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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">UNITED
      STATES</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SECURITIES
      AND EXCHANGE COMMISSION</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Washington,
      D.C. 20549</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FORM
      S-1</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OF 1933</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center"><img src="crc_logo.jpg" alt=""></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center">&#160;</div>
            </td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 17pt; FONT-FAMILY: times new roman">CRC
      Crystal Research Corporation</font></div>
            </td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Name
      of small business issuer in its charter)</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" colspan="3" valign="top" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Nevada</font></div>
            </td>
            <td valign="top" width="28%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2800</font></div>
            </td>
            <td valign="top" width="25%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">86-0728263</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="25%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(State
      or jurisdiction of incorporation or organization)</font></div>
            </td>
            <td valign="top" width="28%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Primary
      Standard Industrial Classification Code Number)</font></div>
            </td>
            <td valign="top" width="25%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(I.R.S.
      Employer Identification No.)</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" colspan="3" valign="top" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%">
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4952
      East Encanto Street</font></div>
            </td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Mesa,
      Arizona 85205</font></div>
            </td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(480)
      452-3301</font></div>
            </td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Address
      and telephone number of registrant&#8217;s principal executive
      offices)</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" colspan="3" valign="top" width="79%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Copies to:</font></font></div>
            </td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Joseph
      Lambert Pittera, Esq.</font></div>
            </td>
          </tr>
          <tr>
            <td colspan="3" valign="top" width="79%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Law
      Offices of Joseph Lambert Pittera</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2214
      Torrance Boulevard</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Torrance,
      California 90501</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Telephone:
      (310) 328-3588</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Facsimile
      No. (310) 328-3063</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Approximate
date of proposed sale to the public: As soon as practicable after this
Registration Statement becomes effective.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. <font style="DISPLAY: inline;" face="Wingdings">o</font>
____________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering. <font style="DISPLAY: inline;" face="Wingdings">o</font>_______________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering. <font style="DISPLAY: inline;" face="Wingdings">o</font>
_______________</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. <font style="DISPLAY: inline;" face="Wingdings">o</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If this
Form is filed to register securities for an offering to be made on a continuous
or delayed basis pursuant to Rule 415 under the Securities Act, please check the
following box. <font style="DISPLAY: inline;" face="Wingdings">x</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filed or a smaller reporting
company.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Large
accelerated filer&#160;&#160;&#160;&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Accelerated
filer&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Non-accelerated
filer&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline;" face="Wingdings">o</font>&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Smaller
reporting company&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline;" face="Wingdings"><font style="DISPLAY: inline;" face="Wingdings">x</font></font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CALCULATION
OF REGISTRATION FEE</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Tile
      of each class of securities to be registered</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="12%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      to be registered</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proposed
      maximum offering price per share (2)</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proposed
      maximum(3) aggregate offering price</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      of registration fee (1)</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      Stock</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11,770,270</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
            </td>
            <td valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.001</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
            </td>
            <td valign="bottom" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11,770.27</font></div>
            </td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
            </td>
            <td valign="bottom" width="10%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.46</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="middle" width="19%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></font></div>
            </td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="middle" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt">&#160;&#160;&#160;&#160;</font></font></div>
            </td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="14%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="middle" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;This
is an initial offering and no current trading market exists for our common
stock.&#160;&#160;The price paid for</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>the currently issued and outstanding
common stock was valued at $.001 per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Estimated
solely for purposes of calculating the registration fee pursuant to Rule
457.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Registrant
shall not receive any part of the proceeds from this registration.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of the prospectus. Any representation to the contrary is a criminal
offense.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Prospectus</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">11,770,270
Shares of Common Stock</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$.001 per
share</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation (&#8220;Company&#8221;) is registering 11,770,270 shares of its
common stock at a price of $0.001 per share distributed among 59 shareholders
for which the Company will derive no financial benefit.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation is a development stage, start-up company and
currently has limited operations.&#160;&#160;Any investment in the shares
offered herein involves a high degree of risk.&#160;&#160;You should only
purchase shares if you can afford a complete loss of your
investment.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior to
this offering, there has been no public market for CRC Crystal Research
Corporation&#8217;s common stock.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number
      of Shares</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Offering
      Price</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Underwriting
      Discounts &amp; Commissions</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="2" valign="bottom" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proceeds
      to the Company</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Per
      Share</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11,770,270</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
            </td>
            <td valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.001</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
            </td>
            <td valign="bottom" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></div>
            </td>
            <td valign="bottom" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">This
investment involves a high degree of risk. You should purchase shares only if
you can afford a complete loss of your investment. See the section titled &#8220;Risk
Factors&#8221; herein.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
information in this prospectus is not complete and may be changed. CRC Crystal
Research Corporation may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation does not plan to use this offering prospectus
before the effective date.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Subject
to Completion, Dated __________, 200__</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">TABLE
OF CONTENTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PAGE</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SUMMARY
      OF PROSPECTUS</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">General
      Information about Our Company</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
      Offering</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">RISK
      FACTORS</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">RISKS
      ASSOCIATED WITH OUR COMPANY</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">RISKS
      ASSOCIATED WITH THIS OFFERING</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">USE
      OF PROCEEDS</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DETERMINATION
      OF OFFERING PRICE</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DILUTION
      OF THE PRICE YOU PAY FOR YOUR SHARES</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">PLAN
      OF DISTRIBUTION</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Offering
      will be Sold by Our Officer and Director</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Terms
      of the Offering</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Deposit
      of Offering Proceeds</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Procedures
      for and Requirements for Subscribing</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DESCRIPTION
      OF SECURITIES</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">INTEREST
      OF NAMED EXPERT AND COUNSEL</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DESCRIPTION
      OF OUR BUSINESS</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">General
      Information</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Industry
      Background</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Principal
      Products and their Markets</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Distribution
      Methods</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Status
      of Any Publicly Announced Products</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Competition</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Sources
      and Availability of Products</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dependence
      on One of a Few Major Customers</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Patents
      and Trademarks</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="MARGIN-LEFT: 18pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Need
      for Any Government Approval of Principal
      Products&#160;&#160;&#160;</font></div>
            </td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Government
      and Industry Regulation</font></div>
            </td>
            <td align="right" valign="top" width="5%">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="MARGIN-LEFT: 18pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Research
      and Development Activities&#160;</font></div>
            </td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="MARGIN-LEFT: 18pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Environmental
      Laws</font></div>
            </td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%" style="PADDING-LEFT: 0pt">
              <div style="MARGIN-LEFT: 18pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Employees
      and Employment Agreements</font></div>
            </td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DESCRIPTION
      OF PROPERTY&#160;</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">LEGAL
      PROCEEDINGS</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS&#160;</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">25</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FINANCIAL
      STATEMENTS</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MANAGEMENT&#8217;S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;FINANCIAL
      DISCLOSURE</font></font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DIRECTOR,
      EXECUTIVE OFFICER, PROMOTER AND CONTROL PERSON</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;30</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">EXECUTIVE
      COMPENSATION</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">33</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-WEIGHT: normal; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">STOCK
      OPTION PLAN AND OTHER LONG-TERM INCENTIVE PLAN</font></font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">35</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">INDEMNIFICATION</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="68%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">AVAILABLE
      INFORMATION</font></td>
            <td align="right" valign="top" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">37</font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4952 East
Encanto Street</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mesa,
Arizona 85205</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SUMMARY
OF PROSPECTUS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
should read the following summary together with the more detailed business
information, financial statements and related notes that appear elsewhere in
this prospectus.&#160;&#160;In this prospectus, unless the context otherwise
denotes, references to &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our,&#8221; and &#8220;CRC&#8221; are to CRC Crystal Research
Corporation</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">GENERAL
INFORMATION ABOUT OUR COMPANY</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation (the "Company" or the "Registrant") was
incorporated in the State of Nevada on June 9, 2006. The Company is the
successor in interest to CRC Crystal Research Corporation (&#8220;Arizona CRC&#8221;), which
was incorporated in the State of Arizona on March 22, 1993.&#160;&#160;On June
10, 2006, the board of directors of the Company and Arizona CRC approved their
merger for the purpose of redomiciling&#160;&#160;the Arizona CRC in the State
of Nevada.&#160;&#160;The redomicile was completed by the filing of Articles of
Merger with the Secretary of State of Nevada on September 20, 2006 and with the
Secretary of State of Arizona on September 21, 2006.&#160;&#160;The Company was
formed by Dr. Kiril Pandelisev to commercialize patents for new technology and
innovative crystal growing processes in the manufacture Crystals and new and
improved Crystal Products based on his patents. The technology encompasses a new
crystal grower&#160;&#160;design, new crystal growing processes, and fabrication
of new and more sensitive Crystal Products. Management believes that the new
technology allows the Company to manufacture Crystal Products faster, less
expensively, and at a higher quality level than that which current industry
methods allow.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has a non-exclusive license to all technology owned by Single Crystal
Technologies, Inc. (&#8220;SCT&#8221;), which is owned by Dr. Kiril A.
Pandelisev.&#160;&#160;Dr. Pandelisev is the Company&#8217;s sole officer and
director. The licensed technology includes patents, whether approved, pending or
in process of filing, other contractual agreements, and technical measures
relating to the manufacture of Crystals, Crystal Products and ultra pure
materials.&#160;&#160;The Company plans to raise capital to fund the development
of initial manufacturing capabilities to grow Crystals and manufacture Crystal
Products for sale in various industrial markets. The Company has never produced
any Crystal Products or other products for commercial sale.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
OFFERING</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
is a brief summary of this offering.&#160;&#160;Please see the Plan of
Distribution section for a more detailed description of the terms of the
offering.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">
          <tr bgcolor="#cceeff">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Securities
      Being Registered:&#160;&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;11,770,270
      common shares, par value $0.001</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Offering Price
      per Share:&#160;&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$0.001</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Offering
      Period:&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;The Offering
      Period shall remain open.</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Net Proceeds
      to Our Company:&#160;&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;$0</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Use of
      Proceeds:&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;None</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number
      of Shares Outstanding </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Before
      the Offering:&#160;</font></font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;13,070,270</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Number
      of Shares Outstanding </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">After
      the Offering:</font></font></td>
            <td width="50%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;13,070,270</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
officer, director, control person and/or affiliates do not intend to purchase
any shares in this offering.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">RISK
FACTORS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">RISKS
ASSOCIATED WITH OUR COMPANY:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">This
investment has a high degree of risk.&#160;&#160;Before you invest you should
carefully consider the risks and uncertainties described below and the other
information in this placement memorandum.&#160;&#160;If any of the following
risks actually occur, our business, operating results and financial condition
could be harmed and the value of our stock could go down.&#160;&#160;This means
you could lose all or a part of your investment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">RISKS
RELATING TO OUR COMPANY</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
are a development stage company, and have a limited operating history on which
to evaluate our potential for future success.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are a
development stage company, and have yet to produce or sell any products or
services.&#160;&#160;We have only a limited operating history upon which you can
evaluate our business and prospects, and have yet to develop sufficient
experience regarding actual revenues to be received from our crystal
products.&#160;&#160;You must consider the risks and uncertainties frequently
encountered by early stage companies in new and rapidly evolving
markets.&#160;&#160;If we are unsuccessful in addressing these risks and
uncertainties, our business, results of operations and financial condition will
be materially and adversely affected.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
business is dependent on raising capital to begin operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
business involves the development of the manufacturing capability to exploit
technology that we license from Singe Crystal Technologies, Inc., an Arizona
corporation (&#8220;SCT&#8221;), an affiliate of Dr. Kiril A. Pandelisev, our founder,
controlling stockholder, sole officer, and one of our directors, to manufacture
crystal products.&#160;&#160;We estimate that we need at least $1,000,000 to
begin business and more funding to expand. The amount needed for expansion will
vary depending on the growth curve the company adopts at the time of
funding.&#160;&#160;&#160;While we have spoken to various investment banks and
investors, at this time we do not have any commitment for the necessary
capital.&#160;&#160;Accordingly, we do not know if we will be able to raise any
capital, or whether the terms will be beneficial or detrimental to existing
shareholders.&#160;&#160;If we are not able to raise capital to begin business,
we may never commence operations and our shares will be worthless.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
business is dependent on licensed technology.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
ability to utilize a unique process to manufacture crystal products for industry
applications which are higher quality and less expensive than those presently
produced is solely dependent on the non-exclusive license of technology owned by
SCT.&#160;&#160;The original license agreement (the &#8220;License&#8221;) only gives us the
non-exclusive right to use the patents and other technology owned by SCT for
their lifetime (including extensions), and can be terminated at SCT&#8217;s option if
we fail to commence production of products using the technology by September 25,
2008, or if we breach the License or file for bankruptcy.&#160;&#160;In May of
2008 SCT and CRC have agreed to renew and extend the licensing agreement, until
September 25, 2010. Additional $50,000 have been added to the initial signing
fees. The second $50,000 is payable when the company&#8217;s cumulative raise is $3
million or more or its product sales exceed $1 Million, whichever comes
first.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may not be able to accommodate rapid growth which could decrease revenues and
result in a loss of customers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
currently have three officers and are in contractual discussions with 3 more,
and in process of hiring the first three employees.&#160;&#160;To manage
anticipated growth, we must develop operational, financial and management
information systems.&#160;&#160;We must also hire, train and retain additional
qualified personnel, and effectively manage our relationships with end users,
suppliers and other third parties.&#160;&#160;Our expansion will place a
significant strain on our current services and support operations, sales and
administrative personnel, capital and other resources.&#160;&#160;We could also
experience difficulties meeting demand for our products.&#160;&#160;We cannot
guarantee that our systems, procedures or controls will be adequate to support
operations, or that management will be capable of fully exploiting the
market.&#160;&#160;Our failure to effectively manage growth could adversely
affect our business and financial results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISKS ASSOCIATED WITH OUR
COMPANY - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
licensed technology is unproven in commercial production.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
business plan is based on the commercial exploitation of technology we license
from SCT, which consists of a combination of patents and technical
know-how.&#160;&#160;To date, the technology has not been deployed in actual
commercial production, and therefore is unproven in that context.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Furthermore,
the technology has not been deployed to manufacture crystal products of the size
that CRC Crystal Research intends to manufacture.&#160;&#160;It is possible that
the technology will not work as well when deployed to make commercial quantities
of crystal products, or that significant additional research and development
will be necessary to perfect the technology.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Product
protection and infringement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research&#8217;s business plan is based on the commercial exploitation of
technology it licenses on a non-exclusive basis from SCT.&#160;&#160;To protect
its technology and confidential information, SCT relies upon a combination of
patents, contractual agreements, and technical measures to protect the
confidential information, know-how and proprietary rights relating to its
manufacture of crystal products.&#160;&#160;Such protection, however, may not
preclude competitors from developing crystal products which have similar
characteristics as those developed by CRC Crystal
Research.&#160;&#160;Furthermore, not all patents on which we may rely have been
granted.&#160;&#160;Under the License, CRC Crystal Research bears the burden of
prosecuting any patent applications in any countries to which it wishes to
extend patent protection for SCT&#8217;s patents.&#160;&#160;In addition, we are
responsible for prosecuting any infringement actions against third parties who
may be infringing on any patents used by CRC Crystal Research and defending any
infringement actions brought by competitors involving patents used by CRC
Crystal Research.&#160;&#160;The cost of prosecuting and defending patent
infringement actions is very high, and may place a severe financial strain on
CRC Crystal Research.&#160;&#160;We do not believe that any of the licensed
technology infringe upon the proprietary rights of any third
party.&#160;&#160;There can be no assurance, however, that third parties will
not assert infringement claims against CRC Crystal Research or SCT in the
future.&#160;&#160;The successful assertion of such claims could have an affect
on CRC Crystal Research&#8217;s business, operating results and financial
condition.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
management has conflicts of interest.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
founder and majority stockholder, Dr. Pandelisev, is also the founder and
majority stockholder of SCT, which has licensed CRC Crystal Research the
technology which is the basis of our business plan.&#160;&#160;The interests of
Dr. Pandelisev and SCT may diverge from the interests of our stockholders in the
future.&#160;&#160;In addition, Dr. Pandelisev is engaged in other business
activities outside of CRC Crystal Research.&#160;&#160;There exist potential
conflicts of interest including, among other things, time, effort and business
combinations with other such entities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
success is dependent on the continued services of Dr. Pandelisev.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
success largely depends on the efforts and abilities of Dr.
Pandelisev.&#160;&#160;The loss of the services of Dr. Pandelisev could
materially harm our business because of the cost and time necessary to replace
and train a replacement and because he possesses unique knowledge of the
underlying technology that is the core of our business.&#160;&#160;We do not
presently maintain key-man life insurance policies on Dr.
Pandelisev.&#160;&#160;In addition, we need to attract additional high quality
sales, technical and consulting personnel.&#160;&#160;To the extent that we are
smaller than our competitors and have fewer resources, we may not be able to
attract the sufficient number and quality of staff.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
management has limited experience and may miss certain business
opportunities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
success will be dependent on our management.&#160;&#160;Our officers and
directors have only limited experience in the business activities in which we
intend to engage.&#160;&#160;Management believes it has sufficient experience to
implement our business plan, although there is no assurance that additional
managerial assistance will not be required.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISKS ASSOCIATED WITH OUR
COMPANY - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
failure to maintain adequate general liability, commercial, and product
liability insurance could subject us to significant losses of
income.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
currently carry general liability, product liability and commercial insurance,
and therefore, we have no protection against any general, commercial and/or
product liability claims.&#160;&#160;Any general, commercial and/or product
liability claims will have a material adverse effect on our financial
condition.&#160;&#160;There can be no assurance that we will be able to obtain
insurance on reasonable terms when we are able to afford it.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
report of our independent auditors indicates uncertainty concerning our ability
to continue as a going concern and this may impair our ability to raise capital
to fund our business plan.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
independent auditors have raised substantial doubt about our ability to continue
as a going concern.&#160;&#160;We cannot assure you that this will not impair
our ability to raise capital on attractive terms.&#160;&#160;Additionally, we
cannot assure you that we will ever achieve significant revenues and therefore
remain a going concern.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
top officers have no experience in public company reporting and limited
experience in financial accounting, which could impair our ability to satisfy
public company filing requirements and increase our securities compliance
costs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
management team has limited experience in a publicly-traded company, or in
complying with the regulatory requirements applicable to a public
company.&#160;&#160;As a result, we could have difficulty satisfying the
regulatory requirements applicable to public companies, which could adversely
affect the market for our common stock.&#160;&#160;At present, we rely upon
outside experts to advise us on matters relating to financial accounting and
public company reporting.&#160;&#160;While we believe that it will be possible
to satisfy our public company reporting requirements through the use of third
party experts, our general and administrative costs will remain higher to the
extent our officers alone are not able to satisfy our public company reporting
requirements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Control
by management.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
Pandelisev currently owns or controls over 66 percent of our issued and
outstanding common stock.&#160;&#160;Consequently, management he has the ability
to influence control of our operations and will have the ability to influence or
control substantially all matters submitted to stockholders for approval,
including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Election
      of the board of directors;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Removal
      of any directors;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amendment
      of our articles of incorporation or bylaws;
and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Adoption
      of measures that could delay or prevent a change in control or impede a
      merger, takeover or other business
combination.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr.
