case of a check, has cleared and immediately available funds are available to the Escrow Agent, pursuant to this Agreement.

2.3

The Escrow Agent may execute or perform any duties under this Agreement either directly or through agents, designees, nominees, and assignees, and shall not be responsible for the actions of any such party appointed with due care.

2.4

The Escrow Agent may request that the Company deliver a certificate setting forth the names of individuals and or titles of officers authorized at such time to take specific actions pursuant to this Agreement and shall be entitled to rely upon such certificate until a new certificate is delivered to Escrow Agent. The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties. The Escrow Agent shall be under no duty to inquire or investigate the validity, accuracy or content of any such document.

2.5

The Escrow Agent shall not be liable for any error of judgment, or for any act done or step taken or omitted by it in good faith or for any mistake in act or law, or for anything which it may do or refrain from doing in connection herewith, except its own gross negligence or willful misconduct.

2.6

The parties hereto agree that should any dispute arise with respect to the payment, ownership or right of possession of the Escrow Account, or if the Escrow Agent is uncertain as to its rights or duties hereunder, the Escrow Agent is authorized and directed to retain in its possession, without liability to anyone, except for its willful misconduct or gross negligence, all or any part of the Escrow Account until such dispute or uncertainty shall have been settled either by mutual agreement by the parties concerned or by the final order, decree or judgment of a court or other tribunal of competent jurisdiction in the United States of America, and a notice executed by the parties to the dispute or their authorized representatives shall have been delivered to the Escrow Agent setting forth the resolution of the dispute. The Escrow Agent shall be under no duty whatsoever to institute, defend or partake in such proceedings; provided, however, the Escrow Agent may, in its sole discretion, commence an interpleader action or seek other judicial relief or orders as it may deem, in its sole discretion, necessary. The costs and expenses, including attorney fees, incurred in connection with any such proceeding shall be paid by, and shall be deemed an expense of Parent and Jenson Services.

2.7

The Escrow Agent shall never be required to use or advance its own funds or otherwise incur financial liability in the performance of any of its duties or the exercise of any of its rights and powers hereunder. The Escrow Agent shall not be obligated to take any action which in its reasonable judgment would involve it in expense or liability unless it has been furnished with an indemnity or other security reasonably satisfactory to it.

2.8

In no event shall the Escrow Agent be liable, directly or indirectly, for any special, indirect or consequential damages, even if the Escrow Agent has been advised of the possibility of such damages and regardless of the form of action.

2.9

The Escrow Agent shall not be responsible for delays or failures in performance resulting from acts beyond its control. Such acts shall include but not be limited to acts of God, strikes, lockouts, riots, acts of war, epidemics, governmental regulations superimposed after the fact, fire, communication line failures, computer viruses, power failures, earthquakes, terrorist attacks or other disasters.

2.10

The Escrow Agent is authorized to obey and comply, in any manner it deems appropriate, with all writs, order, judgments, awards, decrees issued or process entered by any court, agency, arbitrator, or tribunal with respect to this Agreement.

2.11

The agreements set forth in this Section 2 shall survive the resignation or removal of the Escrow Agent, the termination of this Agreement and the payment of all amounts hereunder.

Fees and Indemnification of Escrow Agent

3.1

Parent agrees to pay the Escrow Agent $500 as compensation for its services as Escrow Agent, and to reimburse the Escrow Agent for all costs, fees and expenses incurred by the Escrow Agent in the performance of its duties hereunder.

Wire Instructions:

Brunson Chandler & Jones Trust Account

US BANK

170 South Main Street

Salt Lake City, Utah 84111

Routing: 124302150

Account: 153152343783

Swift: USBKUS44IMT

3.2

Parent and Jenson Services will reimburse and indemnify the Escrow Agent for, and hold it harmless against, any loss, liability, claim, cost, damage or expense, including but not limited to attorney fees and costs, incurred without gross negligence or willful misconduct on the part of the Escrow Agent and arising out of or in conjunction with its acceptance of, or the performance of its duties and obligations under, this Agreement, as well as the costs and expenses of defending against any claim or liability arising out of or relating to this Agreement. Parent and Jenson Services agree to indemnify the Escrow Agent for any transfer or other taxes the Escrow Agent is obligated to pay on behalf of Parent or Jenson Services, respectively, only, in connection with this Agreement. Any payments of income from the Escrow Funds shall be subject to withholding regulations then in force with respect to U.S. taxes. It is understood that the Escrow Agent shall be responsible for income reporting only with respect to income earned on investment of the Escrow Funds and is not responsible for any other tax reporting.