Pandelisev will thus have substantial influence over our management and affairs,
this concentration of ownership by itself may have the effect of impeding a
merger, consolidation, takeover or other business consolidation, or discouraging
a potential acquiror from making a tender offer for the common
stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
future revenues are unpredictable and our quarterly operating results may
fluctuate significantly.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have a
very limited operating history, and have no revenue to date.&#160;&#160;We
cannot forecast with any degree of certainty whether any of our products or
services will ever generate revenue or the amount of revenue to be generated by
any of our products or services.&#160;&#160;In addition, we cannot predict the
consistency of our quarterly operating results.&#160;&#160;Factors which may
cause our operating results to fluctuate significantly from quarter to quarter
include:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISKS ASSOCIATED WITH OUR
COMPANY - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td width="1">
            </td>
            <td align="right" style="WIDTH: 46px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td align="left" width="934">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      ability to attract new and repeat
customers;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      ability to keep current with the evolving requirements of our target
      market;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      ability to protect our proprietary
technology;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      ability of our competitors to offer new or enhanced products or
      &#160;services; and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unanticipated
      delays or cost increases with respect to research and
      development.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
of these and other factors, we believe that quarter-to-quarter comparisons of
our results of operations are not good indicators of our future
performance.&#160;&#160;If our operating results fall below the expectations of
securities analysts and investors in some future periods, then our stock price
may decline.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Acts
of terrorism, responses to acts of terrorism and acts of war may impact our
business and our ability to raise capital.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Future
acts of war or terrorism, national or international responses to such acts, and
measures taken to prevent such acts may harm our ability to raise capital or our
ability to operate.&#160;&#160;In addition, the threat of future terrorist acts
or acts of war may have effects on the general economy or on our business that
are difficult to predict.&#160;&#160;We are not insured against damage or
interruption of our business caused by terrorist acts or acts of
war.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may fail to establish and maintain strategic relationships.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
believe that the establishment of strategic partnerships will greatly benefit
the growth of our business, and we intend to seek out and enter into strategic
alliances.&#160;&#160;We may not be able to enter into these strategic
partnerships on commercially reasonable terms, or at all.&#160;&#160;Even if we
enter into strategic alliances, our partners may not attract significant numbers
of customers or otherwise prove advantageous to our business.&#160;&#160;Our
inability to enter into new distribution relationships or strategic alliances
could have a material and adverse effect on our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may not be able to develop a market for our crystal products, which will most
likely cause our stock price to decline.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
demand and price for our crystal products will be based upon the existence of
markets for them.&#160;&#160;The extent to which we may gain a share of our
intended markets will depend, in part, upon the cost effectiveness and
performance of our crystal products when compared to alternative crystal
products, which may be conventional or heretofore unknown.&#160;&#160;If the
crystal products of other companies provide more cost-effective alternatives or
otherwise outperform our crystal products, the demand for our crystal products
may be adversely affected.&#160;&#160;Our success will be dependent upon market
acceptance of our crystal products.&#160;&#160;Failure of our crystal products
to achieve and maintain meaningful levels of market acceptance would materially
and adversely affect our business, financial condition, results of operations
and market penetration.&#160;&#160;This would likely cause our stock price to
decline.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may have difficulty in attracting and retaining management and outside
independent members to our board of directors as a result of their concerns
relating to their increased personal exposure to lawsuits and stockholder claims
by virtue of holding these positions in a publicly-held company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
directors and management of publicly-traded corporations are increasingly
concerned with the extent of their personal exposure to lawsuits and stockholder
claims, as well as governmental and creditor claims which may be made against
them, particularly in view of recent changes in securities laws imposing
additional duties, obligations and liabilities on management and
directors.&#160;&#160;Due to these perceived risks, directors and management are
also becoming increasingly concerned with the availability of directors and
officers&#8217; liability insurance to pay on a timely basis the costs incurred in
defending such claims.&#160;&#160;We currently do not carry directors and
officers&#8217; liability insurance.&#160;&#160;Directors and officers&#8217; liability
insurance has recently become much more expensive and difficult to
obtain.&#160;&#160;If we are unable to provide directors and officers&#8217; liability
insurance at affordable rates or at all, it may become increasingly more
difficult to attract and retain qualified outside directors to serve on our
board of directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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</font></div>
      </div>
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      </div>
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</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RISKS ASSOCIATED WITH OUR
COMPANY - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We may
lose potential independent board members and management candidates to other
companies that have greater directors and officers&#8217; liability insurance to
insure them from liability or to companies that have revenues or have received
greater funding to date which can offer more lucrative compensation
packages.&#160;&#160;The fees of directors are also rising in response to their
increased duties, obligations and liabilities as well as increased exposure to
such risks.&#160;&#160;As a company with a limited operating history and limited
resources, we will have a more difficult time attracting and retaining
management and outside independent directors than a more established company due
to these enhanced duties, obligations and liabilities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Legislative
actions and potential new accounting pronouncements are likely to impact our
future financial position and results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
there may potentially be new accounting pronouncements or additional regulatory
rulings, which will have an impact on our future financial position and results
of operations.&#160;&#160;The Sarbanes-Oxley Act of 2002 and other rule changes
as well as proposed legislative initiatives have increased our general and
administrative costs as we have incurred increased legal and accounting fees to
comply with such rule changes.&#160;&#160;Further, proposed initiatives are
expected to result in changes in certain accounting rules, including legislative
and other proposals to account for employee stock options as a compensation
expense.&#160;&#160;These and other potential changes could materially increase
the expenses we report under accounting principles generally accepted in the
United States of America, and adversely affect our operating
results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Risks
Associated With This Offering</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
may be unable to sell your common stock at or above your purchase price, which
may result in substantial losses to you.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following factors may add to the volatility in the price of our common stock:
actual or anticipated variations in our quarterly or annual operating results;
government regulations, announcements of significant acquisitions, strategic
partnerships or joint ventures; our capital commitments; and additions or
departures of our key personnel.&#160;&#160;Many of these factors are beyond our
control and may decrease the market price of our common stock, regardless of our
operating performance.&#160;&#160;We cannot make any predictions or projections
as to what the prevailing market price for our common stock will be at any time,
including as to whether our common stock will sustain its current market price,
or as to what effect that the sale of shares or the availability of common stock
for sale at any time will have on the prevailing market price.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Volatility
in our common stock price may subject CRC Crystal Research to securities
litigation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
market for our common stock is characterized by significant price volatility
when 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.&#160;&#160;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.&#160;&#160;We may in the future be the target of
similar litigation.&#160;&#160;Securities litigation could result in substantial
costs and liabilities and could divert management&#8217;s attention and
resources.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain
stockholders may be subject to taxation of dividends.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
absence of an applicable treaty between the United States and the government of
the country of which a stockholder is a citizen, if such stockholder is not a
United States citizen or a resident alien of the United States, pursuant to
United States income tax law, all dividends payable by CRC Crystal Research on
our capital stock to any such stockholder are subject to a withholding rate of
30 percent.&#160;&#160;As of the effective date of this offering, there is no
way to determine which of our potential stockholders may be subject to the 30
percent withholding requirement.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may not achieve results similar to the financial projections in this placement
memorandum.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
projections and related assumptions discussed in this placement memorandum were
based on information about circumstances and conditions existing as of the date
of this placement memorandum.&#160;&#160;The projections and estimated financial
results are based on estimates and assumptions that are inherently uncertain
and, though considered reasonable by us, are subject to significant business,
economic, and competitive uncertainties and contingencies, all of which are
difficult to predict and many of which are beyond our
control.&#160;&#160;Accordingly, there can be no assurance that the projected
results will be realized or that actual results will not be significantly lower
than projected.&#160;&#160;We do not intend to update the
projections.&#160;&#160;The inherent uncertainties in results increase
materially for years closer to the end of the projected
period.&#160;&#160;Neither we nor any other person or entity assumes any
responsibility for the accuracy or validity of the projections.</font></div>
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      </div>
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</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Risks
Associated With This Offering - continued</font></font><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may need to raise additional capital.&#160;&#160;If we are unable to raise
necessary additional capital, our business may fail or our operating results and
our stock price may be materially adversely affected.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
we are a newly operational company, we need to secure adequate
funding.&#160;&#160;If we are unable to obtain adequate funding, we may not be
able to successfully develop and market our crystal products and our business
will most likely fail.&#160;&#160;We do not have commitments for additional
financing.&#160;&#160;To secure additional financing, we may need to borrow
money or sell more securities, which may reduce the value of our outstanding
securities.&#160;&#160;We may be unable to secure additional financing on
favorable terms or at all.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Selling
additional stock, either privately or publicly, would dilute the equity
interests of our stockholders.&#160;&#160;If we borrow more money, we will have
to pay interest and may also have to agree to restrictions that limit our
operating flexibility.&#160;&#160;If we are unable to obtain adequate financing,
we may have to curtail business operations, which would have a material negative
effect on operating results and most likely result in a lower stock
price.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
issuance of additional common stock in exchange for services or to repay debt
would dilute your proportionate ownership and voting rights and could have a
negative impact on the market price of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our board
of directors may generally issue shares of common stock to pay for debt or
services, without further approval by our stockholders based upon such factors
as our board of directors may deem relevant at that time.&#160;&#160;For the
past three years and for the year ended December 31, 2007, we issued a total of
8,469,844 shares in payment for debt and services.&#160;&#160;It is likely that
we will issue additional securities to pay for services and reduce debt in the
future.&#160;&#160;It is possible that we will issue additional shares of common
stock under circumstances we may deem appropriate at the time.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
elimination of monetary liability against our directors, officers and employees
under our articles of incorporation and the existence of indemnification rights
for our directors, officers and employees may result in substantial expenditures
by CRC Crystal Research and may discourage lawsuits against our directors,
officers and employees.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
articles of incorporation contain provisions which eliminate the liability of
our directors for monetary damages to CRC Crystal Research and our
stockholders.&#160;&#160;Our bylaws also require CRC Crystal Research to
indemnify our officers and directors.&#160;&#160;We may also have contractual
indemnification obligations under our agreements with our directors, officers
and employees.&#160;&#160;The foregoing indemnification obligations could result
in CRC Crystal Research incurring substantial expenditures to cover the cost of
settlement or damage awards against directors, officers and employees, which we
may be unable to recoup.&#160;&#160;These provisions and resultant costs may
also discourage CRC Crystal Research from bringing a lawsuit against directors,
officers and employees for breaches of their fiduciary duties, and may similarly
discourage the filing of derivative litigation by our stockholders against our
directors, officers and employees even though such actions, if successful, might
otherwise benefit CRC Crystal Research and our stockholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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      </div>
    </div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Risks
Associated With This Offering - continued</font></font></div>
    <div><br><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
directors have the right to authorize the issuance of shares of our preferred
stock and additional shares of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
directors, within the limitations and restrictions contained in our articles of
incorporation and without further action by our stockholders, have the authority
to issue shares of preferred stock from time to time in one or more series and
to fix the number of shares and the relative rights, conversion rights, voting
rights, and terms of redemption, liquidation preferences and any other
preferences, special rights and qualifications of any such series.&#160;&#160;We
have no intention of issuing shares of preferred stock at the present
time.&#160;&#160;Any issuance of shares of preferred stock could adversely
affect the rights of holders of our common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Should we
issue additional shares of our common stock at a later time, each investor&#8217;s
ownership interest in our stock would be proportionally reduced.&#160;&#160;No
investor will have any preemptive right to acquire additional shares of our
common stock, or any of our other securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
we fail to remain current on our reporting requirements, we could be removed
from the OTC Bulletin Board, which would limit the ability of broker-dealers to
sell our securities and the ability of stockholders to sell their securities in
the secondary market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Companies
trading on the OTC Bulletin Board, such as CRC Crystal Research wants to be,
must be reporting issuers under Section 12 of the Exchange Act, and must be
current in their reports under Section 13 of the Exchange Act, in order to
maintain price quotation privileges on the OTC Bulletin Board.&#160;&#160;If we
fail to remain current on our reporting requirements, we could be removed from
the OTC Bulletin Board.&#160;&#160;As a result, the market liquidity for our
securities could be adversely affected by limiting the ability of broker-dealers
to sell our securities and the ability of stockholders to sell their securities
in the secondary market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dividend
risk.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
present, we are not in a financial position to pay dividends on our common stock
and future dividends will depend on our profitability.&#160;&#160;Investors are
advised that until such time the return on our common stock is restricted to an
appreciation in the share price.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Anti-takeover
provisions may impede the acquisition of CRC Crystal Research.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Certain
provisions of the Nevada Revised Statutes have anti-takeover effects and may
inhibit a non-negotiated merger or other business combination.&#160;&#160;These
provisions are intended to encourage any person interested in acquiring CRC
Crystal Research to negotiate with, and to obtain the approval of, our board of
directors in connection with such a transaction.&#160;&#160;As a result, certain
of these provisions may discourage a future acquisition of CRC Crystal Research,
including an acquisition in which the stockholders might otherwise receive a
premium for their shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
common stock is subject to the &#8220;penny stock&#8221; rules of the Securities and
Exchange Commission, and the trading market in our common stock is limited,
which makes transactions in our stock cumbersome and may reduce the investment
value of our stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
shares of common stock are &#8220;penny stocks&#8221; because they are not registered on a
national securities exchange or listed on an automated quotation system
sponsored by a registered national securities association, pursuant to Rule
3a51-1(a) under the Exchange Act.&#160;&#160;For any transaction involving a
penny stock, unless exempt, the rules require:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 45pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">That
      a broker or dealer approve a person&#8217;s account for transactions in penny
      stocks; and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 45pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">That
      the broker or dealer receives from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Securities and Exchange Commission
relating to the penny stock market, which, in highlight form:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 45pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sets
      forth the basis on which the broker or dealer made the suitability
      determination; and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><br>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 45pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">That
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Risks
Associated With This Offering - continued</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Generally,
brokers may be less willing to execute transactions in securities subject to the
&#8220;penny stock&#8221; rules.&#160;&#160;This may make it more difficult for investors to
dispose of our common stock and cause a decline in the market value of our
stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions.&#160;&#160;Finally, monthly statements have
to be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
market for penny stocks has suffered in recent years from patterns of fraud and
abuse.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stockholders
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.&#160;&#160;Such patterns include:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Control
      of the market for the security by one or a few broker-dealers that are
      often related to the promoter or
issuer;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Manipulation
      of prices through prearranged matching of purchases and sales and false
      and misleading press releases;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Boiler
      room practices involving high-pressure sales tactics and unrealistic price
      projections by inexperienced
salespersons;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Excessive
      and undisclosed bid-ask differential and markups by selling
      broker-dealers; and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">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 consequential
      investor losses.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
management is aware of the abuses that have occurred historically in the penny
stock market.&#160;&#160;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.&#160;&#160;The occurrence of these patterns or practices could
increase the volatility of our share price.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Shares
eligible for future sale by our current stockholders may adversely affect our
stock price.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To date,
we have had a very limited trading volume in our common stock.&#160;&#160;As
long as this condition continues, the sale of a significant number of shares of
common stock at any particular time could be difficult to achieve at the market
prices prevailing immediately before such shares are offered.&#160;&#160;In
addition, sales of substantial amounts of common stock, including shares issued
upon the exercise of outstanding options and warrants, under Securities and
Exchange Commission Rule 144 or otherwise could adversely affect the prevailing
market price of our common stock and could impair our ability to raise capital
at that time through the sale of our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
prospectus contains forward-looking statements about Crystal Research business,
financial condition, and prospects that reflect Crystal Research management&#8217;s
assumptions and beliefs based on information currently available. Crystal
Research can give no assurance that the expectations indicated by such
forward-looking statements will be realized. If any of Crystal Research
assumptions should prove incorrect, or if any of the risks and uncertainties
underlying such expectations should materialize, the actual results may differ
materially from those indicated by the forward-looking statements.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The key
factors that are not within Crystal Research&#8217;s control and that may have a
direct bearing on operating results include, but are not limited to, acceptance
of the proposed advertising monitors that Crystal Research expects to market,
Crystal Research&#8217;s ability to establish a customer base, managements&#8217; ability to
raise capital in the future, the retention of key employees and changes in the
regulation of the industry in which Crystal Research functions.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There may
be other risks and circumstances that management may be unable to predict to
sustain operations. When used in this prospectus, words such as, &#8220;believes,&#8221;
&#8220;expects,&#8221; &#8220;intends,&#8221; &#8220;plans,&#8221; &#8220;anticipates,&#8221; &#8220;estimates&#8221; and similar
expressions are intended to identify and qualify forward-looking statements,
although there may be certain forward-looking statements not accompanied by such
expressions.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">USE
OF PROCEEDS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Registrant shall not receive any part of the proceeds from the registration of
the 11,770,270 common shares and therefore there is no Use of
Proceeds.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DETERMINATION
OF OFFERING PRICE</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
offering price of the common stock has been arbitrarily determined and bears no
relationship to any objective criterion of value. The price does not bear any
relationship to Crystal Research&#8217;s assets, book value, historical earnings, or
net worth. In determining the offering price, management considered such factors
as the prospects, if any, for similar companies, anticipated results of
operations, present financial resources and the likelihood of acceptance of this
offering.&#160;&#160;Accordingly, the offering price should not be considered an
indication of the actual value of our securities.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DILUTION
OF THE PRICE YOU PAY FOR YOUR SHARES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#8220;Dilution&#8221;
represents the difference between the offering price of the shares of common
stock and the net book value per share of common stock immediately after
completion of the offering. &#8220;Net Tangible Book Value&#8221; is the amount that results
from subtracting total liabilities and intangible assets from total assets. In
this offering, the level of dilution is increased as a result of the relatively
low book value of Crystal Research&#8217;s issued and outstanding stock. This is due
in part because of the common stock issued to the Crystal Research shareholders,
officers, directors, and employees totaling 12,327,449 shares at par value
$0.001 per share. Please refer to the section titled &#8220;Certain Transactions&#8221;,
herein, for more information.&#160;&#160;Registrant is seeking to register
11,770,270 common shares at a price of $0.001 per share.&#160;&#160;No new
shares are being registered.</font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">PLAN
OF DISTRIBUTION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">OFFERING
WILL BE SOLD BY OUR OFFICERS AND DIRECTOR</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This is a
self-underwritten offering.&#160;&#160;This Prospectus is part of a Prospectus
that permits our officer and directors to sell the Shares directly to the
public, with no commission or other remuneration payable to him for any Shares
that are sold by him.&#160;&#160;There are no plans or arrangements to enter
into any contracts or agreements to sell the Shares with a broker or
dealer.&#160;&#160;Kiril A. Pandelisev, our officer and director, will see the
Shares and intend to offer them to friends, family members and business
acquaintances.&#160;&#160;In offering the securities on our behalf, they will
rely on the safe harbor from broker dealer registration set out in Rule 3a4-1
under the Securities Exchange Act of 1934.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">14</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PLAN OF DISTRIBUTION
-<font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">&#160;continued</font></font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">OFFERING WILL BE SOLD BY
OUR OFFICERS AND DIRECTORS -<font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">&#160;continued</font></font></font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">They will
register as a broker-dealer pursuant to Section 15 of the Securities Exchange
Act of 1934, in reliance upon Rule 3a4-1, which sets forth those conditions
under which a person associated with an Issuer may participate in the offering
of the Issuer&#8217;s securities and not be deemed to be a broker-dealer.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 49px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a.</font></td>
            <td align="left" width="71%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      officers and directors are not subject to a statutory disqualification, as
      that term</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">is
      defined in Section 3(a)(39) of the Act, at the time of their
      participation; and</font></div>
            </td>
            <td align="left" width="19%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 49px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">b.</font></td>
            <td align="left" width="71%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      officers and directors will not be compensated in connection with
      their</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">participation
      by the payment of commissions or other remuneration based either
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">directly
      or indirectly on transactions in securities; and</font></div>
            </td>
            <td align="left" width="19%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 47px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" style="WIDTH: 51px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">c.&#160;</font></div>
            </td>
            <td align="left" width="71%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      officers and directors are not, nor will they be at the time of their
      participation</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">in
      the offering, an associated person of a broker-dealer; and</font></div>
            </td>
            <td align="left" width="19%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td align="right" style="WIDTH: 45px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" style="WIDTH: 53px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">d.&#160;</font></div>
            </td>
            <td align="left" width="71%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Our
      officers and directors meet the conditions of paragraph (a)(4)(ii) of Rule
      3a4-1</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">of
      the Exchange Act, in that they (A) primarily perform, or intend primarily
      to </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">perform
      at the end of the offering, substantial duties for or on behalf of our
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">company,
      other than in connection with transactions in securities; and (B) are not
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">a
      broker or dealer, or been associated person of a broker or dealer, within
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">the
      preceding twelve months; and (C) has not participated in selling and
      offering </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">securities
      for any Issuer more than once every twelve months other than in
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">reliance
      on Paragraphs (a)(4)(i)&#160;&#160;and (a)(4)(iii).</font></div>
            </td>
            <td align="left" width="19%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
officers, directors, control persons and affiliates of same do not intend to
purchase any shares in this offering.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">TERMS
OF THE OFFERING</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Registrant intends to register 11,770,270 common shares at the fixed price of
$.001 per share and will not receive any funds from the offering.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DEPOSIT
OF OFFERING PROCEEDS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is receiving no funds from this offering.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">PROCEDURES
FOR AND REQUIREMENTS FOR SUBSCRIBING</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There are
no procedures or requirements for subscription as the Company is registering
already issued and outstanding common shares.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DESCRIPTION
OF SECURITIES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">COMMON
STOCK</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is authorized to issue 450,000,000 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 $0.001 per share. As of December 31, 2007, there were 12,327,449 shares
of common stock were issued and outstanding, and no shares of preferred
stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
outstanding share of common stock is entitled to one vote, either in person or
by proxy, on all matters that may be voted upon by the owners thereof at
meetings of the stockholders.&#160;&#160;Holders of our common
stock</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">15</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF SECURITIES
-<font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">&#160;continued</font></font></font></div>
    <div style="MARGIN-LEFT: 36pt">&#160;</div>
    <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td align="right" width="5%" style="WIDTH: 58px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" width="5%" style="WIDTH: 58px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: left"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(i)&#160;</font></div>
              </div>
            </td>
            <td align="left" width="90%">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">have equal ratable
      rights to dividends from funds legally available therefore, if declared by
      our Board of Directors,</font></div>
              </div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td align="right" width="5%" style="WIDTH: 58px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" width="5%" style="WIDTH: 58px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(ii)&#160;</font></div>
            </td>
            <td align="left" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">are
      entitled to share ratably in all our assets available for distribution to
      holders of common stock upon our liquidation, dissolution or winding
      up;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td align="right" width="5%" style="WIDTH: 58px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" width="5%" style="WIDTH: 58px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(iii)&#160;</font></div>
            </td>
            <td align="left" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">do
      not have preemptive, subscription or conversion rights or redemption or
      sinking fund provisions; and</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td align="right" width="5%" style="WIDTH: 58px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" width="5%" style="WIDTH: 58px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(iv)&#160;</font></div>
            </td>
            <td align="left" width="90%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">are
      entitled to one non-cumulative vote per share on all matters on which
      stockholders may vote at all meetings of our
  stockholders.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than fifty percent (50%) of outstanding
shares voting for the election of directors can elect all of our directors if
they so choose and, in such event, the holders of the remaining shares will not
be able to elect any of our directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All of
the Company's outstanding shares of common stock are validly issued, fully paid
and non-assessable.&#160;&#160;Integrity Stock Transfer, Inc. serves as transfer
agent for the common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NON-CUMULATIVE
VOTING</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Holders
of shares of our common stock do not have cumulative voting rights, which means
that the holders of more than 50% of the outstanding shares, voting for the
election of directors, can elect all of the directors to be elected, if they so
choose, and, in such event, the holders of the remaining shares will not be able
to elect any of our directors.&#160;&#160;After this offering is completed, the
present stockholders will own the same percentage of our outstanding common
shares as the Company is not registering new shares but merely registering
already issued and outstanding common shares.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CASH
DIVIDENDS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of the
date of this prospectus, we have not paid any cash dividends to
stockholders.&#160;&#160;The declaration of any future cash dividend will be at
the discretion of our Board of Directors and will depend on our earnings, if
any, our capital requirements and financial position, our general economic
conditions, and other pertinent conditions.&#160;&#160;It is our present
intention not to pay any cash dividends in the foreseeable future, but rather to
reinvest earnings, if any, in our business operations.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">INTEREST
OF NAMED EXPERTS AND COUNSEL</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None of
the below described experts or counsel have been hired on a contingent basis and
none of them will receive a direct or indirect interest in the
Company.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
audited financial statement for the period from inception to December 31, 2008,
included in this prospectus has been audited by Moore &amp; Associates,
Chartered.&#160;&#160;We include the financial statements in reliance on their
report, given upon their authority as experts in accounting and
auditing.&#160;&#160;The reviewed financial statements for the 3 months ended
March 31, 2008, prepared by the company are also included in this
prospectus.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The Law
Offices of Joseph L. Pittera, 2214 Torrance Boulevard, Suite 101, Torrance,
California 90501, has passed upon the validity of the shares being offered and
certain other legal matters and is representing us in connection with this
offering.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DESCRIPTION
OF OUR BUSINESS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">GENERAL
INFORMATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation (the "Company" or the "Registrant") was
incorporated in the State of Nevada on June 9, 2006. The Company is the
successor in interest to CRC Crystal Research Corporation (&#8220;Arizona CRC&#8221;), which
was incorporated in the State of Arizona on March 22, 1993.&#160;&#160;On June
10, 2006, the board of directors of the Company and Arizona CRC approved their
merger in order to redomicile the Arizona CRC in the State of
Nevada.&#160;&#160;The redomiciling process was completed by the filing of
Articles of Merger with the Secretary of State of Nevada on September 20, 2006
and with the Secretary of State of Arizona on September 21, 2006.&#160;&#160;The
Company was formed by Dr. Kiril Pandelisev to commercialize patents for new
technology and new crystal growing processes in the manufacture Crystals and new
methods and technology for various crystals and Crystal Products. The technology
encompasses a new crystal grower design, new crystal growing processes, and new
technology for fabrication of various crystals and more sensitive Crystal and
other Products. Management believes that the new technology allows the Company
to manufacture Crystal Products faster, less expensively, and at a higher
quality level than that which current industry methods provide.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has a non-exclusive license to all technology owned by Single Crystal
Technologies, Inc. (&#8220;SCT&#8221;), which is owned by Dr. Kiril A.
Pandelisev.&#160;&#160;Dr. Pandelisev is the Company&#8217;s sole officer and
director. The licensed technology includes patents, whether approved, pending or
in process of filing, other contractual agreements, and technical measures
relating to the manufacture of Crystals, Crystal Products and ultra pure
materials and products made from them.&#160;&#160;The Company plans to raise
capital to fund the development of initial manufacturing capabilities to
manufacture Crystals, Crystal Products ultra pure materials and products made
from ultra pure materials and alloys for sale in various industrial markets. The
Company has never produced any Crystal Products or other products for commercial
sale.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INDUSTRY
BACKGROUND</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Crystals
are very pure concentrations of elements or compounds that have been melted and
then allowed to solidify in such a fashion that their atomic or molecular
structure forms a crystal lattice.&#160;&#160;A distinguishing characteristic of
crystals is that they have a uniform, low energy state as compared to
non-crystal concentrations of the same elements or compounds.&#160;&#160;When
certain impurities (or dopants) are intentionally added to a crystal, the
properties of the crystal are altered.&#160;&#160;Dopants can be added while the
crystal is grown and/or during the processing of the crystal into a finished
product.&#160;&#160;One significant alteration is that, with certain impurities,
the crystal can be made to react to electromagnetic waves, and the reaction can
be detected with detection devices.&#160;&#160;In addition, impurities at
certain concentrations can alter the temperature at which the crystal will react
to electromagnetic wages.&#160;&#160;By measuring the strength of the reaction
to electromagnetic waves, it is possible to measure features of an item or
process that is emitting the electromagnetic waves.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
effectiveness and quality of a crystal is dependent on the purity of the element
or compound used for the crystal, and the number of flaws in the crystal lattice
structure, which is determined by the crystal growth process. Optical
transmission, scintillation properties and heat tolerance also depend on the
uniformity of a crystal, as well as the amount and uniformity of distributions
of dopants within the crystal.&#160;&#160;For instance, sodium iodide (NaI) in
its pure state can detect gamma rays only at very low temperatures. By adding a
small amount of Thallium metal to the crystal (about 0.01%), the crystal can
detect gamma rays or nuclear particles at much higher temperatures. Sodium
iodide detectors used in the medical imaging need only work at room temperature,
while sodium iodide detectors used in energy exploration operate can be made to
work in temperatures as high as 200<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">o</font>C by
altering the concentrations of Thallium metal added as a dopant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A wide
variety of commercial and industrial applications have been developed to take
advantage of the properties of crystals.&#160;&#160;For example:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Medial Imaging</font>:&#160;&#160;In
medical imaging applications (i.e., a CAT scan), sodium iodide crystals are
shaped into plates and placed around a patient that has been injected with
radioactive tracer material. The gamma rays emitted from the patient enter the
crystal plates and cause a scintillation event, or flash of light, when they
strike a Thallium atom which is used as the dopant.&#160;&#160;A light sensor,
such as photo multiplier tube (PMT), detects the scintillation events, converts
each scintillation event into an electrical pulse and assigns coordinates to the
scintillation event. Special electronics amplify these signals and analyze
billions of events per second. The result of the analysis is the image of the
organ that is scanned. Since healthy tissue absorbs the injected radioactive
material differently than cancerous tissue, a radiologist can detect the
cancerous material as darker or brighter material (depending on the radioactive
material injected). SCT has developed technology that it believes can make the
crystals at lower cost and more sensitive, which will enable more accurate
diagnosis of the patient.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
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</font></div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Petroleum
Exploration</font>:&#160;&#160;When drilling for oil or gas, it is important to
know the geological formations which are being penetrated. By adding a
scintillation crystal to the drilling assembly, a geologist on the surface can
be provided with that information. Oil well surveys are conducted by injecting
small traces of radioactive materials into wells under high steam pressure.
Gamma rays emitted from the walls of the well and detected by the crystal can be
analyzed and interpreted to show the composition of the geological formation in
which the crystal is located and whether it contains hydrocarbons. This
measurement is called oil well logging and is often referred to as "measured
while drilling." When the driller encounters a potential producing zone, a
geologist can use the crystal measurements to assess how much oil is present in
the zone and determine whether to stop drilling or continue drilling in search
for a more productive zone.&#160;&#160;SCT&#8217;s patents provide technology for more
sensitive soil and hydrocarbon detection and can sustain rougher, hotter
environments without being damaged.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-STYLE: italic">Homeland
Security</font>:&#160;&#160;In homeland security applications, crystal detection
devices are commonly used in airports, courthouses, government buildings,
nuclear plants and other sensitive areas to for scanning people, luggage and
shipping containers for weapons and &#8220;dirty bomb&#8221; materials.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Bridgman-Stockbarger
Method of Crystal Production</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
predominant method of crystal production for industrial uses is the
Bridgman-Stockbarger Method, which was perfected in the 1930&#8217;s.&#160;&#160;Under
the Bridgman Stockbarger Method, a crucible is filled with particulate raw
materials and melted at a high temperature.&#160;&#160;The melted material is
then allowed to solidify by slowly lowering it into a cooling section, which
cools the bottom of the crucible.&#160;&#160;The entire crystal is formed by
slowly cooling the entire crucible from the bottom to the
top.&#160;&#160;Particularly with respect to non-metallic crystals, which are
characterized by poor heat conductivity, the Bridgman-Stockbarger Method suffers
from the following manufacturing problems:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      yield for marketable crystals is low, and for large crystals can be as low
      as 1-3%;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are limitations on the maximum possible size of the
    crystals;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      growth rate of the crystals is low, thus inhibiting volume production and
      increasing crystal production time;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      is significant impurity variation within crystals. Often, less than 10% of
      the crystal produced is within the desired
  range;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      capital investment for mass production is
large.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Bridgeman-Stockbarger Method is inefficient and costly, particularly for
non-metallic crystals that are based upon elements or compounds with low heat
conductivity.&#160;&#160;The Bridgman-Stockbarger Method requires special
melting and annealing stations, expensive platinum crucibles, heavy material
handling equipment and considerable personnel. Conventional Bridgman-Stockbarger
furnaces can cost over one million dollars to build. Presently, crystals are
taken out of furnaces when they are over 900&#176;F, exposing personnel to unhealthy
concentrations of iodine and thallium iodide vapors. The crystals produced are
subject to thermal induced stress damage, production yields of 70% or less, and
size limited to a maximum of 30 inches in diagonal dimension.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font></div>
    <div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PRINCIPAL
PRODUCTS AND THEIR MARKETS</font></div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The uses
for CRC&#8217;s Crystal Products are numerous. For example:</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div>
        <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
            <tr valign="top">
              <td style="WIDTH: 36pt">
                <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
              </td>
              <td style="WIDTH: 18pt">
                <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
              </td>
              <td>
                <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      medical imaging industry uses NaI crystal plates to transform invisible
      gamma rays into visible light, which can be converted into an image of the
      object examined;</font></div>
              </td>
            </tr>
        </table>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">bottlers
      use NaI crystal detectors to prevent overfilling of aluminum
      cans;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">automobile
      manufacturers use crystal detectors to control the paint spraying process
      to guarantee proper color mixing;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">steel
      manufacturers use NaI crystal detectors to adjust gigantic rollers to
      insure uniform thickness of rolled
steel;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">nuclear
      power plants use thousands of small NaI crystal detectors to measure
      radiation levels throughout the plant and control any possible leakage of
      radioactive material that might threaten the general
      population;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Engine
      manufacturers use scintillation technology to ensure proper engine wall
      thickness, alloy uniformity and crack free
  parts;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Airports
      use crystals in personal and baggage scanners for detection of controlled
      substances, explosives and radioactive
material;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Borders
      and ports use scintillation based detectors for detection of controlled
      substances, explosives and radioactive
material.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Various
federal agencies, including the Homeland Security Agency, the Environmental
Protection Agency and the Nuclear Regulatory Commission, use crystal detectors
for qualitative and quantitative composition assessment of nuclear waste. They
are effective in providing for the safety of the nuclear waste depositories by
detecting possible leaks from the containers caused by chemical reactions and
the effects of nuclear particles bombardment. Crystal detectors are also used to
maintain inventory records of nuclear stockpiles and to impose sophisticated
security protection measures for these materials, especially those materials
used for military applications.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table sets forth certain crystal types, their applications, and market
information:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="80%">
          <tr>
            <td valign="bottom" width="14%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Crystal
      Type/High Tech Product</font></div>
            </td>
            <td valign="bottom" width="21%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Application</font></div>
            </td>
            <td valign="bottom" width="44%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Market
      Information</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Sodium
      Iodide (NaI)</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Homeland
      Security; Borders, Ports, and inland applications.</font></div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      Customers: US Government, Lockheed Martin, General Electric,
      Others.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size:&#160;&#160;Approximately $362 Billion</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Producer:&#160;&#160;Saint Gobain, Foreign Corporation.</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Sodium
      Iodide (NaI)</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Oil
      Well Logging Detectors</font></div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      Customers: Schlumberger, Halliburton, Baker Hughes</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size:&#160;&#160;Approximately $100 Million</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Producer:&#160;&#160;Saint Gobain, Foreign Corporation.</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Sodium
      Iodide (NaI)</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Medical
      Imaging</font></div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      Customers: GE, ADAC, Siemens, Toshiba</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size: Over $400 Million</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Producer: Saint Gobain, Foreign Corporation.</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cesium
      Iodide</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">High
      Energy Physics</font></div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      Customers: U.S. Nat'l Research Facilities</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size: Approximately Over &gt;$100 Million</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Producer:&#160;&#160;Saint Gobain, Foreign Corporation, and several
      Chinese Government owned entities.</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Calcium
      Fluoride (CaF<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: sub">2</font>)</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Semiconductor
      Equipment manufacturing, Space Applications, Consumer optical
      products</font></div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      Customers: Nikon, Canon, ASML, Zeiss, US Government.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size: Over $1 Billion(per Deutche Bank report)</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Producers: Canon, Nikon, Corning, Shott Lithotech</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
      </table>
    </div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">19</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="80%">
          <tr>
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Barium
      Fluoride (BaF<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: sub">2</font>);
      Strontium Fluoride (SrF<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: sub">2</font>)</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Airborne
      Laser Defense Systems; Medical Imaging; Semiconductor Equipment
      Manufacturing</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      Customers: Lockheed Martin, Northrop Grumman, Boeing, GE,
      Phillips.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size: Over $1 Billion</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Producers: Korth Kristale (Germany), Russian and Chinese Government
      Companies.</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Metal
      and Metal&#160;&#160;Alloys</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Jet
      Engine Turbine Blades, Space applications</font></div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      customers: Honeywell International, GE, Rolls Royce</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size: Over $1 Billion</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      producers: No major producers,</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Silicon/Silicon
      Alloy products</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Semiconductor
      Manufacturing, Chemical Industry, Space Applications</font></div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      customers: Intel, Freescale, TI, Sony, AMD, Others.</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size: Over $5 Billion</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      producers: Toshiba, Norton, Kyocera,</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="14%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">High
      Purity Quartz &amp; Quartz products</font></div>
            </td>
            <td valign="top" width="21%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Semiconductor
      manufacturing, Fiber Optic Industry; Food industry</font></div>
            </td>
            <td align="left" valign="top" width="44%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      customers: Intel, Freescale, Sony, AMD, Others</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
      Market Size: Over $1 Billion</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Major
      producers Corning, Asahi, Shott Glass</font></div>
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Except
for the Deutche Bank report and US Government reports, the market size estimates
are based on published data that management could find or management estimates,
but is not based on a formal CRC commissioned market study.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">STRATEGY</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
believes its innovative, manufacturing process will significantly reduce
production costs of certain non-metallic crystals; reduce the capital
expenditures needed to finance a manufacturing facility; more than triple the
rate of crystal production; provide a product yield ranging from approximately
80 to 90% and produce higher quality crystals and crystal products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Initially,
the Company will focus on production of NaI and other scintillation Crystals and
Crystal Products for Homeland Security applications and for Energy Exploration
applications. Currently, the market for NaI Crystal Products for oil well
drilling and nuclear detection applications is serviced solely by Saint Gobain
and its subsidiary, Harshaw-Bicron Corporation. Management believes that many
NaI and other scintillation Crystals and Crystal Products customers will welcome
a new supplier that can supply higher quality products, without long and
uncertain delivery times and constant price increases.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
respect to the Homeland Security market, the Company is in negotiations to be
the sodium iodide crystal supplier for scintillation crystals and nuclear
detection devices incorporating the crystal detectors that would be purchased
directly or indirectly by entities that need such devices, such as cities,
states, ports, mass transit authorities, and military
installations.&#160;&#160;With the government contracts, the Company plans to
develop a Nuclear/Radioactive Isotope Detection System that is based on
radiation detected by sodium iodide and other scintillation crystals and
detectors . Available software algorithms allow the system to distinguish threat
isotopes (e.g., cobalt-60, cesium-137, iridium-192, and strontium-90) from
isotopes naturally occurring in household items, such as fish, bananas, and
ceramic tile, or those used for medical purposes (e.g., potassium-40,
thorium-232, and technetium-99m).</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
system also measures background radiation at predetermined intervals against a
standard low-level radiation source within the detector unit to constantly
benchmark naturally occurring radiation levels. This will eliminate the
possibility of false positive alarms. The sensor system has centralized
detection and monitoring capabilities for identifying both the type and amount
of radioactive isotopes.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company, directly or indirectly, plans to deploy system to work seamlessly
without disrupting daily operations and workflow with nuisance false-positives.
Alarms occur only when a valid threat is detected through the presence of a
threat isotope or an unusually large presence of a non-threat
isotope.&#160;&#160;For example, the system could be mounted under the spreader
bars of the cranes that unload cargo containers, so that the system will be able
to silently monitor each container as it is unloaded without any additional
steps by port workers.&#160;&#160;The system would also be mounted in U-Frames,
which could be placed at entrances to ports, government and business complexes,
airports, train platforms, schools, toll booths, and special public events to
silently monitor vehicles and pedestrian traffic as the pass through the
U-Frame.&#160;&#160;Finally, the Company plans for portable model to use to
verify positive readings generated by the stationary models.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">With
respect to the Energy Exploration market, the Company is working with
consultants to become a crystal supplier to the major oilfield services
companies, who are currently the suppliers of oil well logging detectors to the
oil and gas exploration industry.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After the
Company has entered the homeland security and energy exploration markets, the
Company intends to enter into the gamma camera market, the optical industry for
semiconductor process applications and air-borne laser defense applications, the
development of high purity materials for support of the crystal growth process
and for the fabrication of chip processing chambers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DISTRIBUTION
METHODS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We plan
to offer our products to major customers having a need for products with our
technology incorporated therein and to serve as sub-contractor to many US
Government contractors that sell various security and other systems to the US
Government and Military but have no in-house manufacturing of crystals and
crystal detectors.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">STATUS OF
ANY PUBLICLY ANNOUNCED NEW PRODUCTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC is
basing its technology on substantial number of patents and related intellectual
property that present a significant opportunity for future sales growth and
profitability.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
patents in USA and elsewhere could lead to products for the following markets
(to name few, and not in any specific order):</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="#cceeff">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Ultra
      pure materials &#8211; high purity metals and alloys for direct or indirect use
      in the semiconductor, medical, energy exploration, military, space, and
      other leading edge industries.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Crystals
      and crystal products for the semiconductor industry, optics industry,
      medical applications, military and defense applications, homeland
      security, aerospace industry, deep space applications, and other
      industries.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="#cceeff">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Semiconductor
      manufacturing system components &#8211; high purity, high temperature silicon
      based wafer processing chamber
components.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">4.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Equipment
      and Process for production of ultra-pure materials for semiconductor,
      space and military applications.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="#cceeff">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">All
      silicon CVD equipment and
processes.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Equipment
      and process for crystal growth for the semiconductor industry, space
      applications and many defense industry
products.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="#cceeff">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Equipment
      and single crystals for Medical Imaging System
  Assemblies.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="white">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">8.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Energy
      Exploration drilling sensor assemblies and drilling tools employing
      them.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="#cceeff">
            <td style="WIDTH: 24px">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">9.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Airport
      security screening systems</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 24px">
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nuclear
      material radiation sensing and inspecting
  systems.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="#cceeff">
            <td style="WIDTH: 24px">
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">11.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fiber
      optic products &#8211; fused silica grain with desired size and purity,
      preforms, and near-net-shape fused silica
  products.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="white">
            <td style="WIDTH: 24px">
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Equipment
      and Process for fiber optic
preforms.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" bgcolor="#cceeff">
            <td style="WIDTH: 24px">
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Fused
      silica processes</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 24px">
            </td>
            <td style="WIDTH: 34px">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">14.</font></div>
            </td>
            <td width="923">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Sensors
      and systems for industrial safety and
control.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">21</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font></div>
    <div>&#160;</div>
    <div><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In particular,
the Pandelisev patents cover:</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
    </div>
    <div style="TEXT-ALIGN: justify" align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" bgcolor="#cceeff" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 36pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">      </font>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-FAMILY: symbol, serif">&#183;</font></font></div>
            </td>
            <td style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">      </font>
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A
      novel approach for full body scanning
technology.</font></div>
            </td>
          </tr>
          <tr valign="top" bgcolor="white" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 36pt; TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-FAMILY: symbol, serif">&#183;</font></font></div>
            </td>
            <td style="TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">A
      novel approach for full body scanning
  technology.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="TEXT-ALIGN: justify" align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" bgcolor="#cceeff" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 36pt; TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-FAMILY: symbol, serif">&#183;</font></font></div>
            </td>
            <td style="TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
      growth of large, high purity crystals of several important compounds such
      as sodium iodide, cesium iodide, calcium fluoride, barium fluoride &#8211; all
      doped and un-doped materials (by adding or subtracting specific
      impurities).</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="TEXT-ALIGN: justify">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 36pt; TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td style="TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      process and technology for purification of materials and materials
      mixtures.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="TEXT-ALIGN: justify" align="center">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" bgcolor="#cceeff" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 36pt; TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-FAMILY: symbol, serif">&#183;</font></font></div>
            </td>
            <td style="TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">The
      process and technology to manufacture components for the semiconductor
      industry.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="TEXT-ALIGN: justify">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 36pt; TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td style="TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      process and technology to manufacture fiber optic enhanced sensor
      technology for energy applications (MWD and LWD included), homeland
      security, nuclear stockpile storage, airport security and other
      applications.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">The customers</font> for many of our
technology made products are many large corporations such as&#160;&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Siemens, GE, Lockheed Martin,
Honeywell, Boeing, Northrop Grumman, Intel, IBM, Hitachi, Toshiba,
Schlumberger</font>,&#160;&#160;to name a few. Once the prototypes are completed
we will revisit our discussions with them regarding the sale of our products and
services, as well as many joint venture programs.&#160;&#160;We are in
discussions regarding various needs of our products in the Homeland security,
defense and many military applications in general. Having working prototypes
will reactivate many of these discussions and initiate our entry to those multi
billion dollar markets.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">COMPETITION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
competitive environment in the sodium iodide scintillation crystal detector
market is quite unique in today&#8217;s global economy, in that a <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">single
supplier dominates the world market.</font>&#160;&#160;This supplier, St. Gobain
of France ($15+ Billion Company), has <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">over 90%
share</font> of the market. The two largest other suppliers, Russian Imports and
Horiba Instruments, are very small, with a very limited product offering. It is
our understanding that all known competitors utilize the outdated
Bridgeman-Stockbarger (developed in the 1930's) crystal growth
technology.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">It
appears that all current suppliers have failed to keep pace with their
customers&#8217; needs in the areas of product performance, delivery, reliability and
customer service.&#160;&#160;Their detector products are often described as
being of inconsistent quality, with long and erratic delivery times. These
characteristics coupled with an aging technology that cannot provide cost
effective, high performance scintillation crystal detectors lead to a <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">significant
opportunity for CRC.</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition to the competition described above, there are competing technologies
that present a choice for the user of gamma radiation detectors. Some of these
technologies include rare earth scintillators, plastic scintillators and
ionization tubes.&#160;&#160;Detectors based on these technologies have a
relatively narrow, limited use in specialized applications.&#160;&#160;They do
not currently pose a threat to erode or replace the alkali halide detector
market due to many performance price and/or performance
limitations.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SOURCES
AND AVAILABILITY OF PRODUCTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There are
numerous applications for the technology of the Registrant.&#160;&#160;As
discussed in the Description of Business section of this prospectus we
anticipate offering many different products based on our technology to a number
of major customers involved in various segments of the industrial, and national
security sectors of the economy.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DEPENDENCE
ON ONE OR A FEW MAJOR CUSTOMERS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
energy exploration is dominated by very large original equipment
manufacturers.&#160;&#160;The nuclear research customers consist of the national
and international Laboratories, while the homeland security detector segment is
made up of the US Government and numerous relatively small specialty equipment
manufacturers.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">The petroleum exploration</font>
segment led by Halliburton (with Dresser Industries), and followed by
Schlumberger, and Baker Hughes Inteq (including the acquisition of Western
Atlas) represents over half of the market. Medium size companies (Tensor, now
part of Honeywell, Computalog, etc.) and numerous small companies that provide
drilling and logging services to the exploration community represent the
remaining half. <font style="DISPLAY: inline; FONT-WEIGHT: bold">Some time
ago</font> <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Halliburton
has provided </font>CRC <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">with the
specification requirements for&#160;&#160;some of their
measurement-while-drilling (MWD) crystal detector and has agreed to provide the
use of their laboratory for the characterization and qualification of CRC&#8217;s
detectors.</font>&#160;&#160;This MWD detector will be among CRC&#8217;s initial
products.&#160;&#160;CRC is currently opening a similar <font style="DISPLAY: inline; FONT-WEIGHT: bold">dialogue</font> with other major
users.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">The nuclear research and homeland
security</font> segment is comprised of the national and international
Laboratories, while the homeland security detector segment is made up of the US
Government and numerous relatively small specialty equipment manufacturers.