3.3

The Escrow Agent shall have a lien upon the Escrowed Shares (and all earnings thereon or additions thereto) held in the Escrow Account for any costs, expenses, fees or indemnification obligations that may arise under this Agreement that are not timely paid in full to the Escrow Agent ( “Owed Amounts” ). The Escrow Agent shall be entitled to debit and retain that portion of the Escrow Shares equal to the Determined Value of such Owed Amounts, until all such Owed Amounts have been paid in full. If property or securities are held in the Escrow Account, the Escrow Agent shall be entitled to sell, convey or otherwise dispose of such property or securities for such purpose.

3.4

The terms and obligations of this Section 3 shall survive the termination of this Agreement, the payment of all amounts hereunder and the resignation or removal of the Escrow Agent.

Resignation of the Escrow Agent

The Escrow Agent shall have the right to resign upon 30 days written notice to Parent. In the event of such resignation, Parent shall appoint a successor escrow agent hereunder by delivering to the Escrow Agent a written notice of such appointment. Upon receipt of such notice, the Escrow Agent shall deliver to the designated successor escrow agent all money and other property held hereunder and shall thereupon be released and discharged from any and all further responsibilities whatsoever under this Agreement; provided, however, the Escrow Agent shall not be deprived of its compensation earned prior to such time. If no successor escrow agent shall have been designated by the date specified in the Escrow Agent’s notice, all obligations of the Escrow Agent hereunder shall nevertheless cease and terminate and the Escrow Agent’s sole responsibility thereafter shall be to keep safely all property then held by it and to deliver the same to a person designated by the other parties hereto. Additionally, if no successor escrow agent shall have been designated, the Escrow Agent may (i) at the expense of Parent, petition any court of competent jurisdiction for the appointment of a successor escrow agent, or (ii) deposit the Escrow Funds with a court of competent jurisdiction and thereafter have no further responsibilities or duties in connection therewith.

Miscellaneous

5.1

This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings (written or oral) of the parties in connection herewith.

5.2

This Agreement shall not be revoked, rescinded, amended, or modified as to any of its terms or conditions except by a writing signed by all of the parties hereto.

5.3

Any notice or other communication under this Agreement shall be in writing and shall be considered given when delivered personally, upon receipt of confirmation from the transmitting equipment if sent by facsimile or email, two days after being sent by a major overnight courier, or five days after being mailed by certified mail, return receipt requested, to the parties at their respective addresses set forth below (or at such other address as a party may specify by notice to the other):

If to Parent, to:

Westcott Products Corporation

P.O. Box 5375

Midland, TX 79704

If to Jenson Services, to:

Jenson Services, Inc.

4685 South Highland Drive, Suite 202

Salt Lake City, Utah 84117

If to the Escrow Agent, to:

Brunson Chandler & Jones, PLLC

175 S. Main St., 15 ^th Floor

Salt Lake City, UT 84111

The parties hereto authorize the Escrow Agent to rely upon and comply with instructions or directions sent via unsecured facsimile or email transmission and Escrow Agent shall not be liable for any loss, liability or expense of any kind incurred by Parent, Jenson Services or any third party due to Escrow Agent’s reliance upon and compliance with instructions or directions given by unsecured facsimile or email transmission, provided, however, that such losses have not arisen from the gross negligence or willful misconduct of the Escrow Agent, it being understood that the failure of the Escrow Agent to verify or confirm that the person providing the instructions or directions, is, in fact, an authorized person does not constitute gross negligence or willful misconduct.

5.4

This Agreement shall be governed by and construed in accordance with the laws of the State of Utah without reference to or application of its rules or principles of conflicts of law. Each of the parties hereto hereby irrevocably agrees that any action, suit or proceedings against any of them by any of the other aforementioned parties with respect to this Agreement shall be brought before the exclusive jurisdiction of the federal or state courts located in Salt Lake County, State of Utah, unless all the parties hereto agree in writing to any other jurisdiction. Each of the parties hereto hereby submits to such exclusive jurisdiction. Each party consents to service of process by certified or registered mail, return receipt requested, directed to the address last specified for notices. All parties hereto agree to waive the right to trial by jury to the fullest extent permitted by law. To the extent that in any jurisdiction, Parent or Jenson Services may be entitled to claim, for itself or its assets, immunity from suit, execution, attachment (whether before or after judgment) or other legal process, each hereby irrevocably agrees not to claim, and hereby waives such immunity.

5.5

This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, administrators, executors, successors, and assigns. Notwithstanding any other provision contained herein, if the Escrow Agent consolidates with, merges or converts into, or transfers all or substantially all of its business to another entity, the successor without any further act shall be the successor Escrow Agent hereunder.

5.5

The failure of any party at any time or times to require performance of any provision hereunder shall in no way affect the right of such party at a later time to enforce the same. The rights and remedies conferred upon the parties hereto shall be cumulative, and the exercise or waiver or any such right or remedy shall not preclude or inhibit the exercise of any additional rights or remedies. The waiver of any right or remedy hereunder shall not preclude the subsequent exercise of such right or remedy.

5.6

This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

5.7

Nothing in this Agreement shall confer any rights, either express or implied, upon any person or entity, other than the parties hereto and their respective successors, permitted assigns, heirs, executors, personal representatives, administrators, and legal representatives.

5.8

If any provisions of this Agreement shall be declared by any court of competent jurisdiction illegal, void or unenforceable, the other provisions shall not be affected, but shall remain in full force and effect.

5.9

Headings of the sections contained in this Agreement are solely for convenience or reference and shall not affect the meaning or interpretation of this Agreement.

5.10

Parent and Jenson Services each represents and warrants (a) that this Agreement has been duly authorized, executed and delivered on its behalf and constitutes its legal, valid and binding obligation and (b) that the execution, delivery and performance of this Agreement by the Company or Jenson Services does not and will not violate any applicable law or regulation.

5.11

The parties hereto shall furnish the Escrow Agent upon execution of this Agreement, and as subsequently required, all appropriate U.S. tax forms and other information in order for the Escrow Agent to comply with U.S. tax or other regulations.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above.

Parent :

________________________________

Name:

Title:

Jenson Services:

________________________________

Name:

Title:

Escrow Agent :

BRUNSON CHANDLER & JONES, PLLC

/s/ Callie Jones __________________

Name: Callie Jones

Title: Partner

Exhibit 99.1

DALA PETROLEUM CORP.

(AN EXPLORATION STAGE COMPANY)

FINANCIAL STATEMENTS

FOR THE PERIOD FROM INCEPTION (JANUARY 17, 2014)

THROUGH MAY 21, 2014

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Dala Petroleum Corporation

We have audited the accompanying balance sheet of Dala Petroleum Corporation (an exploration stage company) (the Company) as of May 21, 2014, and the related statements of operations, stockholders’ equity, and cash flows for the period from inception on January 17, 2014 through May 21, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company’s internal controls over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Dala Petroleum Corporation as of May 21, 2014, and the results of its operations and cash flows for the period from inception on January 17, 2014 through May 21, 2014, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company is in the exploration stage and, accordingly, has not yet generated revenues from operations and has incurred accumulated net losses from inception (January 17, 2014) through May 21, 2014 . These issues raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Mantyla McReynolds

Salt Lake City, Utah

May 29, 2014

DALA PETROLEUM CORP.

(AN EXPLORATION STAGE COMPANY)

BALANCE SHEET


	May 21,
	2014
ASSETS
Current assets:
Cash	$	-
Total current assets		-

Oil and natural gas properties, full cost:
Unproved oil and natural gas properties		1,898,947
Total assets	$	1,898,947

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable – Related Parties	$	48,625
Accounts payable		27,311
Total current liabilities		75,936
Total Liabilities		75,936

Stockholders' equity
Common stock, $0.001 par value, 10,000,000 shares authorized, 1,000,000 shares issued and outstanding as of May 21, 2014,		1,000
Additional Paid-in Capital		1,897,947
Deficit accumulated during the exploration stage		(75,936)
Total stockholders' equity		1,823,010
Total liabilities and stockholders' equity	$	1,898,947

See Accompanying Notes to Financial Statements

DALA PETROLEUM CORP.