These potential customers use standard general-purpose detectors as well as
one-of-a-kind custom designed, complex detector
configurations.&#160;&#160;Portions of these customers are resellers of crystal
detectors.&#160;&#160;CRC continues its efforts to establish proper <font style="DISPLAY: inline; FONT-WEIGHT: bold">dialogue</font> with these customers
regarding designing CRC&#8217;s detectors into their instruments.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC will
&#8220;target&#8221; <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">major
customers</font> within each industry and work with these customers to <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">create
value</font> for them through the <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">improved
performance and reliability</font> of our crystal detectors. Our focus will be
on solving customers&#8217; problems and creating value by providing detectors that
offer improved performance and reliability, and creating new products for their
new and more demanding applications.&#160;&#160;We will also be able to be <font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">more
responsive to customers</font>&#8217; needs due to our shorter manufacturing time and
customer-focused management.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PATENTS
AND TRADEMARKS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has entered into a non-exclusive license of technology from Single
Crystal Technologies, Inc. (&#8220;SCT&#8221;), which is owned by Dr.
Pandelisev.&#160;&#160;SCT holds patents obtained by Dr. Pandelisev pertaining
to a new method of growing crystals, purifying base compounds, introducing
dopants and incorporating finished crystals into industrial
applications.&#160;&#160;Among the patents issued to Dr. Pandelisev and licensed
to the Company by SCT are:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Patents
Issued</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Wingdings">v</font></font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,402,840&#160;&#160;Crystal
      growth employing embedded purification
chamber</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Wingdings">v</font></font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,352,588&#160;&#160;Material
      Purification</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Wingdings">v</font></font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,334,899&#160;&#160;Continuous
      crystal plate growth apparatus</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Wingdings">v</font></font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,153,011&#160;&#160;Continuous
      crystal plate growth process and
apparatus</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Wingdings">v</font></font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6,071,339&#160;&#160;Continuous
      crystal plate growth process and
apparatus</font></div>
            </td>
          </tr>
      </table>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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addition, the SCT and Dr. Pandelisev have the following pending patents that
relating the manufacture of Crystals and the development of Crystal
Products:</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
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Application)</font></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
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Filings</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Patents
in U.S., Europe and Asia with an impressive 100 supporting claims</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NEED FOR
ANY GOVERNMENT APPROVAL OR PRINCIPAL PRODUCTS</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
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AND INDUSTRY REGULATION</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We will
be subject to federal laws and regulations that relate directly or indirectly to
our operations including securities laws.&#160;&#160;We will also be subject to
common business and tax rules and regulations pertaining to the operation of our
business</font></div>
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AND DEVELOPMENT ACTIVITIES</font></div>
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or indirectly through SCT the Company continues to keep abreast of the
technology developments through new patent filings, in house technology
development, applications for various research grants, etc.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div><br>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">24</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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    </div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DESCRIPTION OF OUR
BUSINESS <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">-
continued</font></font></font></div>
    <div style="TEXT-ALIGN: justify">&#160;</div>
    <div style="TEXT-ALIGN: justify"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ENVIRONMENTAL
LAWS</font></div>
    <div style="TEXT-ALIGN: justify"><br><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
materials supplied to manufacture the Crystal Products, the crystal
manufacturing process, or refuse produced by the crystal manufacturing process
are subject to any federal or state environmental regulations. The refuse
discarded after the planned production of Crystals and Crystal Products is not
classified as a "hazardous substance" under either federal or state law, and the
airborne, chemicals emitted from the production process do not exceed federal or
state ambient air quality standards.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EMPLOYEES
AND EMPLOYMENT AGREEMENTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On order
to achieve our planned growth as set in our business plan the company has
executed three employment agreements as described in the 8-K being concurrently
filed. Dr. Kiril A. Pandelisev, serves as Chief Executive Officer and Director,
Gen. Charles Searock serves as President and Director and Don Meyers serves as
Chief financial officer.&#160;&#160;The contracts are effective May 1,
2008&#160;&#160;The company is in contractual negotiations with 5 other
individuals that will constitute the initial management and technical team for
CRC.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
21, 2007 the following individuals were elected to the Board of Directors of the
Company as Directors: Charlie Searock, Don Jackson, and Shariar
Motakef.&#160;&#160;On January 31, 2008 the company added Professor Alexandar
Ostrogorsky from Renselaer Polytechnic Institute in New York to the Board of
Directors. The Directors have also agreed to allocate a portion of their time to
the Company&#8217;s activities. As reported all directors are compensated by common
stock for their services.</font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DESCRIPTION
OF PROPERTY</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation has administrative offices located at 4952 East
Encanto Street, Mesa, Arizona 85205.&#160;&#160;Kiril A. Pandelisev currently
contributes to payment of the rental obligation at the 4952 East Encanto Street,
Mesa, Arizona 85205 property which consists of 500 square feet of
space.&#160;&#160;The equipment of the Company is located in a storage facility
whose monthly rental consists of $400 per month for 400 square
feet.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">LEGAL
PROCEEDINGS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
not involved in any pending legal proceeding nor are we aware of any pending or
threatened litigation against us.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">No public
market currently exists for shares of our common stock.&#160;&#160;Concurrently
with the completion of this offering, we are applying to have our common stock
listed for quotation on the Over-the-Counter Bulletin Board.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PENNY
STOCK RULES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny
stocks.&#160;&#160;Penny stocks are generally equity securities with a price of
less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the Nasdaq system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system).</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
purchaser is purchasing penny stock which limits the ability to sell the
stock.&#160;&#160;The shares offered by this prospectus constitute penny stock
under the Securities and Exchange Act.&#160;&#160;The shares will remain penny
stocks for the foreseeable future.&#160;&#160;The classification of penny stock
makes it more difficult for a broker-dealer to sell the stock into a secondary
market, which makes it more difficult for a purchaser to liquidate his/her
investment.&#160;&#160;Any broker-dealer engaged by the purchaser for the
purpose of selling his or her shares in us will be subject to Rules 15g-1
through 15g-10 of the Securities and Exchange Act.&#160;&#160;Rather than
creating a need to comply with those rules, some broker-dealers will refuse to
attempt to sell penny stock.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify">
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</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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      </div>
      <div id="HDR">
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</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, to deliver a standardized risk disclosure
document, which:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Contains
a description of the nature and level of risk in the market for penny stock
inboth Public offerings and secondary trading;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Contains
a description of the broker&#8217;s or dealer&#8217;s duties to the customer and of the
rightsand remedies available to the customer with respect to a violation of such
duties or otherrequirements of the Securities Act of 1934, as
amended;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Contains
a brief, clear, narrative description of a dealer market, including &#8220;bid&#8221; and
&#8220;ask&#8221;price for the penny stock and the significance of the spread between the
bid and ask price;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Contains
a toll-free number for inquiries on disciplinary actions;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Defines
significant terms in the disclosure document or in the conduct of trading
pennystocks; and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Contains
such other information and is in such form (including language, type, size
andformat) as the Securities and Exchange Commission shall require by rule or
regulation.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, to the customer:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
bid and offer quotations for the penny stock;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
compensation of the broker-dealer and its salesperson in the
transaction;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
number of shares to which such bid and ask prices apply, or other
comparableinformation relating to the depth and liquidity of the market for such
stock; and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>-&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Monthly
account statements showing the market value of each penny stock held in
thecustomer&#8217;s account.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser&#8217;s written acknowledgement of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.&#160;&#160;These disclosure requirements will have the effect of
reducing the trading activity in the secondary market for our stock because it
will be subject to these penny stock rules.&#160;&#160;Therefore, stockholders
may have difficulty selling their securities.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">REGULATION
M</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
officer and director, who will offer and sell the Shares, is aware that he is
required to comply with the provisions of Regulation M promulgated under the
Securities Exchange Act of 1934, as amended.&#160;&#160;With certain exceptions,
Regulation M precludes the officers and directors, sales agents, any
broker-dealer or other person who participate in the distribution of shares in
this offering from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">REPORTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
subject to certain reporting requirements and will furnish annual financial
reports to our stockholders, certified by our independent accountants, and will
furnish un-audited quarterly financial reports in our quarterly reports filed
electronically with the SEC.&#160;&#160;All reports and information filed by us
can be found at the SEC website, <font style="DISPLAY: inline; TEXT-DECORATION: underline">www.sec.gov</font>.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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</font></div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">STOCK
TRANSFER AGENT</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our stock
transfer agent is Pacific Stock Transfer Company, 500 E. Warm Springs Road,
Suite 240, Las Vegas, Nevada 89119, Telephone (702) 361-3033 Extension 106,
Facsimile (702) 433-1979, and website
www.pacificstocktransfer.com.</font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">FINANCIAL
STATEMENTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
fiscal year end is December 31.&#160;&#160;We intend to provide financial
statements audited by an Independent Registered Accounting Firm to our
shareholders in our annual reports.&#160;&#160;The audited financial statements
for the period from the date of incorporation, June 9, 2006, to December 31,
2007 and the reviewed financials for the 3 months ended March 31,
2008&#160;start on page F-1.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">MANAGEMENT&#8217;S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
generated no revenue since inception and have incurred total losses of $919,453
through December 31, 2007.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table provides selected financial data about our company for the
period from the date of incorporation through December 31, 2007.&#160;&#160;For
detailed financial information, see the financial statements included in this
prospectus.</font><br></div>
    <div>&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="40%">
          <tr>
            <td valign="bottom" width="88%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="TEXT-DECORATION: none"><font style="DISPLAY: inline; TEXT-DECORATION: none">Balance Sheet
      Data</font>:</font>&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="TEXT-DECORATION: none">12/31/2007</font></font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom" width="88%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="88%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Cash</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">500</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="88%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total
      assets&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">500</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="88%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total
      liabilities</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">22,306</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="88%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Shareholders&#8217;
      equity&#160;&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(21,806</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other
than the shares being registered by this prospectus, no other source of capital
has been identified or sought.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PLAN OF
OPERATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">GOING
CONCERN</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In our
audited financial statements as of December 31, 2007 we were issued an opinion
by our auditors that raised substantial doubt about our ability to continue as a
going concern based on our current financial position.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRITICAL
ACCOUNTING POLICIES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="TEXT-ALIGN: justify">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A.</font></div>
            </td>
            <td style="TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">BASIS
      OF ACCOUNTING</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
statements were prepared following generally accepted accounting principles of
the United States of America consistently applied.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="TEXT-ALIGN: justify">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.</font></div>
            </td>
            <td style="TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">BASIC
      EARNINGS PER SHARE</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The basic
earnings (loss) per share is calculated by dividing the Company&#8217;s net income
available to common shareholders by the weighted average number of common shares
during the year. The diluted earnings (loss) per share is calculated by dividing
the Company&#8217;s net income (loss) available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">27</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MANAGEMENT&#8217;S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">C.</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CASH
      EQUIVALENTS</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">D.</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">USE
      OF ESTIMATES AND ASSUMPTIONS</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 from those
estimates.</font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">E.</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INCOME
      TAXES</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.&#160;&#160;The total
deferred tax asset is $203,248 as of December 31, 2007 which is calculated by
multiplying a 22% estimated tax rate by the cumulative NOL of $923,853 the total
valuation allowance is a comparable $203,248.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
provision for income taxes for the period ended December 31, 2007 and 2006
follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt">&#160;</div>
    <div style="MARGIN-LEFT: 54pt" align="left">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="50%">
          <tr>
            <td valign="bottom" width="76%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font size="3"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Year
      Ended <font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: none">December
      31</font></font></font></font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
            </td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
            </td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Deferred Tax
      Asset</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,937</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">28,776</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Valuation
      Allowance&#160;&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,937</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)&#160;&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(28,776</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="76%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Current Taxes
      Payable</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="76%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Income Tax
      Expense</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Below is
a chart showing the estimated federal net operating losses and the years in
which they will expire.</font></div>
    <div>&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="35%">
          <tr>
            <td valign="bottom" width="41%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Year&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="23%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount</font></div>
            </td>
            <td align="left" nowrap valign="bottom" width="3%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Expiration</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1994</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">60,292</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2014</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1995</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">199,109</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;2015</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1996</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">125,697</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2016</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1997</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">175,534</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2017</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1998</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">220,547</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2018</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1999</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">154,943</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2019</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;2000</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">231,985</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2020</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2001&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">80,558</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2021</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2002</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16,760</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2022</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2003&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,063</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2023</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2004&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">142,763</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2024</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2005</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(773,675</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2025</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2006</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">130,799</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2026</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="41%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2007</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">63,206</font></td>
            <td align="left" nowrap valign="bottom" width="3%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%" style="PADDING-BOTTOM: 2px">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2027</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="41%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="2%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="21%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">923,853</font></td>
            <td align="left" nowrap valign="bottom" width="3%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="32%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">28</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">MANAGEMENT&#8217;S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font></div>
    <div>&#160;</div>
    <div><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NEW ACCOUNTING
PRONOUNCEMENTS<br></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Below is
a listing of the most recent Statement of Financial Accounting Standards (SFAS)
SFAS 155-157 and their effect on the Company.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Statement No. 155 &#8211; </font><font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Certain Hybrid
Financial Instruments</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
February 2006, the FASB issued SFAS No. 155, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Certain Hybrid
Financial Instruments</font>, which amends SFAS No. 133, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Derivatives
Instruments and Hedging Activities</font> and SFAS No. 140, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of
Liabilities</font>.&#160;&#160;SFAS No. 155 amends SFAS No. 133 to narrow the
scope exception for interest-only and principal-only strips on debt instruments
to include only such strips representing rights to receive a specified portion
of the contractual interest or principle cash flows.&#160;&#160;SFAS No. 155
also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a
passive derivative financial instrument pertaining to beneficial interests that
itself is a derivative instrument.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Statement No. 156 &#8211; </font><font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Servicing of
Financial Assets</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
2006, the FASB issued SFAS No. 156, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Servicing of
Financial Assets,</font> which provides an approach to simplify efforts to
obtain hedge-like (offset) accounting.&#160;&#160;This Statement amends FASB
Statement No. 140, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities</font>, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. The Statement (1) requires an entity
to recognize a servicing asset or servicing liability each time it undertakes an
obligation to service a financial asset by entering into a servicing contract in
certain situations; (2) requires that a separately recognized servicing asset or
servicing liability be initially measured at fair value, if practicable; (3)
permits an entity to choose either the amortization method or the fair value
method for subsequent measurement for each class of separately recognized
servicing assets or servicing liabilities; (4) permits at initial adoption a
one-time reclassification of available-for-sale securities to trading securities
by an entity with recognized servicing rights, provided the securities
reclassified offset the entity's exposure to changes in the fair value of the
servicing assets or liabilities; and (5) requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value
in the balance sheet and additional disclosures for all separately recognized
servicing assets and servicing liabilities. SFAS No. 156 is effective for all
separately recognized servicing assets and liabilities as of the beginning of an
entity's fiscal year that begins after September 15, 2006, with earlier adoption
permitted in certain circumstances. The Statement also describes the manner in
which it should be initially applied.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Statement No. 157</font> &#8211; <font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value
Measurements</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
September 2006, the FASB issued SFAS No. 157, <font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value Measurements</font>, to
clarify how to measure fair value and to expand disclosures about fair value
measurements.&#160;&#160;The expanded disclosures include the extent to which
companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value on earnings and is applicable
whenever other standards require (or permit) assets and liabilities to be
measured at fair value.&#160;&#160;SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
adoption of these new Statements is not expected to have a material effect on
the Company&#8217;s current financial position, results or operations, or cash
flows.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">29</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Listed
below are the directors and executive officers of the Company.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
    </div>
    <div>&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="100%">
          <tr>
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            <td width="25%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Age</font></font></font></div>
            </td>
            <td width="25%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">First Year as
    Director</font></font></font></div>
            </td>
            <td width="25%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Position</font></font></font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Dr. Kiril A.
      Pandelisev</font></td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;57</font></div>
            </td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1993</font></div>
            </td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;CEO/Director</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Charles J.
      Searock</font></td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;71</font></div>
            </td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2007</font></div>
            </td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;President/Director</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Don
      Meyers</font></td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;65</font></div>
            </td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2008</font></div>
            </td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Chief
      Financial Officer</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Dr. Don
      Jackson</font></td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;73</font></div>
            </td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2007</font></div>
            </td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Director</font></font></font></td>
          </tr>
          <tr bgcolor="white">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Prof.
      Alexander Ostrogorsky</font></td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;50</font></div>
            </td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2007</font></div>
            </td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Director</font></font></font></td>
          </tr>
          <tr bgcolor="white">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Dr. Shariar
      Motakef</font></td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;50</font></div>
            </td>
            <td width="25%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2007</font></div>
            </td>
            <td width="25%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Director</font></font></font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The term
of office of each director of the Company ends at the next annual meeting of the
Company's stockholders or when such director's successor is elected and
qualifies.&#160;&#160;No date for the next annual meeting of stockholders is
specified in the Company's bylaws or has been fixed by the Board of
Directors.&#160;&#160;The term of office of each officer of the Company is as
described in the employment agreements effective May 1, 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Directors
are entitled to reimbursement for expenses in attending meetings but receive no
other compensation for services as directors. Directors who are employees may
receive compensation for services other than as director. No compensation was
paid during the fiscal years ended December 31, 2005 and 2006 to directors for
services in their capacity as director.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">BACKGROUND
INFORMATION ABOUT OUR OFFICERS AND DIRECTORS</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following information sets forth the backgrounds and business experience of the
directors and executive officers with or without contract with the
company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Dr. Kiril A. Pandelisev,
Chief Executive Officer and Chairman of the Board</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dr. Kiril
A. Pandelisev joined the Company at its inception in 1993.&#160;&#160;From 1975
to 1984, Dr. Pandelisev was a member of the faculty of St. Cyril and Methodius
University, Skopje, Macedonia.&#160;&#160;From 1979 to 1982, Dr. Pandelisev was
an Exchange Scientist at Arizona State University.&#160;&#160;From 1985 to 1988,
Dr. Pandelisev was a Research Analyst at Arizona State
University.&#160;&#160;From 1988 to 1990, Dr. Pandelisev was a Research
Physicist at Johnson Matthey Electronics.&#160;&#160;In 1991, Dr. Pandelisev was
a Senior Scientist at Horiba Instruments, Inc.,&#160;&#160;Since 1991, Dr.
Pandelisev has been employee by various private entities which he owns and
controls, including the Company.&#160;&#160;Dr. Pandelisev received a B.Sc.
degree in Applied Physics from St. Cyril and Methodius University, Skopje,
Macedonia, in 1973.&#160;&#160;Dr. Pandelisev received an M.Sc. degree in
Physics from St. Cyril and Methodius University in 1976.&#160;&#160;Dr.
Pandelisev received a Sc.D degree in Physics from St. Cyril and Methodius
University in 1984.&#160;&#160;Dr. Pandelisev is an authority on crystal growth,
and is the author or contributing author of 17 papers on the subject published
in various scientific journals.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps; TEXT-DECORATION: underline">Lt.
Gen. Charles J. Searock Jr., USAF Retired, President<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps; TEXT-DECORATION: underline">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps; TEXT-DECORATION: underline">and
Director</font></font></font></font><br></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Lt. Gen.
Charles J. Searock Jr. retired from active duty military service in 1993 after
almost 37 years in the Air Force and two years in the Army National Guard. He
served most recently as the President of the International Tactical Training
Center in Denison, Texas and left that position on 31 Dec 06.&#160;&#160;He was
recently reappointed by the Secretary of the Air Force to the Civil Air Patrol
Board of Governors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For the
past six years, the general has consulted in aviation and high technology
matters. His background also includes service on the board of directors and as a
volunteer president of the Air Victory Museum. From 1996 to 2001, he was
CEO/president and a member of the board of directors of Dynasil Corp., a
publicly traded high-tech glass manufacturing company. He also spent four years
in the general aviation industry as the Air Victory Museum&#8217;s original director,
as executive vice president of Aero Development Corp., the owner/operator of the
South Jersey Regional Airport and as president of Royal Air Inc., a charter air
service company he co-founded. &#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Searock
is a 1976 Army War College graduate who commanded at the squadron, wing, center
and major command levels. He served as a KC-97 pilot, B-52 pilot/instructor
pilot/flight examiner and FB-111 pilot/instructor pilot. He flew 152 B-52 combat
missions during the Vietnam War and has accumulated over 7,000 hours of flying
time. He was assigned to the Pentagon as a member of the air staff, and he
served as Assistant for Plans to the Military Assistant to the President at the
White House. He maintains his currency as a commercial multi-engine
instrument-rated pilot and is a Civil Air Patrol pilot.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A former
member of the National Aviation Hall of Fame Board of Directors, he continues to
serve as a member of its Nominating Committee.&#160;&#160;He currently serves on
the Crystal Research Corporation Board of Directors and is a former member of
the New Jersey Governor&#8217;s Air and Space Medal Nominating Committee. He is also a
member of the Wings Club in New York City, the Air Force Association, the
Aircraft Owners and Pilots Association, the Experimental Aircraft Association,
the Veterans of Foreign Wars and Military Officers Association.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">General
Searock graduated from the University of Nebraska, Omaha in 1962 with a BS in
Education and from Central Michigan University with a MBA in 1975.&#160;&#160;He
is married for the past 49+ years to Ann Brackeen Searock and they have four
sons and five grandchildren.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps"><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">Don
Meyers, Chief Financial O<font style="FONT-WEIGHT: bold">fficer</font></font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr. Don
D. Meyers brings strong financial background to the Company both with regulatory
compliance and financial management.&#160;&#160;For the past five years Mr.
Meyers has specialized in the preparation of GAAP compliant financial statements
for public companies, three years as a partner with a PCAOB registered CPA firm
and two years as the owner of his own firm.&#160;&#160;Mr. Meyers received his
Bachelor of Science in Accounting from Arizona State University in December
1984.&#160;&#160;Since that time Mr. Meyers spent almost nine years with the
Defense Contract Audit Agency as a senior auditor performing a variety of
financial and compliance audits resulting is multi-million dollar savings to the
Government on new contracts and the recovery of over $10,000,000 returned to the
Government from contracts found to be in violation of the Truth in Negotiations
act.&#160;&#160;Mr. Meyers also spent a year as a fraud auditor with the
Department of Justice where his audits resulted in the recovery of funds and the
conviction of individuals responsible for defrauding the Medicare and Medicaid
programs.&#160;&#160;Mr. Meyers has also served as an Operations Officer and
Comptroller with both public and private companies.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
Meyers spent six years un the U.S. Army as an senior accounting specialist where
he was directly responsible for the preparation and management of multi-million
dollar budgets for battalion size organization or larger.&#160;&#160;Mr. Meyers
was often cited for his innovations and sound judgment in the management of
funds allowing for high operational readiness even in times of limited
funding.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Dr. Don Jackson</font><font style="DISPLAY: inline; TEXT-DECORATION: underline">,
Director</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From 2002
to the present, Dr. Jackson has been the chairman and chief executive officer of
Findem, Inc. &#160;Prior to joining Findem, Inc., Dr. Jackson held a variety of
officer and managerial positions in technology and engineering-related
companies, including Prodeo Technologies, Inc., Westech Systems, Inc./IPEC,
The&#160;Arena Group, Superwave Technologies, Inc., and Microelectronic
Packaging, Inc. &#160;Dr. Jackson is on the Dean&#8217;s Advisory Board of Fulton
School of Engineering at Arizona State University and serves as an adjunct
physics professor at Embry Riddle Aeronautical University in Prescott, Arizona.