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF OPERATIONS


	(Inception)
	January 1, 2014
	to
	May 21, 2014

Revenues	$	-

Operating expenses:
General and administrative		75,936
Total operating expenses		75,936


Net loss before provision for income taxes		(75,936)

Provision for income taxes		-

Net loss	$	(75,936)

Weighted average number of common shares outstanding – basic and diluted		362,903

Net loss per share – basic and diluted	$	(0.21)

See Accompanying Notes to Financial Statements

DALA PETROLEUM CORP.

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF CASH FLOWS


		(Inception)
		January 17, 2014
		to
		May 21, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss	$	(75,936)
Adjustments to reconcile net loss to net cash used in operating activities:
Changes in operating assets and liabilities:
Increase in accounts payable – Related Parties		48,625
Increase in accounts payable		27,311
Net cash used in operating activities		-

NET CHANGE IN CASH		-

CASH AT BEGINNING OF PERIOD		-

CASH AT END OF PERIOD	$	-

SUPPLEMENTAL NFORMATION
Interest paid	$	-
Income taxes paid	$	-

NON-CASH INVESTING ACTIVITIES:
Contribution of unproved oil and natural gas properties	$	1,898,947

See Accompanying Notes to Financial Statements

DALA PETROLEUM CORP.

(AN EXPLORATION STAGE COMPANY)

STATEMENT OF STOCKHOLDERS’ EQUITY


						Deficit
						Accumulated
				Additional		During		Total
	Common Shares			Paid-In		Exploration		Stockholders’
	Shares	Amount		Capital		Stage		Equity

Contributed assets in exchange for common stock	1,000,000	$	1,000	$	1,897,947	$	-	$	1,897,947

Net loss	-		-		-		(75,936)		(75,936)

Balance, May 21, 2014	1,000,000	$	1,000	$	1,897,947	$	(75,936)	$	1,823,010

See Accompanying Notes to Financial Statements

DALA PETROLEUM CORP.

(an Exploration Stage Company)

Notes to Financial Statements

For the period from inception (January 17, 2014) through May 21, 2014

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

Dala Petroleum Corp. ("Dala" or the “Company”) was established on January 17, 2014 (Date of Inception). The Company is in the exploration stage and has yet to begin operations. Commencing on the Date of Inception, for the accompanying financial statements, the Company’s sponsors paid expenses, entered into agreements, and began organizing the entity on behalf of the Company. Accordingly, the Balance Sheet and related Statements of Operations, Stockholders’ Equity and Cash Flows reflect activity prior to the Company’s date of incorporation in the state of Nevada as a C-Corporation on March 20, 2014.

The Company has not commenced any significant operations and, in accordance with ASC Topic 915, the Company is considered an exploration stage company.

The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to exploration stage enterprises, and are expressed in U.S. dollars.

Nature of Operations

The Company is focused on the acquisition and development of oil and natural gas resources in the United States. The Company has not found oil and natural gas resources in potentially commercially exploitable quantities and is engaged in both determining the most advantageous development program and in exploring certain lands in an effort to discover hydrocarbons. The Company has been in the exploration stage since its formation and has not realized revenues from its planned principal operations.

Use of Estimates

The timely preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

Fair value of financial instruments

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

Level 1 – Unadjusted quoted prices in active markets that are accessible at measurement date for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities and less observable from objective sources.

The Company has no assets that are measured at fair value.

Loss per share

The Company follows ASC Topic 260 to account for the loss per share. Basic loss per common share calculations are determined by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted loss per common share calculations are determined by dividing net loss by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

As the Company has incurred losses for the period ended May 21, 2014, the potentially dilutive shares are anti-dilutive and are thus not added into the loss per share calculations.