&#160;Dr. Jackson has an AB degree in Physics from William Jewell College, an
M.S. degree in Physics from Iowa State University, and a Ph.D. in Electrical
Engineering from Arizona State University.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">31</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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</font></div>
      </div>
    </div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font></font><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Professor. Alexander
Ostrogorsky, Director</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prof.
Ostrogorsky is with the Mechanical, Aerospace and Nuclear Engineering
Department, Materials Science and Engineering&#160;Department, Rensselaer
Polytechnic Institute, in Troy, New York.&#160;&#160;Prof. Ostrogorsky received
his B.S. in&#160;Mechanical Engineering from University of Belgrade,&#160; M.S.
Nuclear Engineering, Rensselaer Polytechnic Institute and Sc.D. in Mechanical
Engineering from&#160; Massachusetts&#160; Institute of Technology, with Minor
in Nuclear Engineering.&#160;&#160;Prior to joining Rensselaer Polytechnic
Institute, he was a Director,&#160; Center for Microgravity and Materials
Research (CMMR)&#160;and Professor at the Univ. of Alabama in Huntsville,
Associate Professor at the Mechanical, Aerospace and Mechanics, Rensselaer
Polytechnic Institute and Assistant Professor at the Mechanical Engineering,
Columbia University. Prof Ostrogorsky was a Fulbright Fellow at the Rensselaer
Polytechnic Institute, Nuclear Engineering Dept in 1980-81, and an Alexander von
Humboldt Fellow: Universit&#228;t Erlangen-N&#252;rnberg, Electronic Materials Lab. In
1991.&#160;&#160;Prof. Ostrogorsky is an Associate Editor for the Journal of
Crystal Growth, Member of the Executive Committee at the American Association
for Crystal Growth (AACG); Fellow of the American Society of Mechanical
Engineers (ASME), Associate Fellow at the American Inst. of Aeronautics and
Astronautics (AIAA), and member of many other professional
organizations.&#160;&#160;Prof. Ostrogorsky&#8217;s research encompasses heat and mass
transfer phenomena occurring in solidification/crystal growth, crystals for
gamma ray detectors (semiconductors and scintillators), ternary alloys, and the
design of equipment for biomedical research.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman; FONT-VARIANT: small-caps"><font style="DISPLAY: inline; TEXT-DECORATION: underline">&#160;Dr&#160;&#160;Shariar
Motakef, Director</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prof.
Motakef is the founder of CAPE Simulations, Inc., a company serving the thermal
engineering, computational, and control needs of the materials processing
industry.&#160;&#160;Prof. Motakef was an Associate Professor of Mechanical
Engineering at Massachusetts Institute of Technology for seven
years.&#160;&#160;At MIT he was a pioneer in developing high-fidelity
large-scale numerical simulation packages and on-line model-based control
algorithms for the semiconductor processing industry.&#160;&#160;He also led an
effort in the development of advanced sensors such as the Full-Field Holographic
Temperature and Species (FHTS) sensor for chemical vapor deposition
applications.&#160;&#160;During his stay at MIT, Prof. Motakef taught graduate
and under graduate level courses in thermo-fluids, championed the introduction
of simulation-based projects into graduate level curriculum, and led or
participated in academic research projects with the nearly 2-million dollars
funding provided by DARPA, USAF, NASA, and NSF.&#160;&#160;Prof. Motakef has
over 40 publications in technical journals and proceedings and has delivered
more than 30 lectures in the U.S., Europe, and Japan.&#160;&#160;At MIT, he was
a consultant to nearly a dozen corporations and a consultant for two Phase I and
Phase II SBIR programs supported by NASA to develop CFD codes for materials
processing applications.&#160;&#160;Prof. Motakef is an editor of Journal of
Materials Processing and Manufacturing Science, and a member of the American
society of Mechanical Engineering, American Society of Metals, Materials
Research Society, American Institute of Aeronautics and Astronautics, and the
American Association for Crystal Growth.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is actively searching for additional directors who have credentials,
experience, and contacts, which will assist us in the fulfillment of our
business plan.&#160;&#160;The Company does not have any
committees.&#160;&#160;The Company does not have an audit committee financial
expert on its board of directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">32</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of change of ownership of our common
stock.&#160;&#160;Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish us with copies of all Section 16(a)
forms they file.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We intend
to ensure to the best of our ability that all Section 16(a) filing requirements
applicable to our officers, directors and greater than ten percent beneficial
owners are complied with in a timely fashion.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">EXECUTIVE
COMPENSATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
compensations for the initial officers and directors is as shown below. The
contracts with the other officer and key technical personal are being discussed
and they have not been signed to date. We do not currently have any benefits,
such as health or life insurance, available.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td colspan="9" valign="top" width="74%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Summary Compensation
  Table</font></font></div>
            </td>
          </tr>
          <tr>
            <td align="left" colspan="9" valign="top" width="74%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td align="left" valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="3" valign="top" width="15%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Annual
      Compensation</font></div>
            </td>
            <td align="left" valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td colspan="4" valign="top" width="31%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Long-Term
      Compensation</font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="18%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name
      and</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Principal
      Position</font></div>
            </td>
            <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Year</font></div>
            </td>
            <td valign="bottom" width="7%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Salary
      ($)</font></div>
            </td>
            <td valign="bottom" width="4%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Bonus
      ($)</font></div>
            </td>
            <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Other
      Annual Compensation ($)</font></div>
            </td>
            <td valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Restricted
      Stock Awards ($)</font></div>
            </td>
            <td valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Securities
      Underlying Options (#)</font></div>
            </td>
            <td valign="bottom" width="6%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">LTIP
      Payouts ($)</font></div>
            </td>
            <td valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">All
      Other Compensation ($)</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Kiril
      A. Pandelisev</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CEO,
      and Director</font></div>
            </td>
            <td valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
            </td>
            <td valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">170,000</font></div>
            </td>
            <td valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">110,000</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">250000</font></div>
            </td>
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></div>
            </td>
            <td valign="top" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Charles
      J. Searock</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">President,
      Director</font></div>
            </td>
            <td valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
            </td>
            <td valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">130,000</font></div>
            </td>
            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">110,000</font></div>
            </td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">200,000</font></div>
            </td>
            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Don
      Meyers</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Financial Officer</font></div>
            </td>
            <td valign="top" width="4%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></div>
            </td>
            <td valign="top" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">120,000</font></div>
            </td>
            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">150,000</font></div>
            </td>
            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="18%">
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            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="8%">
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            <td valign="top" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="8%">
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            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="4%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="8%">
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      </font></td>
            <td valign="top" width="6%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">STOCK AND
OPTION
AWARDS&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div align="left">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="80%">
          <tr>
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            <td valign="bottom" width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
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          <tr>
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            <td valign="bottom" width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td colspan="2" valign="bottom" width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
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            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
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            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2007&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td valign="bottom" width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2008</font></font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">33</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EXECUTIVE COMPENSATION -
<font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br>&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.</font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006 the Company issued 5,800,000 common shares at $0.04 per
      share to the Company&#8217;s CEO in satisfaction of an indebtedness of $232,000
      from the Company to the CEO.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">2.</font></font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.&#160;&#160;The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 18pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">3.</font></font></div>
            </td>
            <td>
              <div style="TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.&#160;&#160;The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DIRECTORS&#8217;
COMPENSATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Directors
are compensated for services rendered to CRC Crystal Research Corporation, with
110,000 shares of common stock</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">EMPLOYMENT
CONTRACTS AND OFFICERS&#8217; COMPENSATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has entered into a number of employment agreements as of May 1,
2008.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May 1,
2008 the Company entered into an employment agreement with Dr. Kiril A.
Pandelisev&#160;&#160;Dr Pandelisev serves as Chief Executive Officer of the
Company.&#160;&#160;Dr Pandelisev&#8217;s base yearly salary payable twice every month
is $170,000, with any unpaid salary converted into options every quarter to
purchase shares of common stock in the Company.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May 1,
2008 the Company entered into an employment agreement with Lt. Gen. Charles J.
Searock.&#160;&#160;Mr. Searock serves as President of the
Company.&#160;&#160;Mr. Searock&#8217;s base yearly salary payable twice every month
is $130,000, with any unpaid salary converted into options every quarter to
purchase shares of common stock in the Company.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On May 1,
2008 the Company entered into an employment agreement with Mr. Don
Meyers.&#160;&#160;Mr. Meyers serves as Chief Financial Officer of the
Company.&#160;&#160;Mr. Meyers&#8217;s base yearly salary payable twice every month is
$120,000, with any unpaid salary converted into options every quarter to
purchase shares of common stock in the Company.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">STOCK
OPTION PLAN AND OTHER LONG-TERM INCENTIVE PLAN</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
10, 2006, the Company issued 469,844 shares of common stock to the CEO as a
result of his exercise of an option to purchase such shares at $0.0025 per
share, or $1,175.&#160;&#160;The purchase price was paid by the cancellation of
indebtedness from the Company to the CEO in an equal amount.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
10, 2006, the Company issued 400,000 shares of common stock to the CEO as a
result of his exercise of an option to purchase such shares at $0.25 per share,
or $100,000.&#160;&#160;The purchase price was paid by the cancellation of
indebtedness from the Company to the CEO in an equal amount.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">LONG-TERM
INCENTIVE PLAN (&#8220;LTIP&#8221;) AWARDS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
have been no awards made to a named executive officer in the last completed
fiscal year under any LTIP.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table sets forth, as of the date of this prospectus, the total number
of shares owned beneficially by our directors, officers and key employees,
individually and as a group, and the present owners of 5% or more of our total
outstanding shares.&#160;&#160;The table also reflects what the percentage of
ownership will be assuming completion of the sale of all shares in this
offering, which we cannot guarantee.&#160;&#160;The stockholders listed below
have direct ownership of their shares and possess sole voting and dispositive
power with respect to the shares.</font><br></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">34</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font></div>
    <div>&#160;</div>
    <div align="center">
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          <tr>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" width="28%">
              <div style="TEXT-ALIGN: center"><font size="+0"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold"><font size="3" style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Percent of
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            </td>
          </tr>
          <tr>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Title
of</font></font></font></td>
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              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Amount of
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            <td width="13%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Before</font></font></font></div>
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            <td width="15%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">After</font></font></font></div>
            </td>
          </tr>
          <tr>
            <td width="20%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Class</font></font></font></td>
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            <td width="26%" style="BORDER-BOTTOM: black 2px solid">
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              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Offering</font></font></font></div>
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            <td width="15%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">Offering
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            </td>
          </tr>
          <tr>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="13%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="15%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
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            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Common&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Kiril A.
      Pandelisev, CEO, and&#160;&#160;Director</font></td>
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            </td>
            <td width="15%">
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            </td>
          </tr>
          <tr bgcolor="white">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="13%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="15%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Common&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Charles J.
      Searock, President and Director</font></td>
            <td width="26%">
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            </td>
            <td width="13%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;.84%</font></div>
            </td>
            <td width="15%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;.84%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="13%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="15%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Common&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Don
      Meyers&#160;</font></td>
            <td width="26%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;278,000</font></div>
            </td>
            <td width="13%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2.13%</font></div>
            </td>
            <td width="15%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2.13%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="13%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="15%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Common&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Dr. Don
      Jackson&#160;</font></td>
            <td width="26%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;110,000&#160;</font></div>
            </td>
            <td width="13%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;.84%</font></div>
            </td>
            <td width="15%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;.84%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="13%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="15%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Common&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Dr. Shariar
      Motakef</font></td>
            <td width="26%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;110,000&#160;</font></div>
            </td>
            <td width="13%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;.84%</font></div>
            </td>
            <td width="15%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;.84%</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="13%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="15%">&#160;</td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Common&#160;</font></td>
            <td width="26%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Prof.
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            <td width="26%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;110,000&#160;</font></div>
            </td>
            <td width="13%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;.84%</font></div>
            </td>
            <td width="15%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;.84%</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1.&#160;&#160;The
address of each executive officer and director is c/o CRC Crystal Research
Corporation, 4952 East Encanto Street, Mesa, Arizona 85205.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.&#160;&#160;As
used in this table, &#8220;beneficial ownership&#8221; means the sole or shared power to
vote, or to direct the voting of, a security, or the sole or share investment
power with respect to a security (i.e., the power to dispose of, or to direct
the disposition of a security).</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We do not
currently have any conflicts of interest by or among our current officer,
director, key employee or advisors.&#160;&#160;We have not yet formulated a
policy for handling conflicts of interest, however, we intend to do so upon
completion of this offering and, in any event, prior to hiring any additional
employees.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is authorized to issue 450,000,000 shares of common stock, par value
$0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per
share.&#160;&#160;As of December 31, 2006, there were 10,659,449 shares of
common stock outstanding, and no shares of preferred stock
outstanding.&#160;&#160;&#160;On June 10, 2006, the Company effected a four for
one stock split.&#160;&#160;All share amounts herein are adjusted to give effect
to the stock split.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
February 20, 2008 the Company registered 4,000,000 common shares and 2,000,000
options to purchase common shares under an S-8 Non-Qualified Stock Compensation
Plan. On March 3, the company amended its S-8 filing reducing the registered
shares to 2,000,000 and setting the price per share to $1 per share or option.
Since no common stock was issued or stock options were granted the Company
withdrew both filings on May 5, 2008. A phone call from SEC to Dr. Pandelisev
confirmed the consent for the withdrawal</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
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Company did not issue any shares of common stock in 2005.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company issued 6,979,844 shares of common stock in 2006 in the following
transactions:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="TEXT-ALIGN: justify">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 36pt; TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt; TEXT-ALIGN: justify">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td style="TEXT-ALIGN: justify">
              <div style="TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.&#160;&#160;The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="TEXT-ALIGN: justify">
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%" style="TEXT-ALIGN: justify">
          <tr valign="top" style="TEXT-ALIGN: justify;">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.&#160;&#160;The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 5,800,000 shares of common stock to the
      CEO in satisfaction of $232,000 of indebtedness from the Company to CEO,
      or $0.04 per share.</font></div>
            </td>
          </tr>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">35</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
      <table border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 48px">
            </td>
            <td align="right" style="WIDTH: 24px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td align="left" width="909">
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      June 10, 2006, the Company issued 300,000 shares of common stock to six
      unrelated parties for services rendered to the Company.&#160;&#160;The
      shares were valued at $0.04 per
share.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 30, 2006, the Company issued 10,000 shares of common stock to an
      unrelated person for services rendered to the Company.&#160;&#160;The
      shares were valued at $0.04 per
share.</font></div>
            </td>
          </tr>
      </table>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company issued 1,668,000 shares of common stock during the period ended December
31, 2007 as follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 15, 2007 the Company issued 1,050,000 common shares at $0.01 for
      professional consulting services of
$10,500.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      October 1, 2007 the Company issued 440,000 common shares to four board
      members for services in lieu of cash at $0.05 per share or $22,000 and
      178,000 common shares at $0.05 per share to convert accounts payable of
      $8,900.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Warrants and
Options</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Information
relating to warrant activity during 2006 and 2005 follows:</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="80%">
          <tr bgcolor="#cceeff">
            <td colspan="2" width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Warrants
      Outstanding at December 31, 2004</font></td>
            <td width="20%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1,169,844</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Issued/Exercised&#160;&#160;</font></td>
            <td width="20%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="11%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="69%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Expired&#160;</font></td>
            <td width="20%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td colspan="2" width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total Warrants
      outstanding at December 31, 2005</font></td>
            <td width="20%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;1,169,844</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Exercised&#160;&#160;</font></td>
            <td width="20%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;869,844</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="11%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="69%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Expired&#160;</font></td>
            <td width="20%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="11%">
              <div>&#160;</div>
            </td>
            <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td colspan="2" width="11%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total Warrants
      Outstanding at December 31, 2006&#160;&#160;</font></td>
            <td width="20%" style="BORDER-BOTTOM: black 4px double">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;300,000</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 31, 2007, the Company had warrants outstanding for the purchase of an
aggregate of 300,000 shares of its Common Stock, which are summarized in the
table below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" width="60%">
          <tr>
            <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Warrants</font></div>
            </td>
            <td width="20%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Exercise</font></div>
            </td>
            <td width="20%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Expiration</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="TEXT-DECORATION: none"><font style="DISPLAY: inline; TEXT-DECORATION: none">Outstanding</font></font></font></div>
            </td>
            <td width="20%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: none">Price</font></font></div>
            </td>
            <td width="20%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Date</font></div>
            </td>
          </tr>
          <tr>
            <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;140,000&#160;</font></div>
            </td>
            <td width="20%">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$0.50</font></div>
            </td>
            <td width="20%">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;19-Oct-2008</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td width="10%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; TEXT-DECORATION: none">160,000</font></font></div>
            </td>
            <td width="20%" style="PADDING-BOTTOM: 2px">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$0.50</font></div>
            </td>
            <td width="20%" style="PADDING-BOTTOM: 2px">
              <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;08-Apr-2010</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="10%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total&#160;</font></td>
            <td width="20%" style="BORDER-BOTTOM: black 4px double">
              <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;300,000</font></div>
            </td>
            <td width="20%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
exercise prices and share amounts have been adjusted to account for a 4:1 stock
split effected on June 10, 2006.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">INDEMNIFICATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the Articles of Incorporation and By-Laws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest.&#160;&#160;In
certain cases, we may advance expenses incurred in defending any such
proceeding.&#160;&#160;To the extent that the officer or director is successful
on the merits in any such proceeding as to which such person is to be
indemnified, we must indemnify him against all expenses incurred, including
attorney&#8217;s fees.&#160;&#160;With respect to a derivative action, indemnity may
be made only for expenses actually and reasonably incurred in defending the
proceeding, and if the officer or director is judged liable, only by a court
order.&#160;&#160;The indemnification is intended to be to the fullest extent
permitted by the laws of the State of Nevada.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">36</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INDEMNIFICATION
- <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font><br></font>

    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act, and is, therefore,
unenforceable.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
event that a claim for indemnification against such liabilities, other than the
payment by us of expenses incurred or paid by one of our directors, officers, or
controlling persons in the successful defense of any action, suit or proceeding,
is asserted by one of our directors, officers, or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification is
against public policy as expressed in the Securities Act, and we will be
governed by the final adjudication of such issue.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">AVAILABLE
INFORMATION</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
filed a registration statement on Form S-1, of which this prospectus is a part,
with the U.S. Securities and Exchange Commission.&#160;&#160;Upon completion of
the registration, we will be subject to the informational requirements of the
Exchange Act and, in accordance therewith, will file all requisite reports, such
as Forms 10-K, 10-Q, and 8-K, proxy statements, under Section 14 of the Exchange
Act and other information with the Commission.&#160;&#160;Such reports, proxy
statements, this registration statement and other information, may be inspected
and copied at the public reference facilities maintained by the Commission at
100 Fifth Street NE, Washington, D.C. 20549.&#160;&#160;Copies of all materials
may be obtained from the Public Reference Section of the Commission&#8217;s
Washington, D.C. office at prescribed rates.&#160;&#160;You may obtain
information regarding the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330.&#160;&#160;The Commission also maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at <font style="DISPLAY: inline; TEXT-DECORATION: underline">http://www.sec.gov</font>.</font></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">37</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center"><font style="FONT-WEIGHT: bold">FINANCIAL STATEMENTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">
    </div>
    <div>&#160;</div>
    <div align="center">
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            <td width="83%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">REPORT OF INDEPENDENT
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            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;F-2</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="83%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
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            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;F-3</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="83%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="83%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">STATEMENT OF OPERATIONS</font></font></font></td>
            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;F-4</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="83%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
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            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;F-5</font></td>
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          <tr bgcolor="white">
            <td width="83%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
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      (DEFICIT)</font></font></td>
            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;F-6</font></td>
          </tr>
          <tr bgcolor="white">
            <td width="83%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td width="83%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold">NOTES TO FINANCIAL
      STATEMENTS</font></font></td>
            <td width="17%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;F-7 -
      F-12</font></td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
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      </div>
      <div id="HDR">
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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&amp; ASSOCIATES, CHARTERED</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">ACCOUNTANTS AND
ADVISORS</font></font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
the Board of Directors</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A
Development Stage Company)</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
audited the accompanying balance sheets of CRC Crystal Research Corporation (A
Development Stage Company) as of December 31, 2007 and 2006, and the related
statements of operations, stockholders&#8217; equity and cash flows through December
31, 2007, 2006 and Inception on March 22, 1993 through December 31, 2007. These
financial statements are the responsibility of the Company&#8217;s
management.&#160;&#160;Our responsibility is to express an opinion on these
financial statements based on our audits.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States).&#160;&#160;Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.&#160;&#160;An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.&#160;&#160;An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.&#160;&#160;We believe that our audits provide a reasonable basis
for our opinion.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of CRC Crystal Research Corporation (A
Development Stage Company) as of December 31, 2007 and 2006 and the results of
its operations and its cash flows through December 31, 2007, 2006 and Inception
on March 22, 1993 through December 31, 2007, in conformity with accounting
principles generally accepted in the United States of America.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern.&#160;&#160;As discussed in Note 3 to the
financial statements, the Company has never generated any revenues, has
accumulated a loss of $919,453 and currently lacks the capital </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">to pursue
its business plan as of December 31, 2007, which raises substantial doubt about
its ability to continue as a going concern.&#160;&#160;Management&#8217;s plans
concerning these matters are also described in Note 3.&#160;&#160;The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 12pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">/s/
Moore &amp; Associates, Chartered</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Moore
&amp; Associates Chartered</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Las
Vegas, Nevada</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: -18pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">February
26, 2008</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">2675 S. Jones Blvd. Suite
109, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-2</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold; TEXT-DECORATION: underline">BALANCE
SHEET</font></font></div>
    <div style="TEXT-ALIGN: center" align="left">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
            </td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
            </td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
            </td>
            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
            </td>
            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td colspan="9" valign="bottom">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">ASSETS</font></font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
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          <tr bgcolor="#cceeff">
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="76%" style="PADDING-LEFT: 3%; PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
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            </td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="76%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Current
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="76%" style="PADDING-LEFT: 3%">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="76%" style="PADDING-LEFT: 3%; PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Loans
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="76%" style="PADDING-LEFT: 3%; PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
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            </td>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">no
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="bottom" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">450,000,000
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            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr>
            <td align="left" valign="bottom" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">issued
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            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr>
            <td align="left" valign="bottom" style="PADDING-LEFT: 0pt">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007
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            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr>
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          <tr>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;Development
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(860,647</font></td>
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            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="76%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="76%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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an integral part of these statements.</font><br>
      <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
        <div id="FTR">
          <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
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        <div id="PN" style="PAGE-BREAK-AFTER: always">
          <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-3</font></div>
          <div style="WIDTH: 100%; TEXT-ALIGN: center">
            <hr style="COLOR: black" noshade size="2">
          </div>
        </div>
        <div id="HDR">
          <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="bottom" width="67%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">STATEMENT OF
      OPERATIONS</font></font></div>
            </td>
            <td valign="bottom" width="2%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">March
      22, 1993</font></div>
            </td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="6" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Inception)
      to</font></div>
            </td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="6" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Year
      Ended December 31,</font></div>
            </td>
            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
            </td>
            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
            </td>
            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
            </td>
            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
            </td>
            <td align="left" nowrap valign="bottom" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">General
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            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">29,443</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">140,683</font></td>
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            <td align="left" valign="bottom" width="64%">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">331,459</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">33,763</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">63,206</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(63,206</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(31,868</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(1,614,085</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Gain
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="64%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(63,206</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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accompanying Notes are an integral part of these statements.</font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-4</font></div>
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      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
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    </div>
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OF CASH FLOWS</font></font></div>
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    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: -9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
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            </td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;773,675</font></div>
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            <td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;773,675</font></div>
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          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance,
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            </td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%">
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            </td>
            <td align="left" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;3,679</font></div>
            </td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;511,393</font></div>
            </td>
            <td align="left" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></div>
            </td>
            <td align="left" valign="bottom" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(729,848)</font></div>
            </td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;(214,776)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      shares issued for</font></div>
            </td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;exercise
      of warrants for debt</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10-Jun-06</font></div>
            </td>
            <td align="left" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$&#160;&#160;&#160;0.12</font></div>
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            <td align="left" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;869,844</font></div>
            </td>
            <td align="left" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;870</font></div>
            </td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;100,305</font></div>
            </td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;101,175</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      shares issued for</font></div>
            </td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;convertion
      of related party debt</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10-Jun-06</font></div>
            </td>
            <td align="left" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$&#160;&#160;&#160;0.04</font></div>
            </td>
            <td align="left" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;5,800,000</font></div>
            </td>
            <td align="left" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;5,800</font></div>
            </td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;226,200</font></div>
            </td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;232,000</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      shares issued for services</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">10-Jun-06</font></div>
            </td>
            <td align="left" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$&#160;&#160;&#160;0.04</font></div>
            </td>
            <td align="left" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;300,000</font></div>
            </td>
            <td align="left" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;300</font></div>
            </td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;11,700</font></div>
            </td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;12,000</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      shares issued for services</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">30-Sep-06</font></div>
            </td>
            <td align="left" valign="bottom" width="7%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$&#160;&#160;&#160;0.04</font></div>
            </td>
            <td align="left" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;10,000</font></div>
            </td>
            <td align="left" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;10</font></div>
            </td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;390</font></div>
            </td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;400</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      (Loss)</font></div>
            </td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(130,799)</font></div>
            </td>
            <td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;(130,799)</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance,
      December 31, 2006</font></div>
            </td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;10,659,449</font></div>
            </td>
            <td align="left" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;10,659</font></div>
            </td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;849,988</font></div>
            </td>
            <td align="left" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></div>
            </td>
            <td align="left" valign="bottom" width="11%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(860,647)</font></div>
            </td>
            <td align="left" valign="bottom" width="9%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></div>
            </td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
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            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%">
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      shares issued for services</font></div>
            </td>
            <td align="right" valign="bottom" width="8%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">01-Oct-07</font></div>
            </td>
            <td align="left" valign="bottom" width="7%">
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            <td align="left" valign="bottom" width="8%">
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            <td align="left" valign="bottom" width="9%">
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            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%">
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          <tr bgcolor="white">
            <td valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Net
      Income / (Loss)</font></div>
            </td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="8%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;(63,206)</font></div>
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            <td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;(63,206)</font></div>
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          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="22%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Balance,
      December 31, 2007</font></div>
            </td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="bottom" width="10%" style="BORDER-BOTTOM: black 4px double">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;12,327,449</font></div>
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            <td align="left" valign="bottom" width="8%" style="BORDER-BOTTOM: black 4px double">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$&#160;&#160;&#160;12,327</font></div>
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            <td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double">
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            <td align="left" valign="bottom" width="10%" style="BORDER-BOTTOM: black 4px double">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;-</font></div>
            </td>
            <td align="left" valign="bottom" width="11%" style="BORDER-BOTTOM: black 4px double">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$&#160;&#160;&#160;&#160;&#160;(923,853)</font></div>
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            <td align="left" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$&#160;&#160;(21,806)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="7%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="8%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
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    <div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
9, 2006 the Company exercised articles of conversion from an Arizona corporation
to a Nevada Corporation and changed its capital stock from no par value stock to
a $0.001 par value, this change has been retroactively applied to this
schedule.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
10, 2006 the Company exercised a 4:1 forward stock split that has been
retroactively applied to this schedule and increases the number of shares issued
and thereby decreases the price per share.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
accompanying Notes are an integral part of these statements.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: center" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">STATEMENT OF STOCKHOLDER&#8217;S
(DEFICIT)</font></font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">March
      22, 1993</font></div>
            </td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="6" valign="bottom" width="22%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Inception)
      to</font></div>
            </td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom" width="64%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="6" valign="bottom" width="22%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Year
      Ended December 31,</font></div>
            </td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">December
      31,</font></div>
            </td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="bottom" width="64%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td colspan="2" valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td colspan="2" valign="bottom" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;Depreciation</font></div>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;Loss
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">7,491</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;Impairment
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">98,930</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;Common
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,400</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">225,000</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;&#160;&#160;&#160;Gain
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%; PADDING-BOTTOM: 2px">
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="64%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Cash
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%">
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            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="64%">
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            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%; PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Stock
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="64%" style="PADDING-LEFT: 3%; PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Stock
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            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">41,400</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
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          <tr bgcolor="white">
            <td valign="bottom" width="64%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" colspan="4" valign="bottom">
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      accompanying notes are an integral part of these
statements</font></div>
            </td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Crystal
Research, INC</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A
DEVELOPMENT STAGE COMPANY)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTES
TO FINANCIAL STATEMENTS</font></div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="p2_36">NOTE
1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;GENERAL
ORGANIZATION AND BUSINESS</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation (&#8220;CRC Arizona&#8221;) was organized in the state of
Arizona on March 22, 1993.&#160;&#160;CRC Arizona had difficulty obtaining
sufficient capital to maintain operations and ceased active operations in
1999.&#160;&#160;In June, 2006, CRC Arizona&#8217;s board approved a plan to
reincorporate in the State of Nevada.&#160;&#160;CRC Arizona completed the
reincorporation by filing of Articles of Merger with the States of Arizona and
Nevada on September 21, 2006, which effected the merger of the CRC Arizona with
and into CRC Crystal Research Corporation (&#8220;CRC Nevada&#8221;), a Nevada
corporation.&#160;&#160;Prior to filing the Articles of Merger, CRC Nevada was a
wholly-owned subsidiary of CRC Arizona.&#160;&#160;&#160;CRC Arizona and CRC
Nevada shall be referred to collectively as the &#8220;Company.&#8221;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is the licensee under a License Agreement dated September 25, 2006, with
Single Crystal Technologies, Inc. (&#8220;SCT&#8221;), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights owned by SCT to manufacture, use and sell scintillation crystals, well
logging assemblies, scintillation crystal plate assemblies and gamma camera
plate assemblies.&#160;&#160;The Company intends to use the rights granted under
the License Agreement to develop product and services for use in energy
exploration and homeland security, among other applications, and is actively
seeking capital to fund the commencement of operations.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE&#160;&#160;2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
relevant accounting policies and procedures are listed below.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accounting
Basis</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
statements were prepared following generally accepted accounting principles of
the United States of America consistently applied.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Fiscal
Year</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company operates on a December 31<font style="DISPLAY: inline; FONT-SIZE: 70%; VERTICAL-ALIGN: super">st</font> fiscal
year end.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Earnings
per Share</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The basic
earnings (loss) per share is calculated by dividing the Company&#8217;s net income
available to common shareholders by the weighted average number of common shares
during the year. The diluted earnings (loss) per share is calculated by dividing
the Company&#8217;s net income (loss) available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Dividends</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-7</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Crystal
Research, INC</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A
DEVELOPMENT STAGE COMPANY)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTES
TO FINANCIAL STATEMENTS</font></div>
    </div>
    <div>&#160;</div>
    <div><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE&#160;&#160;2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES - </font><font style="FONT-STYLE: italic"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">continued</font><br></font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Use of
Estimates</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 from those
estimates.</font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Property
and Equipment</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Property
and equipment are carried at cost and depreciated on a straight-line bases over
their useful lives.&#160;&#160;Office Equipment is depreciated over five
years.&#160;&#160;Manufacturing equipment is depreciated over ten years and is
periodically reviewed for impairment.&#160;&#160;A gain or loss on disposal is
included in the statement of operation net of cost and accumulated depreciation
for all disposed assets.&#160;&#160;During 2004 the Company sold an asset and
recorded a loss on disposition of $7,491.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The net
book value of manufacturing equipment at December 31, 2004 was
$203,212.&#160;&#160;Because the Company had been inactive and the manufacturing
equipment had been in storage for several years, the Company decided to review
the equipment for impairment.&#160;&#160;It was determined that not all
components were still useful.&#160;&#160;Accordingly, the Company recorded an
impairment charge of $100,000 at December 31, 2005, which represented the value
of the book value components which the Company determined were no longer
useful.&#160;&#160;As of December 31, 2006, the Company reviewed the
manufacturing equipment again, and decided to fully impair the equipment, which
resulted in an impairment charge of $98,931 in the year ended December 31,
2006.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Income
Taxes</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
provision for income taxes is the total of the current taxes payable and the net
of the change in the deferred income taxes. Provision is made for the deferred
income taxes where differences exist between the period in which transactions
affect current taxable income and the period in which they enter into the
determination of net income in the financial statements.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE
3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;GOING
CONCERN</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of its
assets and the liquidation of its liabilities in the normal course of
business.&#160;&#160;However, the Company has never generated revenues, has
accumulated a loss of $919,453 during its development stage, and currently lacks
the capital to pursue its business plan.&#160;&#160;This raises substantial
doubt about the Company&#8217;s ability to continue as a going concern.&#160;&#160;The
financial statements do not include any adjustments that might result from this
uncertainty.</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management&#8217;s
Plan</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Management
plans to seek funding from its shareholders and other qualified investors to
pursue its business plan.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-8</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Crystal
Research, INC</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A
DEVELOPMENT STAGE COMPANY)</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTES
TO FINANCIAL STATEMENTS</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE
4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;STOCKHOLDERS&#8217;
EQUITY</font><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Common
Stock</font></div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is authorized to issue 450,000,000 shares of common stock, par value
$0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per
share.&#160;&#160;As of December 31, 2006, there were 10,659,449 shares of
common stock outstanding, and no shares of preferred stock
outstanding.&#160;&#160;&#160;On June 10, 2006, the Company effected a four for
one stock split.&#160;&#160;All share amounts herein are adjusted to give effect
to the stock split.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 3, 2007 the Company registered 4,000,000 common shares and 2,000,000
options to purchase common shares under an S-8 Non-Qualified Stock Compensation
Plan to assist in the acquisition of services and provide incentives for
employees as it executes its business plan of which zero shares have been issued
or committed as of December 31, 2007.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company did not issue any shares of common stock in 2005.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company issued 6,979,844 shares of common stock in 2006 in the following
transactions:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.&#160;&#160;The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.&#160;&#160;The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 5,800,000 shares of common stock to the
      CEO in satisfaction of $232,000 of indebtedness from the Company to CEO,
      or $0.04 per share.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 300,000 shares of common stock to six
      unrelated parties for services rendered to the Company.&#160;&#160;The
      shares were valued at $0.04 per
share.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 30, 2006, the Company issued 10,000 shares of common stock to an
      unrelated person for services rendered to the Company.&#160;&#160;The
      shares were valued at $0.04 per
share.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company issued 1,668,000 shares of common stock during the period ended December
31, 2007 as follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
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      professional consulting services of
$10,500.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      October 1, 2007 the Company issued 440,000 common shares to four board
      members for services in lieu of cash at $0.05 per share or $22,000 and
      178,000 common shares at $0.05 per share to convert accounts payable of
      $8,900.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Warrants and
Options</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Information
relating to warrant activity during 2006 and 2005 follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="80%">
            <tr bgcolor="#cceeff">
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      Outstanding at December 31, 2004</font></td>
              <td width="20%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1,169,844</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Issued/Exercised&#160;&#160;</font></td>
              <td width="20%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td width="11%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="69%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Expired&#160;</font></td>
              <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr bgcolor="#cceeff">
              <td colspan="2" width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total Warrants
      outstanding at December 31, 2005</font></td>
              <td width="20%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;1,169,844</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Exercised&#160;&#160;</font></td>
              <td width="20%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;869,844</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td width="11%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="69%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Expired&#160;</font></td>
              <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="11%">
                <div>&#160;</div>
              </td>
              <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr bgcolor="#cceeff">
              <td colspan="2" width="11%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total Warrants
      Outstanding at December 31, 2006&#160;&#160;</font></td>
              <td width="20%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;300,000</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-9</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Crystal
Research, INC</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A
DEVELOPMENT STAGE COMPANY)</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTES
TO FINANCIAL STATEMENTS</font></div>
      </div>
    </div>
    <div>&#160;</div>
    <div style="TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold"><font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE
4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;STOCKHOLDERS&#8217;
EQUITY - <font style="FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">continued</font></font></font><br><br><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 31, 2007, the Company had warrants outstanding for the purchase of an
aggregate of 300,000 shares of its Common Stock, which are summarized in the
table below.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="60%">
            <tr>
              <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Warrants</font></div>
              </td>
              <td width="20%">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Exercise</font></div>
              </td>
              <td width="20%">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Expiration</font></div>
              </td>
            </tr>
            <tr>
              <td width="10%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="TEXT-DECORATION: none"><font style="DISPLAY: inline; TEXT-DECORATION: none">Outstanding</font></font></font></div>
              </td>
              <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: none">Price</font></font></div>
              </td>
              <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Date</font></div>
              </td>
            </tr>
            <tr>
              <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr bgcolor="#cceeff">
              <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;140,000&#160;</font></div>
              </td>
              <td width="20%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$0.50</font></div>
              </td>
              <td width="20%">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;19-Oct-2008</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td width="10%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; TEXT-DECORATION: none">160,000</font></font></div>
              </td>
              <td width="20%" style="PADDING-BOTTOM: 2px">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$0.50</font></div>
              </td>
              <td width="20%" style="PADDING-BOTTOM: 2px">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;08-Apr-2010</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr bgcolor="white">
              <td width="10%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total&#160;</font></td>
              <td width="20%" style="BORDER-BOTTOM: black 4px double">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;300,000</font></div>
              </td>
              <td width="20%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td width="20%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
        </table>
      </div>
      <div>&#160;</div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
exercise prices and share amounts have been adjusted to account for a 4:1 stock
split effected on June 10, 2006.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE
5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;RELATED
PARTY PAYABLES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Loans from Kiril A.
Pandelisev</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
the fiscal year ended December 31, 2005, the Company received loans from the
Company&#8217;s sole officer and director, and its majority shareholder.&#160;&#160;As
of December 31, 2005, the Company was indebted to the CEO in the amount of
$176,665.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
the fiscal year ended December 31, 2006, the Company received loans from the CEO
in the amount of $17,327.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The loans
made by the CEO to the Company in 2005 and 2006 were used to fund general and
administrative expenses of the Company.&#160;&#160;The loans were not evidenced
by a note, were unsecured, did not bear interest and were payable on
demand.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
10, 2006, the CEO utilized the amount due him by the Company to pay the exercise
price under warrants held by him (see below).</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Employment Agreement with
the CEO</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company was a party to an Employment Agreement with its CEO dated March 31,
1997.&#160;&#160;The Employment Agreement provided that the CEO was entitled to
base compensation of $120,000 per year, among other provisions.&#160;&#160;The
Employment Agreement terminated by its terms on March 31, 2002.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2005 the Company had accrued $799,182 in deferred salary under an
Employment Agreement with the CEO.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
December 31, 2005, the CEO agreed to forgive any claim for $660,000 of the
accrual compensation, and as a result the Company recorded an unusual gain in
that amount in fiscal 2005.&#160;&#160;As a result of the forgiveness, the
balance owed to CEO at December 31, 2005 for accrued compensation was $139,182
accrued salary.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Satisfaction of Amounts Due
the CEO</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On June
10, 2006, the CEO agreed to satisfy the amounts due him for accrued compensation
under his Employment Agreement and for loans he had made the Company by
exercising his options in the Company and converting the balance of the
indebtedness into additional shares of common stock.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As of
June 10, 2006, the CEO held options to purchase 400,000 shares of common stock
at $0.25 per share, and options to purchase 469,844 shares of common stock at
$0.0025 per share.&#160;&#160;The aggregate exercise price under both options
was $101,175.&#160;&#160;The CEO applied $101,175 of the indebtedness due him by
the Company to the exercise price under the options, which resulted in him
acquiring 869,844 shares of common stock.</font></div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-10</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Crystal
Research, INC</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A
DEVELOPMENT STAGE COMPANY)</font></div>
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTES
TO FINANCIAL STATEMENTS</font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">NOTE
5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;RELATED
PARTY PAYABLES - <font style="FONT-STYLE: italic">continued</font></font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">After
exercising the options, the balance owed to the CEO was $232,000, which was
converted into 5,800,000 shares of common stock at $0.04 per share.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">License Agreement with
Single Crystal Technologies, Inc.</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
September 25, 2006, the Company entered into a License Agreement with Single
Crystal Technologies, Inc. (&#8220;SCT&#8221;), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights owned by SCT to manufacture, use and sell scintillation crystals, well
logging assemblies, scintillation crystal plate assemblies and gamma camera
plate assemblies.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SCT is
owned by the Company&#8217;s CEO.&#160;&#160;Under the License Agreement, the Company
is obligated to pay SCT a license fee of $50,000 when it raises at least $50,000
in capital.&#160;&#160;In addition, the Company will be obligated to pay SCT
royalties in varying percentages based on the revenues received from products
that incorporate the technology licensed to the Company under the License
Agreement.&#160;&#160;In the event the Company fails to commence the production
of products incorporating the technology licensed under the License Agreement
within two years of the date of the Agreement, SCT may terminate the License
Agreement at its option.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Current Loans from the
CEO</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
the year ended December 31, 2007, Mr. Pandelisev has provided short term
operating capital to the company in the amount of $21,556.&#160;&#160;This is
non-interest bearing demand loans.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE
6.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;PROVISION
FOR INCOME TAXES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.&#160;&#160;The total
deferred tax asset is $203,248 as of December 31, 2007 which is calculated by
multiplying a 22% estimated tax rate by the cumulative NOL of $923,853 the total
valuation allowance is a comparable $203,248.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
provision for income taxes for the period ended December 31, 2007 and 2006
follows:</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
      <div style="MARGIN-LEFT: 54pt" align="left">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="50%">
            <tr>
              <td valign="bottom" width="76%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font size="3"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Year
      Ended <font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman; TEXT-DECORATION: none">December
      31</font></font></font></font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2007</font></div>
              </td>
              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td colspan="2" valign="bottom" width="10%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2006</font></div>
              </td>
              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Deferred Tax
      Asset</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
              <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">12,937</font></td>
              <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
              <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">28,776</font></td>
              <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="76%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Valuation
      Allowance&#160;&#160;</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(12,937</font></td>
              <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)&#160;&#160;</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="9%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(28,776</font></td>
              <td align="left" nowrap valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="76%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Current Taxes
      Payable</font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></td>
              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></td>
              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="76%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Income Tax
      Expense</font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></td>
              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
              <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">0.00</font></td>
              <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
        </table>
      </div>
      <div>&#160;</div>
      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Below is
a chart showing the estimated federal net operating losses and the years in
which they will expire.</font></div>
      <div>&#160;</div>
      <div align="center">
        <table bgcolor="white" cellpadding="0" cellspacing="0" width="35%">
            <tr>
              <td valign="bottom" width="41%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Year&#160;</font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td colspan="2" valign="bottom" width="23%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount</font></div>
              </td>
              <td align="left" nowrap valign="bottom" width="3%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%" style="BORDER-BOTTOM: black 2px solid">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Expiration</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1994</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">60,292</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2014</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1995</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">199,109</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;2015</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1996</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">125,697</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2016</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1997</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">175,534</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2017</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1998</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">220,547</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2018</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1999</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">154,943</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2019</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;2000</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">231,985</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2020</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2001&#160;</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">80,558</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2021</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2002</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">16,760</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2022</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2003&#160;</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">18,063</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2023</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2004&#160;</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">142,763</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2024</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2005</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(773,675</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">)</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2025</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2006</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">130,799</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2026</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="41%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2007</font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%" style="BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">63,206</font></td>