Oil and natural gas properties

The Company follows the full cost method of accounting for oil and natural gas operations whereby all costs related to the exploration and development of oil and natural gas properties are initially capitalized into a single cost center (“full cost pool”). Such costs include land acquisition costs, a portion of employee salaries related to property development, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling directly related to acquisition, and exploration activities. Internal salaries are capitalized based on employee time allocated to the acquisition of leaseholds and development of oil and natural gas properties. The Company did not capitalize interest for the period ended May 21, 2014.

Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. No gain or loss was recognized on any sales during the period.

The Company assesses all items classified as unproved property on a quarterly basis for possible impairment or reduction in value. The assessment includes consideration of the following factors, among others: intent to drill, remaining lease term, geological and geophysical evaluations, drilling results and activity, the assignment of proved reserves, and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and amortization.

Capitalized costs associated with impaired properties and properties having proved reserves, estimated future development costs, and asset retirement costs under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 410-20-25 are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves. The costs of unproved properties are withheld from the depletion base until such time as they are developed, impaired, or abandoned.

Under the full cost method of accounting, capitalized oil and natural gas property costs less accumulated depletion, net of deferred income taxes, may not exceed a ceiling amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and natural gas reserves plus the cost of unproved properties not subject to amortization (without regard to estimates of fair value), or estimated fair value, if lower, of unproved properties that are subject to amortization. Should capitalized costs exceed this ceiling, which is tested on a quarterly basis, an impairment is recognized. The present value of estimated future net revenues is computed by applying prices based on a 12-month unweighted average of the oil and natural gas prices in effect on the first day of each month, less estimated future expenditures to be incurred in developing and producing the proved reserves (assuming the continuation of existing economic conditions), less any applicable future taxes.

Revenue recognition

The Company recognizes oil and natural gas revenues from our interests in producing wells when production is delivered to, and title has transferred to, the purchaser and to the extent the selling price is reasonably determinable.

The Company uses the sales method of accounting for balancing of natural gas production and would recognize a liability if the existing proven reserves were not adequate to cover the current imbalance situation.

Asset retirement obligation

ARO reflects the estimated present value of the amount of dismantlement, removal, site reclamation and similar activities associated with the Company's oil and natural gas properties. Inherent in the fair value calculation of the ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments.

Income Taxes

The Company follows ASC Topic 740 for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. The net operating loss carryforward for the period ended May 21, 2014 is $75,936.

The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. As of May 21, 2014, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a 50% likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material effect on the Company.

Recent Pronouncements

The Company has evaluated the recent accounting pronouncements through May 2014 and believes that none of them will have a material effect on the company’s financial statements.

NOTE 2 – GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the exploration stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring startup costs and expenses. As a result, the Company incurred accumulated net losses from Inception (January 17, 2014) through the period ended May 21, 2014 of $75,936. These factors, among others, raise substantial doubt about its ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. Failure to obtain additional financing would have a material adverse effect on our business operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 – OIL AND NATURAL GAS PROPERTIES

As of May 21, 2014 the Company had $1,898,947 in capitalized costs for unproved oil and natural gas properties.

Project Description

The oil and natural gas assets were transferred from a related party to the Company in exchange for 1,000,000 shares of common stock on May 21, 2014. As the leases were transferred to the Company by significant shareholders of the Company, the leases were recorded based on the historical cost basis of the contributing shareholders. The Company has a substantial land position with 80,000 acres over a shallow, conventional oil play in north central Kansas. It is located in a four county area and is geographically defined by the boundaries of the productive North American Rift System. The Company will begin an eight well drilling program with two permitted wells at 12.5% working interests each and six additional wells at 25% working interests each.

NOTE 4 – SHAREHOLDERS’ EQUITY

The Company is authorized to issue 10,000,000 shares of its $0.001 par value common stock.

NOTE 5 – TRANSACTIONS WITH RELATED PARTIES

Accounts payable to related parties for reimbursement of expenses and settlement of current liabilities is $48,625 as of May 21, 2014. Those parties include Chisholm Partners II, LLC. and E. Will Gray, the Company’s CEO and Director.

The $1,898,947 of oil and natural gas assets were transferred at cost from a related party to the Company in exchange for 1,000,000 shares of common stock.

NOTE 6 – COMMITMENTS AND CONTINGENCIES

From time to time, the Company may become a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s financial position or results of operations.

NOTE 7 – INCOME TAXES

The Company utilizes the liability method of accounting for income taxes. Under the liability method deferred tax assets and liabilities are determined based on the differences between financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse.

The provision for income taxes consists of the following as of May 21, 2014:


		May 21, 2014
Current Taxes
Federal		-
State		-
Deferred Taxes
Federal		-
State		-
Total Provision		-

The total deferred tax asset is calculated by multiplying a 38.62% federal and state statutory tax rate by the cumulative Net Operating Loss (“NOL”) of $75,936. This Net Operating Loss will begin to expire in 2034 for federal jurisdictions and 2024 for state jurisdictions. The total valuation allowance is equal to the total deferred tax asset. Accordingly, deferred tax assets total approximately $29,327 as of May 21, 2014.

The tax effects of significant items comprising the Company's net deferred taxes as of May 21, 2014 were as follows:


	May 21, 2014
NOL Deferred Tax Asset	$	29,327
Valuation allowance		(29,327)
	$	-

As it is the first year of operations, the valuation allowance increased by the full amount of $29,327.

The income tax provision differs from the amount of income tax determined by applying the federal and state statutory tax rate of 38.62% to pretax income from continuing operations for the period ended May 21, 2014 due to the following:


	May 21, 2014
Income tax benefit at U. S. federal statutory rates:	$	(25,818)
Expected state taxes, net of federal benefit		(3,509)
Change in valuation allowance		29,327
	$	-

The Company has no tax positions at May 21, 2014 for which the ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.

The Company recognizes interest accrued relative to unrecognized tax benefits in interest and penalties accrued relative to unrecognized tax benefits in income tax expense. During the period from January 17, 2014 (date of inception) through May 21, 2014 the Company recognized no income tax related interest and penalties. The Company had no accruals for income tax related interest and penalties at May 21, 2014.

The tax year 2014 remains open to examination for federal income tax purposes and by other major taxing jurisdictions to which we are subject.

NOTE 8 – OTHER MATTERS

On January 8, 2014, the Company entered into a non-binding Letter of Intent (the “LOI”) with Westcott Products Corporation (“Westcott”). The LOI is subject to various conditions, including certain funding requirements. The parties continue to work towards a conclusion of the conditions of the LOI to complete the acquisition; however, no assurance can be given that the various conditions of the LOI will be satisfied or that this acquisition will be completed .

Exhibit 99.2

Dala Petroleum Corp.

(Formerly Westcott Products Corporation)

(An Exploration Stage Company)

Unaudited Pro-Forma Consolidated Balance Sheet

Westcott Products Corporation March 31, 2014

Dala Petroleum Corp. May 21, 2014


	Westcott		Dala
	Products		Petroleum
	Corporation		Corporation		Pro-Forma			Pro-Forma
	03/31/14		5/21/14		Adjustments			Consolidated
ASSETS

Current assets:
Cash	$	6,755	$	-	$	2,025,000	a	$	2,031,755
Total current assets		6,755		-		2,025,000			2,031,755

Oil and natural gas properties, full cost
Unproved oil and natural gas properties		-		1,898,947		-			1,898,947

Total assets	$	6,755	$	1,898,947	$	2,025,000		$	3,930,702

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable – Related Parties	$	94,291	$	48,625	$	-		$	142,916
Accounts payable		-		27,311		-			27,311
Accrued interest – Related Party		23,485		-					24,485
Total current liability		117,776		75,936		-			193,712

Derivative liabilities		-		-		204,607	b		204,607

Total liabilities		117,776		75,936		204,607			398,319

Stockholders’ equity:
Preferred convertible stock, 50,000,000 shares authorized, $.01 par value, 50,000,000 shares issued and outstanding		-		-		2,025,000	a		2,025,000
Common stock, 50,000,000 shares authorized, $.001 par value, 12,500,000 shares issued and outstanding		2,500		1,000		9,000	d		12,500
Additional paid in capital		2,828,155		1,897,947		(9,000)	d		4,717,102
Deficit accumulated during the exploration stage		-		(75,936)		(2,941,676)	c		-
						(204,607)	b		(3,222,219)
Accumulated deficit		(2,867,932)		-		2,867,932	c		-
Deficit accumulated during the development stage		(73,744)		-		73,744	c		-

Total stockholders’ equity		(111,021)		1,823,010		1,820,393			3,532,382

Total liabilities and stockholders’ equity	$	6,755	$	1,898,947	$	2,025,000		$	3,930,702

Dala Petroleum Corp.