              <td align="left" nowrap valign="bottom" width="3%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%" style="PADDING-BOTTOM: 2px">
                <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;2027</font></div>
              </td>
            </tr>
            <tr bgcolor="#cceeff">
              <td valign="bottom" width="41%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total</font></td>
              <td valign="bottom" width="1%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="right" valign="bottom" width="21%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" nowrap valign="bottom" width="3%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr bgcolor="white">
              <td valign="bottom" width="41%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="1%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="bottom" width="2%" style="PADDING-BOTTOM: 2px; BORDER-BOTTOM: black 2px solid"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
              <td align="right" valign="bottom" width="21%" style="BORDER-BOTTOM: black 4px double"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">923,853</font></td>
              <td align="left" nowrap valign="bottom" width="3%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="bottom" width="32%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-11</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Crystal
Research, INC</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(A
DEVELOPMENT STAGE COMPANY)</font></div>
          <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTES
TO FINANCIAL STATEMENTS</font></div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE
7.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;COMMITMENTS
AND CONTINGENCIES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
September 25, 2006, the Company entered into a License Agreement with Single
Crystal Technologies, Inc. (&#8220;SCT&#8221;), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights owned by SCT to manufacture, use and sell scintillation crystals, well
logging assemblies, scintillation crystal plate assemblies and gamma camera
plate assemblies.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SCT is
owned by the Company&#8217;s CEO.&#160;&#160;Under the License Agreement, the Company
is obligated to pay SCT a license fee of $50,000 when it raises at least $50,000
in capital. The Company has not recorded a liability to SCT because it is
uncertain at this time that the Company will be able to raise sufficient capital
to trigger the obligation to make this payment.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, the Company will be obligated to pay SCT royalties in varying
percentages based on the revenues received from products that incorporate the
technology licensed to the Company under the License Agreement.&#160;&#160;In
the event the Company fails to commence the production of products incorporating
the technology licensed under the License Agreement within two years of the date
of the Agreement, SCT may terminate the License Agreement at its
option.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE&#160;&#160;8.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
THE EFFECT OF RECENTLY ISSUED ACCOUNTING&#160;&#160;STANDARDS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Below is
a listing of the most recent Statement of Financial Accounting Standards (SFAS)
SFAS 155-157 and their effect on the Company.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Statement No. 155 &#8211; </font><font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Certain Hybrid
Financial Instruments</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
February 2006, the FASB issued SFAS No. 155, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Certain Hybrid
Financial Instruments</font>, which amends SFAS No. 133, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Derivatives
Instruments and Hedging Activities</font> and SFAS No. 140, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of
Liabilities</font>.&#160;&#160;SFAS No. 155 amends SFAS No. 133 to narrow the
scope exception for interest-only and principal-only strips on debt instruments
to include only such strips representing rights to receive a specified portion
of the contractual interest or principle cash flows.&#160;&#160;SFAS No. 155
also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a
passive derivative financial instrument pertaining to beneficial interests that
itself is a derivative instrument.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Statement No. 156 &#8211; </font><font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Servicing of
Financial Assets</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In March
2006, the FASB issued SFAS No. 156, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting for Servicing of
Financial Assets,</font> which provides an approach to simplify efforts to
obtain hedge-like (offset) accounting.&#160;&#160;This Statement amends FASB
Statement No. 140, <font style="DISPLAY: inline; FONT-STYLE: italic">Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities</font>, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. The Statement (1) requires an entity
to recognize a servicing asset or servicing liability each time it undertakes an
obligation to service a financial asset by entering into a servicing contract in
certain situations; (2) requires that a separately recognized servicing asset or
servicing liability be initially measured at fair value, if practicable; (3)
permits an entity to choose either the amortization method or the fair value
method for subsequent measurement for each class of separately recognized
servicing assets or servicing liabilities; (4) permits at initial adoption a
one-time reclassification of available-for-sale securities to trading securities
by an entity with recognized servicing rights, provided the securities
reclassified offset the entity's exposure to changes in the fair value of the
servicing assets or liabilities; and (5) requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value
in the balance sheet and additional disclosures for all separately recognized
servicing assets and servicing liabilities. SFAS No. 156 is effective for all
separately recognized servicing assets and liabilities as of the beginning of an
entity's fiscal year that begins after September 15, 2006, with earlier adoption
permitted in certain circumstances. The Statement also describes the manner in
which it should be initially applied.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Statement No. 157</font> &#8211; <font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value
Measurements</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
September 2006, the FASB issued SFAS No. 157, <font style="DISPLAY: inline; FONT-STYLE: italic">Fair Value Measurements</font>, to
clarify how to measure fair value and to expand disclosures about fair value
measurements.&#160;&#160;The expanded disclosures include the extent to which
companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value on earnings and is applicable
whenever other standards require (or permit) assets and liabilities to be
measured at fair value.&#160;&#160;SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
adoption of these new Statements is not expected to have a material effect on
the Company&#8217;s current financial position, results or operations, or cash
flows.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NOTE&#160;&#160;9.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;
SUBSEQUENT EVENTS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
January 22, 2008 the company entered in to a consulting agreement with Mirador
Consulting Inc. (Mirador) for Investor Relations consulting.&#160;&#160;The
Company is obligated to pay $3,000 per month payable in arrears at the time
Mirador raises not less that $250,000, a 5% finders fee on any money raised by
them and 600,000 restricted shares of common stock, 300,000 shares to be issued
upon execution of the agreement and 300,000 common shares when the Company
receives $250,000 in investments brought by Mirador.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
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        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">F-12</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PART
II &#8211; INFORMATION NOT REQUIRED IN PROSPECTUS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="otherexp_36">ITEM 13.&#160;&#160;OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following table sets forth the costs and expenses payable by Crystal Research in
connection with registering the sale of the common stock. Crystal Research has
agreed to pay all costs and expenses in connection with this offering of common
stock. Set for the below is the estimated expenses of issuance and distribution,
assuming the maximum proceeds are raised.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="60%">
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="88%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Legal
      and Professional Fees</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,000.00</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="88%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Accounting
      Fees</font></div>
            </td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%">&#160;</td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="88%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Blue
      Sky Qualification Fees</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid">&#160;</td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="88%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="right" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="9%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td align="left" valign="bottom" width="88%" style="PADDING-BOTTOM: 2px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Total</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="bottom" width="1%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$</font></td>
            <td align="right" valign="bottom" width="9%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5,000.00</font></td>
            <td align="left" nowrap valign="bottom" width="1%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><a name="indemn_36"><br></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ITEM
14.&#160;&#160;INDEMNIFICATION OF DIRECTORS AND OFFICERS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CRC
Crystal Research Corporation&#8217;s Articles of Incorporation and Bylaws provide for
the indemnification of a present or former director or officer. Crystal Research
indemnifies any director, officer, employee or agent who is successful on the
merits or otherwise in defense on any action or suit. Such indemnification shall
include, but not necessarily be limited to, expenses, including attorney&#8217;s fees
actually or reasonably incurred by him. Nevada law also provides for
discretionary indemnification for each person who serves as or at Crystal
Research request as an officer or director. Crystal Research may indemnify such
individual against all costs, expenses, and liabilities incurred in a
threatened, pending or completed action, suit, or proceeding brought because
such individual is a director or officer. Such individual must have conducted
himself in good faith and reasonably believed that his conduct was in, or not
opposed to, Crystal Research&#8217;s best interests. In a criminal action, he must not
have had a reasonable cause to believe his conduct was unlawful.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NEVADA
LAW</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
to the provisions of Nevada Revised Statutes 78.751, Crystal Research shall
indemnify any director, officer and employee as follows: Every director,
officer, or employee of Crystal Research shall be indemnified by us against all
expenses and liabilities, including counsel fees, reasonably incurred by or
imposed upon him/her in connection with any proceeding to which he/she may be
made a party, or in which he/she may become involved, by reason of being or
having been a director, officer, employee or agent of Crystal Research or is or
was serving at the request of Crystal Research as a director, officer, employee
or agent of Crystal Research, partnership, joint venture, trust or enterprise,
or any settlement thereof, whether or not he/she is a director, officer,
employee or agent at the time such expenses are incurred, except in such cases
wherein the director, officer, employee or agent is adjudged guilty of willful
misfeasance or malfeasance in the performance of his/her duties; provided that
in the event of a settlement the indemnification herein shall apply only when
the Board of Directors approves such settlement and reimbursement as being for
the best interests of Crystal Research. Crystal Research shall provide to any
person who is or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of CRC Crystal Research Corporation as a
director, officer, employee or agent of the corporation, partnership, joint
venture, trust or enterprise, the indemnity against expenses of a suit,
litigation or other proceedings which is specifically permissible under
applicable law.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As to
indemnification for liabilities arising under the Securities Act of 1933, as
amended, for directors, officers or coolling persons, we have been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy and is, therefore, unenforceable.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;<font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ITEM
15.&#160;&#160;&#160;&#160;&#160;RECENT SALES OF UNREGISTERED
SECURITIES.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Set forth
below is information regarding the issuance and sales of securities without
registration since inception.&#160;&#160;No such sales involved the use of an
underwriter; no advertising or public solicitation was involved; the securities
bear a restrictive legend; and no commissions were paid in connection with the
sale of any securities.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company is authorized to issue 450,000,000 shares of common stock, par value
$0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per
share.&#160;&#160;As of December 31, 2006, there were 10,659,449 shares of
common stock outstanding, and no shares of preferred stock
outstanding.&#160;&#160;&#160;On June 10, 2006, the Company effected a four for
one stock split.&#160;&#160;All share amounts herein are adjusted to give effect
to the stock split.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 3, 2007 the Company registered 4,000,000 common shares and 2,000,000
options to purchase common shares under an S-8 Non-Qualified Stock Compensation
Plan to assist in the acquisition of services and provide incentives for
employees as it executes its business plan of which zero shares have been issued
or committed as of December 31, 2007.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">38</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ITEM
15.&#160;&#160;&#160;&#160;&#160;RECENT SALES OF UNREGISTERED SECURITIES - <font style="FONT-STYLE: italic">continued</font></font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt; TEXT-ALIGN: justify" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company did not issue any shares of common stock in 2005.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company issued 6,979,844 shares of common stock in 2006 in the following
transactions:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.&#160;&#160;The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.&#160;&#160;The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 5,800,000 shares of common stock to the
      CEO in satisfaction of $232,000 of indebtedness from the Company to CEO,
      or $0.04 per share.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 10, 2006, the Company issued 300,000 shares of common stock to six
      unrelated parties for services rendered to the Company.&#160;&#160;The
      shares were valued at $0.04 per
share.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      September 30, 2006, the Company issued 10,000 shares of common stock to an
      unrelated person for services rendered to the Company.&#160;&#160;The
      shares were valued at $0.04 per
share.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company issued 1,668,000 shares of common stock during the period ended December
31, 2007 as follows:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      June 15, 2007 the Company issued 1,050,000 common shares at $0.01 for
      professional consulting services of
$10,500.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top">
            <td style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;
      </font></div>
            </td>
            <td style="WIDTH: 18pt">
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif">&#183;</font></font></div>
            </td>
            <td>
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      October 1, 2007 the Company issued 440,000 common shares to four board
      members for services in lieu of cash at $0.05 per share or $22,000 and
      178,000 common shares at $0.05 per share to convert accounts payable of
      $8,900.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Warrants and
Options</font></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Information
relating to warrant activity during 2006 and 2005 follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
        <div align="center">
          <table bgcolor="white" cellpadding="0" cellspacing="0" width="80%">
              <tr bgcolor="#cceeff">
                <td colspan="2" width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Warrants
      Outstanding at December 31, 2004</font></td>
                <td width="20%">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;1,169,844</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Issued/Exercised&#160;&#160;</font></td>
                <td width="20%">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td width="11%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="69%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Expired&#160;</font></td>
                <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td colspan="2" width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total Warrants
      outstanding at December 31, 2005</font></td>
                <td width="20%">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;1,169,844</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td width="11%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Exercised&#160;&#160;</font></td>
                <td width="20%">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;869,844</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td width="11%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="69%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Less: Warrants
      Expired&#160;</font></td>
                <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;0</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td width="11%">
                  <div>&#160;</div>
                </td>
                <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              </tr>
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              <tr bgcolor="white">
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                <td width="69%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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        </div>
      </div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
December 31, 2007, the Company had warrants outstanding for the purchase of an
aggregate of 300,000 shares of its Common Stock, which are summarized in the
table below.</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
        <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
        <div align="center">
          <table bgcolor="white" cellpadding="0" cellspacing="0" width="60%">
              <tr>
                <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%">
                  <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Warrants</font></div>
                </td>
                <td width="20%">
                  <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Exercise</font></div>
                </td>
                <td width="20%">
                  <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Expiration</font></div>
                </td>
              </tr>
              <tr>
                <td width="10%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="TEXT-DECORATION: none"><font style="DISPLAY: inline; TEXT-DECORATION: none">Outstanding</font></font></font></div>
                </td>
                <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: none">Price</font></font></div>
                </td>
                <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Date</font></div>
                </td>
              </tr>
              <tr>
                <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;140,000&#160;</font></div>
                </td>
                <td width="20%">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$0.50</font></div>
                </td>
                <td width="20%">
                  <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;19-Oct-2008</font></div>
                </td>
              </tr>
              <tr bgcolor="white">
                <td width="10%" style="PADDING-BOTTOM: 2px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%" style="BORDER-BOTTOM: black 2px solid">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; TEXT-DECORATION: none">160,000</font></font></div>
                </td>
                <td width="20%" style="PADDING-BOTTOM: 2px">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;$0.50</font></div>
                </td>
                <td width="20%" style="PADDING-BOTTOM: 2px">
                  <div style="TEXT-ALIGN: center"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;08-Apr-2010</font></div>
                </td>
              </tr>
              <tr bgcolor="#cceeff">
                <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="white">
                <td width="10%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;Total&#160;</font></td>
                <td width="20%" style="BORDER-BOTTOM: black 4px double">
                  <div style="TEXT-ALIGN: right"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;300,000</font></div>
                </td>
                <td width="20%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%" style="PADDING-BOTTOM: 4px"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
              <tr bgcolor="#cceeff">
                <td width="10%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
                <td width="20%"><font style="FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              </tr>
          </table>
        </div>
        <div>&#160;</div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">All
exercise prices and share amounts have been adjusted to account for a 4:1 stock
split effected on June 10, 2006.</font><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
securities were issued in reliance upon the exemption contained in Section 4(2)
of the Securities Act of 1933.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">39</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="index_37">ITEM 16.&#160;&#160;&#160;&#160;EXHIBITS.</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
following exhibits are included with this registration statement:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="bottom" width="13%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Exhibit Number.</font></font></div>
            </td>
            <td align="left" valign="bottom" width="87%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Name/Identification of
    Exhibit</font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2</font></div>
            </td>
            <td align="left" valign="top" width="87%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Agreement
      and Plan of Merger Dated September 20, 2006</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="13%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3.1</font></div>
            </td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Articles
      of Incorporation dated June 9, 2006*</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="13%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3.2</font></div>
            </td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amended
      and Restated Bylaws dated February 9, 2007*</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="13%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3.3</font></font></div>
            </td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amendment
      to Articles of Incorporation dated September 22, 2006*</font></font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5</font></div>
            </td>
            <td align="left" valign="top" width="87%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Opinion
      of Joseph L. Pittera, Esq.</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">13</font></div>
            </td>
            <td align="left" valign="top" width="87%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Form
      10-Q for March 31, 2008*</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23.1</font></div>
            </td>
            <td align="left" valign="top" width="87%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consent
      of Independent Auditor</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td valign="top" width="13%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23.2</font></font></div>
            </td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consent
      of Counsel (See Exhibit 5)</font></td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="13%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td align="left" valign="top" width="87%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr bgcolor="#cceeff">
            <td colspan="2" valign="top" width="13%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">*Incorporated
      by reference to Form 10-SB filed February 13, 2007, and Form 10-Q for
      March 31, 2008 filed May 12,
2008.&#160;</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br>&#160;</div><br>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; WIDTH: 100%; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">40</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right"><font style="DISPLAY: inline; FONT-SIZE: 8pt; COLOR: #000000; FONT-FAMILY: Times New Roman">&#160;
</font></div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="undert_38">ITEM 17.&#160;&#160;&#160;UNDERTAKINGS.</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
Rule 415 of the Securities Act, we are registering securities for an offering to
be made on a continuous or delayed basis in the future. The registration
statement pertains only to securities (a) the offering of which will be
commenced promptly, will be made on a continuous basis and may continue for a
period in excess of 30 days from the date of initial effectiveness and (b) are
registered in an amount which, at the time the registration statement becomes
effective, is reasonably expected to be offered and sold within two years from
the initial effective date of the registration.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based on
the above-referenced facts and in compliance with the above-referenced rules,
Crystal Research includes the following undertakings in this Registration
Statement:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A. The
undersigned Registrant hereby undertakes:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1) To
file, during any period, in which offers or sales are being made, a
post-effective amendment to this Registration Statement:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(i) To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933, as amended;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the &#8220;Calculation of the Registration Fee&#8221; table in the
effective Registration Statement; and</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1) That,
for the purpose of determining any liability under the Securities Act of 1933,
as amended, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">B.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the &#160;Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.</font></div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div><br>
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</font></div>
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      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">41</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="sigs_41">SIGNATURES</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-1 and authorized this Registration Statement to
be signed on its behalf by the undersigned, in the City of Mesa, State of
Arizona on May 29, 2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify">
      <div>
        <table border="0" cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td colspan="2" valign="top" width="38%">
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            <tr>
              <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(Registrant)</font></font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="50%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td valign="top" width="3%" style="BORDER-BOTTOM: #ffffff solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">By:
      </font></div>
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              <td align="left" nowrap valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/&#160;Kiril
      A. Pandelisev</font></td>
              <td valign="top" width="12%" style="BORDER-BOTTOM: #ffffff solid"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" nowrap valign="bottom" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Name:
      Kiril A. Pandelisev&#160;</font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title:
      <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">President,
      Treasurer, and Director</font>&#160;</font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td valign="top" width="50%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="3%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="35%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="12%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td valign="top" width="27%" style="BORDER-BOTTOM: black 2px solid">
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Title</font></font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Date</font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="27%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">/s/ Kiril A. Pandelisev</font></font></div>
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            <td valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">CEO
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      29, 2008</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="27%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Kiril
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              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
            <td valign="top" width="26%">
              <div style="DISPLAY: block; TEXT-INDENT: 0pt">&#160;</div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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          </tr>
          <tr>
            <td valign="top" width="27%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      Charles J. Searock</font></div>
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              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">President
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            </td>
            <td valign="top" width="26%" style="PADDING-BOTTOM: 2px">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">May
      29, 2008</font></div>
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          </tr>
          <tr>
            <td valign="top" width="27%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Charles
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            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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          </tr>
          <tr>
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              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      Dr. Don Jackson</font></div>
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              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Director</font></div>
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            <td valign="top" width="26%" style="PADDING-BOTTOM: 2px">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;May
      29, 2008</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="27%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dr.
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            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
            <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      </font></td>
          </tr>
          <tr>
            <td valign="top" width="27%" style="BORDER-BOTTOM: black 2px solid">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
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              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Director</font></div>
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              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">May
      29, 2008</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="27%">
              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Dr.
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            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="26%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="27%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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          <tr>
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              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Director</font></div>
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            <td valign="top" width="26%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">      </font>
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          </tr>
          <tr>
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              <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Alexander
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            </td>
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          </tr>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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    <div style="DISPLAY: block; TEXT-INDENT: 0pt; TEXT-ALIGN: center"><font style="FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">42</font><br></div>
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crc_s1.htm
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
Washington,
      D.C. 20549
FORM
      S-1
REGISTRATION
      STATEMENT UNDER THE SECURITIES ACT OF 1933
CRC
      Crystal Research Corporation
(Name
      of small business issuer in its charter)
Nevada
2800
86-0728263
(State
      or jurisdiction of incorporation or organization)
(Primary
      Standard Industrial Classification Code Number)
(I.R.S.
      Employer Identification No.)
4952
      East Encanto Street
Mesa,
      Arizona 85205
(480)
      452-3301
(Address
      and telephone number of registrant's principal executive
      offices)
Copies to:
Joseph
      Lambert Pittera, Esq.
Law
      Offices of Joseph Lambert Pittera
2214
      Torrance Boulevard
Torrance,
      California 90501
Telephone:
      (310) 328-3588
Facsimile
      No. (310) 328-3063
Approximate
date of proposed sale to the public: As soon as practicable after this
Registration Statement becomes effective.
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering.
o
____________
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering.
o
_______________
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering.
o
_______________
If
delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box.
o
If this
Form is filed to register securities for an offering to be made on a continuous
or delayed basis pursuant to Rule 415 under the Securities Act, please check the
following box.
x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filed or a smaller reporting
company.
Large
accelerated filer
o
Accelerated
filer
o
Non-accelerated
filer
o
Smaller
reporting company
x
1
CALCULATION
OF REGISTRATION FEE
Tile
      of each class of securities to be registered
Amount
      to be registered
Proposed
      maximum offering price per share (2)
Proposed
      maximum(3) aggregate offering price
Amount
      of registration fee (1)
Common
      Stock
11,770,270
$
0.001
$
11,770.27
$
0.46
(1)           This
is an initial offering and no current trading market exists for our common
stock.  The price paid for
the currently issued and outstanding
common stock was valued at $.001 per share.
(2)           Estimated
solely for purposes of calculating the registration fee pursuant to Rule
457.
(3)           Registrant
shall not receive any part of the proceeds from this registration.
The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of the prospectus. Any representation to the contrary is a criminal
offense.
2
Prospectus
CRC
Crystal Research Corporation
11,770,270
Shares of Common Stock
$.001 per
share
CRC
Crystal Research Corporation ("Company") is registering 11,770,270 shares of its
common stock at a price of $0.001 per share distributed among 59 shareholders
for which the Company will derive no financial benefit.
CRC
Crystal Research Corporation is a development stage, start-up company and
currently has limited operations.  Any investment in the shares
offered herein involves a high degree of risk.  You should only
purchase shares if you can afford a complete loss of your
investment.
Prior to
this offering, there has been no public market for CRC Crystal Research
Corporation's common stock.
Number
      of Shares
Offering
      Price
Underwriting
      Discounts & Commissions
Proceeds
      to the Company
Per
      Share
11,770,270
$
0.001
$
0.00
$
0
This
investment involves a high degree of risk. You should purchase shares only if
you can afford a complete loss of your investment. See the section titled "Risk
Factors" herein.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
information in this prospectus is not complete and may be changed. CRC Crystal
Research Corporation may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
CRC
Crystal Research Corporation does not plan to use this offering prospectus
before the effective date.