(Formerly Westcott Products Corporation)

(An Exploration Stage Company)

Unaudited Pro-Forma Consolidated Statement of Operations

For the Six Months Ended March 31, 2014 for Westcott Products Corporation

For the Period from Inception (January 17, 2014) to May 21, 2014 for Dala Petroleum Corp.


			Dala
	Westcott		Petroleum
	Products		Corporation
	Corporation		From
	For the Six		Inception
	Months Ended		(01/17/14) to		Pro-Forma			Pro-Forma
	03/31/14		05/21/14		Adjustments			Consolidated
Revenues	$	-	$	-	$	-		$	-

Operating expenses:
General and administrative		9,114		75,936		-			85,050

Net loss from operations		(9,114)		(75,936)		-			(85,050)

Other expenses:
Loss on derivative valuation		-		-		(204,607)	b		(204,607)
Interest expense - Related Party		(5,685)		-		-			(5,685)
Total other expense		(5,685)		-		(204,607)			(210,292)

Net loss before income taxes		(14,799)		(75,936)		(204,607)			(295,342)

Income tax expense		-		-		-			-

Net loss	$	(14,799)	$	(75,936)	$	(204,607)		$	(295,342)

BASIC AND DILUTED LOSS PER COMMON SHARE	$	(0.01)	$	(0.21)		-		$	(0.03)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING		1,488,469		362,903		9,637,097	e		11,488,469

Dala Petroleum Corp.

(Formerly Westcott Products Corporation)

(An Exploration Stage Company)

Notes to Unaudited Consolidated Pro Forma Financial Statements

For the Six Months Ended March 31, 2014 for Westcott Products Corporation and

For the Period from Inception (January 17, 2014) to May 21, 2014 for Dala Petroleum Corp.

The Company has not commenced any significant operations and, in accordance with ASC Topic 915, the Company is considered an exploration stage company.

On June 3, 2014, Westcott Products Corporation, a Delaware corporation (“Westcott”), its newly formed and wholly-owned subsidiary, Dala Acquisition Corp., a Nevada corporation (“Merger Subsidiary”), and Dala Petroleum Corp., a Nevada corporation (“Dala”), executed and delivered an Agreement and Plan of Merger (the “Merger Agreement”) and all required or necessary documentation to complete the merger (collectively, the “Transaction Documents”), whereby Merger Subsidiary merged with and into Dala, and Dala was the surviving company under the merger and became a wholly-owned subsidiary of Westcott on the closing of the merger (the “Merger”). Effective June 3, 2014, the respective Boards of Directors of Westcott and Dala, along with Westcott, as the sole stockholder of Merger Subsidiary, and Dala’s sole stockholder Chisholm Partners II, LLC, a Louisiana limited liability company (“Chisholm II”) owning 100% of the outstanding voting securities of Dala approved the Merger by written consent, and the Articles of Merger were filed with the Secretary of State of the State of Nevada on such date, which was the effective date of the Merger. Accordingly, Westcott will issue 10,000,000 shares of its common stock in exchange for all of the outstanding shares of common stock of Dala, to be distributed to Dala Petroleum’s sole shareholder that will immediately distribute the shares on a pro rata basis to its members. Dala had no other outstanding stock options, warrants, preferred stock or securities on the closing of the Merger. There will then be 12,500,000 outstanding shares of Westcott common stock. Current Westcott stockholders will own 2,500,000 of these shares or approximately 20% of the outstanding voting securities of Westcott; and Dala stockholders will own approximately 10,000,000 of these shares or approximately 80% of these outstanding voting securities of Westcott.

Several conditions precedent as set forth in the Merger Agreement were completed prior to the Merger. One critical condition precedent set forth in the Merger Agreement is that Westcott would raise no less than $2,000,000 (the minimum Offering) from persons who are “accredited investors” in consideration of the issuance (or the conversion) of a minimum of 2,000 shares up to a maximum of 2,500 shares of its Series A 6% Convertible Preferred Stock at the offering price of $1,000 per Unit. Each Unit consists of one share of Series A 6% Convertible Preferred Stock that is convertible at any time at the option of the Holder into common stock at the conversion price of $0.70 per common share (subject to adjustment as set forth in the Company’s Series A 6% Convertible Preferred Stock Certificate of Designation that was filed on May 30, 2014) and 1,429 warrants to purchase common shares of the Company at an exercise price of $1.35 within three years of the “Effective Date” as defined in the Stock Purchase Agreement for the Offering. The Effective Date is defined as the earliest date of the following to occur: (a) the initial registration statement required by the Offering Documents has been declared effective by the Commission, (b) all of the underlying shares have been sold pursuant to Rule 144 or may be sold pursuant to Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 and without volume or manner-of-sale restrictions or (c) following the one year anniversary of the Closing Date provided that a holder of underlying shares is not an Affiliate of the Company, all of the underlying shares may be sold pursuant to an exemption from registration under Section 4(1) of the Securities Act without volume or manner-of-sale restrictions and Company counsel has delivered to such holders a standing written unqualified opinion that re-sales may then be made by such holders of the underlying shares pursuant to such exemption which opinion shall be in form and substance reasonably acceptable to such holders.

(1)

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma consolidated financial statements of the Company (the “pro forma financial statements”) have been prepared for illustrative purposes only and are not necessarily indicative of what the combined entities consolidated financial position or results of operations actually would have been had the share purchase exchange between the Company and Westcott Products Corporation had been completed as of the date indicated below. In addition, the unaudited pro forma consolidated financial information does not purport to project the future financial position or operating results of the combined entities. Future results may vary significantly from the results reflected because of various factors.

The pro forma financial statements give effect to the share exchange as if the share exchange was already consummated. The historical financial statements have been adjusted in the pro forma financial statements to give effects to events that are (1) directly attributable to the share exchange, (2) factually supportable, and (3) with respect to the statement of operations, expected to have a continuing impact on the combined entities. The unaudited pro forma consolidated statement of operations does not reflect any non-recurring charges directly related to the share exchange that the combined entities may incur upon completion of the share exchange. The pro forma financial statements were derived from and should be read in conjunction with the historical financial statements of the Company and Westcott Products Corporation.

The unaudited pro forma consolidated balance sheet as of March 31, 2014 for Westcott Products Corporation and as of May 21, 2014 for Dala Petroleum Corp. reflects the merger as if it occurred on March 31, 2014 and the unaudited pro forma condensed statements of operations for the six months ended March 31, 2014 reflect the merger as if it occurred on October 1, 2013.

(2)

UNAUDITED PRO FORMA ADJUSTMENTS

The unaudited pro forma adjustments are as follows:

Per the merger agreement, Dala Petroleum Corp. will issue 2,025 units of Series A 6% Convertible Preferred Shares to investors for cash of $2,025,000.

The issuance of Convertible Preferred Shares and related warrants were issued with down round protection. The estimated value of the convertible preferred shares is $115,017 and the estimated value of the warrants is $89,590.

To record recapitalization and eliminate accumulated deficit of Westcott Products Corporation.

The adjustment eliminates the historical stockholders’ equity and reflects the issuance of shares pursuant to the Merger Agreement.

The following sets forth the computation of the unaudited pro forma basic and diluted loss per share:


	Six Month Ended March 31, 2014

Pro forma basic and diluted loss per share:
Numerator
Net Loss	$	(295,342)


Denominator
Weighted average common shares of Westcott Product Corporation		1,488,469

Common shares Issued per the Merger Agreement		10,000,000

Pro forma basic and diluted common shares outstanding		11,488,469

Pro forma basic and diluted net loss per share	$	(0.03)

The computation of the pro forma diluted earnings per share for the six months ended March 31, 2014 does not include stock options and warrants to purchase shares because these common stock equivalents were anti-dilutive.