Subject
to Completion, Dated __________, 200__
3
TABLE
OF CONTENTS
PAGE
SUMMARY
      OF PROSPECTUS
5
General
      Information about Our Company
5
The
      Offering
5
RISK
      FACTORS
6
RISKS
      ASSOCIATED WITH OUR COMPANY
6
RISKS
      ASSOCIATED WITH THIS OFFERING
10
USE
      OF PROCEEDS
14
DETERMINATION
      OF OFFERING PRICE
14
DILUTION
      OF THE PRICE YOU PAY FOR YOUR SHARES
14
PLAN
      OF DISTRIBUTION
14
Offering
      will be Sold by Our Officer and Director
14
Terms
      of the Offering
15
Deposit
      of Offering Proceeds
15
Procedures
      for and Requirements for Subscribing
15
DESCRIPTION
      OF SECURITIES
15
INTEREST
      OF NAMED EXPERT AND COUNSEL
15
DESCRIPTION
      OF OUR BUSINESS
15
General
      Information
15
Industry
      Background
16
Principal
      Products and their Markets
19
Distribution
      Methods
21
Status
      of Any Publicly Announced Products
21
Competition
22
Sources
      and Availability of Products
22
Dependence
      on One of a Few Major Customers
22
Patents
      and Trademarks
23
Need
      for Any Government Approval of Principal
      Products
24
Government
      and Industry Regulation
24
Research
      and Development Activities
24
Environmental
      Laws
25
Employees
      and Employment Agreements
25
DESCRIPTION
      OF PROPERTY
25
LEGAL
      PROCEEDINGS
25
MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
25
FINANCIAL
      STATEMENTS
27
MANAGEMENT'S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
27
CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL
      DISCLOSURE
30
DIRECTOR,
      EXECUTIVE OFFICER, PROMOTER AND CONTROL PERSON
30
EXECUTIVE
      COMPENSATION
33
STOCK
      OPTION PLAN AND OTHER LONG-TERM INCENTIVE PLAN
34
SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
34
CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
35
INDEMNIFICATION
36
AVAILABLE
      INFORMATION
37
4
CRC
Crystal Research Corporation
4952 East
Encanto Street
Mesa,
Arizona 85205
SUMMARY
OF PROSPECTUS
You
should read the following summary together with the more detailed business
information, financial statements and related notes that appear elsewhere in
this prospectus.  In this prospectus, unless the context otherwise
denotes, references to "we," "us," "our," and "CRC" are to CRC Crystal Research
Corporation
GENERAL
INFORMATION ABOUT OUR COMPANY
CRC
Crystal Research Corporation (the "Company" or the "Registrant") was
incorporated in the State of Nevada on June 9, 2006. The Company is the
successor in interest to CRC Crystal Research Corporation ("Arizona CRC"), which
was incorporated in the State of Arizona on March 22, 1993.  On June
10, 2006, the board of directors of the Company and Arizona CRC approved their
merger for the purpose of redomiciling  the Arizona CRC in the State
of Nevada.  The redomicile was completed by the filing of Articles of
Merger with the Secretary of State of Nevada on September 20, 2006 and with the
Secretary of State of Arizona on September 21, 2006.  The Company was
formed by Dr. Kiril Pandelisev to commercialize patents for new technology and
innovative crystal growing processes in the manufacture Crystals and new and
improved Crystal Products based on his patents. The technology encompasses a new
crystal grower  design, new crystal growing processes, and fabrication
of new and more sensitive Crystal Products. Management believes that the new
technology allows the Company to manufacture Crystal Products faster, less
expensively, and at a higher quality level than that which current industry
methods allow.
The
Company has a non-exclusive license to all technology owned by Single Crystal
Technologies, Inc. ("SCT"), which is owned by Dr. Kiril A.
Pandelisev.  Dr. Pandelisev is the Company's sole officer and
director. The licensed technology includes patents, whether approved, pending or
in process of filing, other contractual agreements, and technical measures
relating to the manufacture of Crystals, Crystal Products and ultra pure
materials.  The Company plans to raise capital to fund the development
of initial manufacturing capabilities to grow Crystals and manufacture Crystal
Products for sale in various industrial markets. The Company has never produced
any Crystal Products or other products for commercial sale.
THE
OFFERING
Following
is a brief summary of this offering.  Please see the Plan of
Distribution section for a more detailed description of the terms of the
offering.
Securities
      Being Registered:
11,770,270
      common shares, par value $0.001
Offering Price
      per Share:
$0.001
Offering
      Period:
The Offering
      Period shall remain open.
Net Proceeds
      to Our Company:
$0
Use of
      Proceeds:
None
Number
      of Shares Outstanding
Before
      the Offering:
13,070,270
Number
      of Shares Outstanding
After
      the Offering:
13,070,270
Our
officer, director, control person and/or affiliates do not intend to purchase
any shares in this offering.
5
RISK
FACTORS
RISKS
ASSOCIATED WITH OUR COMPANY:
This
investment has a high degree of risk.  Before you invest you should
carefully consider the risks and uncertainties described below and the other
information in this placement memorandum.  If any of the following
risks actually occur, our business, operating results and financial condition
could be harmed and the value of our stock could go down.  This means
you could lose all or a part of your investment.
RISKS
RELATING TO OUR COMPANY
We
are a development stage company, and have a limited operating history on which
to evaluate our potential for future success.
We are a
development stage company, and have yet to produce or sell any products or
services.  We have only a limited operating history upon which you can
evaluate our business and prospects, and have yet to develop sufficient
experience regarding actual revenues to be received from our crystal
products.  You must consider the risks and uncertainties frequently
encountered by early stage companies in new and rapidly evolving
markets.  If we are unsuccessful in addressing these risks and
uncertainties, our business, results of operations and financial condition will
be materially and adversely affected.
Our
business is dependent on raising capital to begin operations.
Our
business involves the development of the manufacturing capability to exploit
technology that we license from Singe Crystal Technologies, Inc., an Arizona
corporation ("SCT"), an affiliate of Dr. Kiril A. Pandelisev, our founder,
controlling stockholder, sole officer, and one of our directors, to manufacture
crystal products.  We estimate that we need at least $1,000,000 to
begin business and more funding to expand. The amount needed for expansion will
vary depending on the growth curve the company adopts at the time of
funding.   While we have spoken to various investment banks and
investors, at this time we do not have any commitment for the necessary
capital.  Accordingly, we do not know if we will be able to raise any
capital, or whether the terms will be beneficial or detrimental to existing
shareholders.  If we are not able to raise capital to begin business,
we may never commence operations and our shares will be worthless.
Our
business is dependent on licensed technology.
Our
ability to utilize a unique process to manufacture crystal products for industry
applications which are higher quality and less expensive than those presently
produced is solely dependent on the non-exclusive license of technology owned by
SCT.  The original license agreement (the "License") only gives us the
non-exclusive right to use the patents and other technology owned by SCT for
their lifetime (including extensions), and can be terminated at SCT's option if
we fail to commence production of products using the technology by September 25,
2008, or if we breach the License or file for bankruptcy.  In May of
2008 SCT and CRC have agreed to renew and extend the licensing agreement, until
September 25, 2010. Additional $50,000 have been added to the initial signing
fees. The second $50,000 is payable when the company's cumulative raise is $3
million or more or its product sales exceed $1 Million, whichever comes
first.
We
may not be able to accommodate rapid growth which could decrease revenues and
result in a loss of customers.
We
currently have three officers and are in contractual discussions with 3 more,
and in process of hiring the first three employees.  To manage
anticipated growth, we must develop operational, financial and management
information systems.  We must also hire, train and retain additional
qualified personnel, and effectively manage our relationships with end users,
suppliers and other third parties.  Our expansion will place a
significant strain on our current services and support operations, sales and
administrative personnel, capital and other resources.  We could also
experience difficulties meeting demand for our products.  We cannot
guarantee that our systems, procedures or controls will be adequate to support
operations, or that management will be capable of fully exploiting the
market.  Our failure to effectively manage growth could adversely
affect our business and financial results.
6
RISKS ASSOCIATED WITH OUR
COMPANY -
continued
The
licensed technology is unproven in commercial production.
Our
business plan is based on the commercial exploitation of technology we license
from SCT, which consists of a combination of patents and technical
know-how.  To date, the technology has not been deployed in actual
commercial production, and therefore is unproven in that context.
Furthermore,
the technology has not been deployed to manufacture crystal products of the size
that CRC Crystal Research intends to manufacture.  It is possible that
the technology will not work as well when deployed to make commercial quantities
of crystal products, or that significant additional research and development
will be necessary to perfect the technology.
Product
protection and infringement.
CRC
Crystal Research's business plan is based on the commercial exploitation of
technology it licenses on a non-exclusive basis from SCT.  To protect
its technology and confidential information, SCT relies upon a combination of
patents, contractual agreements, and technical measures to protect the
confidential information, know-how and proprietary rights relating to its
manufacture of crystal products.  Such protection, however, may not
preclude competitors from developing crystal products which have similar
characteristics as those developed by CRC Crystal
Research.  Furthermore, not all patents on which we may rely have been
granted.  Under the License, CRC Crystal Research bears the burden of
prosecuting any patent applications in any countries to which it wishes to
extend patent protection for SCT's patents.  In addition, we are
responsible for prosecuting any infringement actions against third parties who
may be infringing on any patents used by CRC Crystal Research and defending any
infringement actions brought by competitors involving patents used by CRC
Crystal Research.  The cost of prosecuting and defending patent
infringement actions is very high, and may place a severe financial strain on
CRC Crystal Research.  We do not believe that any of the licensed
technology infringe upon the proprietary rights of any third
party.  There can be no assurance, however, that third parties will
not assert infringement claims against CRC Crystal Research or SCT in the
future.  The successful assertion of such claims could have an affect
on CRC Crystal Research's business, operating results and financial
condition.
Our
management has conflicts of interest.
Our
founder and majority stockholder, Dr. Pandelisev, is also the founder and
majority stockholder of SCT, which has licensed CRC Crystal Research the
technology which is the basis of our business plan.  The interests of
Dr. Pandelisev and SCT may diverge from the interests of our stockholders in the
future.  In addition, Dr. Pandelisev is engaged in other business
activities outside of CRC Crystal Research.  There exist potential
conflicts of interest including, among other things, time, effort and business
combinations with other such entities.
Our
success is dependent on the continued services of Dr. Pandelisev.
Our
success largely depends on the efforts and abilities of Dr.
Pandelisev.  The loss of the services of Dr. Pandelisev could
materially harm our business because of the cost and time necessary to replace
and train a replacement and because he possesses unique knowledge of the
underlying technology that is the core of our business.  We do not
presently maintain key-man life insurance policies on Dr.
Pandelisev.  In addition, we need to attract additional high quality
sales, technical and consulting personnel.  To the extent that we are
smaller than our competitors and have fewer resources, we may not be able to
attract the sufficient number and quality of staff.
Our
management has limited experience and may miss certain business
opportunities.
Our
success will be dependent on our management.  Our officers and
directors have only limited experience in the business activities in which we
intend to engage.  Management believes it has sufficient experience to
implement our business plan, although there is no assurance that additional
managerial assistance will not be required.
7
RISKS ASSOCIATED WITH OUR
COMPANY -
continued
Any
failure to maintain adequate general liability, commercial, and product
liability insurance could subject us to significant losses of
income.
We do not
currently carry general liability, product liability and commercial insurance,
and therefore, we have no protection against any general, commercial and/or
product liability claims.  Any general, commercial and/or product
liability claims will have a material adverse effect on our financial
condition.  There can be no assurance that we will be able to obtain
insurance on reasonable terms when we are able to afford it.
The
report of our independent auditors indicates uncertainty concerning our ability
to continue as a going concern and this may impair our ability to raise capital
to fund our business plan.
Our
independent auditors have raised substantial doubt about our ability to continue
as a going concern.  We cannot assure you that this will not impair
our ability to raise capital on attractive terms.  Additionally, we
cannot assure you that we will ever achieve significant revenues and therefore
remain a going concern.
Our
top officers have no experience in public company reporting and limited
experience in financial accounting, which could impair our ability to satisfy
public company filing requirements and increase our securities compliance
costs.
Our
management team has limited experience in a publicly-traded company, or in
complying with the regulatory requirements applicable to a public
company.  As a result, we could have difficulty satisfying the
regulatory requirements applicable to public companies, which could adversely
affect the market for our common stock.  At present, we rely upon
outside experts to advise us on matters relating to financial accounting and
public company reporting.  While we believe that it will be possible
to satisfy our public company reporting requirements through the use of third
party experts, our general and administrative costs will remain higher to the
extent our officers alone are not able to satisfy our public company reporting
requirements.
Control
by management.
Dr.
Pandelisev currently owns or controls over 66 percent of our issued and
outstanding common stock.  Consequently, management he has the ability
to influence control of our operations and will have the ability to influence or
control substantially all matters submitted to stockholders for approval,
including:
·
Election
      of the board of directors;
·
Removal
      of any directors;
·
Amendment
      of our articles of incorporation or bylaws;
and
·
Adoption
      of measures that could delay or prevent a change in control or impede a
      merger, takeover or other business
combination.
Dr.
Pandelisev will thus have substantial influence over our management and affairs,
this concentration of ownership by itself may have the effect of impeding a
merger, consolidation, takeover or other business consolidation, or discouraging
a potential acquiror from making a tender offer for the common
stock.
Our
future revenues are unpredictable and our quarterly operating results may
fluctuate significantly.
We have a
very limited operating history, and have no revenue to date.  We
cannot forecast with any degree of certainty whether any of our products or
services will ever generate revenue or the amount of revenue to be generated by
any of our products or services.  In addition, we cannot predict the
consistency of our quarterly operating results.  Factors which may
cause our operating results to fluctuate significantly from quarter to quarter
include:
8
RISKS ASSOCIATED WITH OUR
COMPANY -
continued
·
Our
      ability to attract new and repeat
customers;
·
Our
      ability to keep current with the evolving requirements of our target
      market;
·
Our
      ability to protect our proprietary
technology;
·
The
      ability of our competitors to offer new or enhanced products or
       services; and
·
Unanticipated
      delays or cost increases with respect to research and
      development.
Because
of these and other factors, we believe that quarter-to-quarter comparisons of
our results of operations are not good indicators of our future
performance.  If our operating results fall below the expectations of
securities analysts and investors in some future periods, then our stock price
may decline.
Acts
of terrorism, responses to acts of terrorism and acts of war may impact our
business and our ability to raise capital.
Future
acts of war or terrorism, national or international responses to such acts, and
measures taken to prevent such acts may harm our ability to raise capital or our
ability to operate.  In addition, the threat of future terrorist acts
or acts of war may have effects on the general economy or on our business that
are difficult to predict.  We are not insured against damage or
interruption of our business caused by terrorist acts or acts of
war.
We
may fail to establish and maintain strategic relationships.
We
believe that the establishment of strategic partnerships will greatly benefit
the growth of our business, and we intend to seek out and enter into strategic
alliances.  We may not be able to enter into these strategic
partnerships on commercially reasonable terms, or at all.  Even if we
enter into strategic alliances, our partners may not attract significant numbers
of customers or otherwise prove advantageous to our business.  Our
inability to enter into new distribution relationships or strategic alliances
could have a material and adverse effect on our business.
We
may not be able to develop a market for our crystal products, which will most
likely cause our stock price to decline.
The
demand and price for our crystal products will be based upon the existence of
markets for them.  The extent to which we may gain a share of our
intended markets will depend, in part, upon the cost effectiveness and
performance of our crystal products when compared to alternative crystal
products, which may be conventional or heretofore unknown.  If the
crystal products of other companies provide more cost-effective alternatives or
otherwise outperform our crystal products, the demand for our crystal products
may be adversely affected.  Our success will be dependent upon market
acceptance of our crystal products.  Failure of our crystal products
to achieve and maintain meaningful levels of market acceptance would materially
and adversely affect our business, financial condition, results of operations
and market penetration.  This would likely cause our stock price to
decline.
We
may have difficulty in attracting and retaining management and outside
independent members to our board of directors as a result of their concerns
relating to their increased personal exposure to lawsuits and stockholder claims
by virtue of holding these positions in a publicly-held company.
The
directors and management of publicly-traded corporations are increasingly
concerned with the extent of their personal exposure to lawsuits and stockholder
claims, as well as governmental and creditor claims which may be made against
them, particularly in view of recent changes in securities laws imposing
additional duties, obligations and liabilities on management and
directors.  Due to these perceived risks, directors and management are
also becoming increasingly concerned with the availability of directors and
officers' liability insurance to pay on a timely basis the costs incurred in
defending such claims.  We currently do not carry directors and
officers' liability insurance.  Directors and officers' liability
insurance has recently become much more expensive and difficult to
obtain.  If we are unable to provide directors and officers' liability
insurance at affordable rates or at all, it may become increasingly more
difficult to attract and retain qualified outside directors to serve on our
board of directors.
9
RISKS ASSOCIATED WITH OUR
COMPANY -
continued
We may
lose potential independent board members and management candidates to other
companies that have greater directors and officers' liability insurance to
insure them from liability or to companies that have revenues or have received
greater funding to date which can offer more lucrative compensation
packages.  The fees of directors are also rising in response to their
increased duties, obligations and liabilities as well as increased exposure to
such risks.  As a company with a limited operating history and limited
resources, we will have a more difficult time attracting and retaining
management and outside independent directors than a more established company due
to these enhanced duties, obligations and liabilities.
Legislative
actions and potential new accounting pronouncements are likely to impact our
future financial position and results of operations.
There
have been regulatory changes, including the Sarbanes-Oxley Act of 2002, and
there may potentially be new accounting pronouncements or additional regulatory
rulings, which will have an impact on our future financial position and results
of operations.  The Sarbanes-Oxley Act of 2002 and other rule changes
as well as proposed legislative initiatives have increased our general and
administrative costs as we have incurred increased legal and accounting fees to
comply with such rule changes.  Further, proposed initiatives are
expected to result in changes in certain accounting rules, including legislative
and other proposals to account for employee stock options as a compensation
expense.  These and other potential changes could materially increase
the expenses we report under accounting principles generally accepted in the
United States of America, and adversely affect our operating
results.
Risks
Associated With This Offering
You
may be unable to sell your common stock at or above your purchase price, which
may result in substantial losses to you.
The
following factors may add to the volatility in the price of our common stock:
actual or anticipated variations in our quarterly or annual operating results;
government regulations, announcements of significant acquisitions, strategic
partnerships or joint ventures; our capital commitments; and additions or
departures of our key personnel.  Many of these factors are beyond our
control and may decrease the market price of our common stock, regardless of our
operating performance.  We cannot make any predictions or projections
as to what the prevailing market price for our common stock will be at any time,
including as to whether our common stock will sustain its current market price,
or as to what effect that the sale of shares or the availability of common stock
for sale at any time will have on the prevailing market price.
Volatility
in our common stock price may subject CRC Crystal Research to securities
litigation.
The
market for our common stock is characterized by significant price volatility
when 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.
Certain
stockholders may be subject to taxation of dividends.
In the
absence of an applicable treaty between the United States and the government of
the country of which a stockholder is a citizen, if such stockholder is not a
United States citizen or a resident alien of the United States, pursuant to
United States income tax law, all dividends payable by CRC Crystal Research on
our capital stock to any such stockholder are subject to a withholding rate of
30 percent.  As of the effective date of this offering, there is no
way to determine which of our potential stockholders may be subject to the 30
percent withholding requirement.
We
may not achieve results similar to the financial projections in this placement
memorandum.
Any
projections and related assumptions discussed in this placement memorandum were
based on information about circumstances and conditions existing as of the date
of this placement memorandum.  The projections and estimated financial
results are based on estimates and assumptions that are inherently uncertain
and, though considered reasonable by us, are subject to significant business,
economic, and competitive uncertainties and contingencies, all of which are
difficult to predict and many of which are beyond our
control.  Accordingly, there can be no assurance that the projected
results will be realized or that actual results will not be significantly lower
than projected.  We do not intend to update the
projections.  The inherent uncertainties in results increase
materially for years closer to the end of the projected
period.  Neither we nor any other person or entity assumes any
responsibility for the accuracy or validity of the projections.
10
Risks
Associated With This Offering - continued
We
may need to raise additional capital.  If we are unable to raise
necessary additional capital, our business may fail or our operating results and
our stock price may be materially adversely affected.
Because
we are a newly operational company, we need to secure adequate
funding.  If we are unable to obtain adequate funding, we may not be
able to successfully develop and market our crystal products and our business
will most likely fail.  We do not have commitments for additional
financing.  To secure additional financing, we may need to borrow
money or sell more securities, which may reduce the value of our outstanding
securities.  We may be unable to secure additional financing on
favorable terms or at all.
Selling
additional stock, either privately or publicly, would dilute the equity
interests of our stockholders.  If we borrow more money, we will have
to pay interest and may also have to agree to restrictions that limit our
operating flexibility.  If we are unable to obtain adequate financing,
we may have to curtail business operations, which would have a material negative
effect on operating results and most likely result in a lower stock
price.
Our
issuance of additional common stock in exchange for services or to repay debt
would dilute your proportionate ownership and voting rights and could have a
negative impact on the market price of our common stock.
Our board
of directors may generally issue shares of common stock to pay for debt or
services, without further approval by our stockholders based upon such factors
as our board of directors may deem relevant at that time.  For the
past three years and for the year ended December 31, 2007, we issued a total of
8,469,844 shares in payment for debt and services.  It is likely that
we will issue additional securities to pay for services and reduce debt in the
future.  It is possible that we will issue additional shares of common
stock under circumstances we may deem appropriate at the time.
The
elimination of monetary liability against our directors, officers and employees
under our articles of incorporation and the existence of indemnification rights
for our directors, officers and employees may result in substantial expenditures
by CRC Crystal Research and may discourage lawsuits against our directors,
officers and employees.
Our
articles of incorporation contain provisions which eliminate the liability of
our directors for monetary damages to CRC Crystal Research and our
stockholders.  Our bylaws also require CRC Crystal Research to
indemnify our officers and directors.  We may also have contractual
indemnification obligations under our agreements with our directors, officers
and employees.  The foregoing indemnification obligations could result
in CRC Crystal Research incurring substantial expenditures to cover the cost of
settlement or damage awards against directors, officers and employees, which we
may be unable to recoup.  These provisions and resultant costs may
also discourage CRC Crystal Research from bringing a lawsuit against directors,
officers and employees for breaches of their fiduciary duties, and may similarly
discourage the filing of derivative litigation by our stockholders against our
directors, officers and employees even though such actions, if successful, might
otherwise benefit CRC Crystal Research and our stockholders.
11
Risks
Associated With This Offering - continued
Our
directors have the right to authorize the issuance of shares of our preferred
stock and additional shares of our common stock.
Our
directors, within the limitations and restrictions contained in our articles of
incorporation and without further action by our stockholders, have the authority
to issue shares of preferred stock from time to time in one or more series and
to fix the number of shares and the relative rights, conversion rights, voting
rights, and terms of redemption, liquidation preferences and any other
preferences, special rights and qualifications of any such series.  We
have no intention of issuing shares of preferred stock at the present
time.  Any issuance of shares of preferred stock could adversely
affect the rights of holders of our common stock.
Should we
issue additional shares of our common stock at a later time, each investor's
ownership interest in our stock would be proportionally reduced.  No
investor will have any preemptive right to acquire additional shares of our
common stock, or any of our other securities.
If
we fail to remain current on our reporting requirements, we could be removed
from the OTC Bulletin Board, which would limit the ability of broker-dealers to
sell our securities and the ability of stockholders to sell their securities in
the secondary market.
Companies
trading on the OTC Bulletin Board, such as CRC Crystal Research wants to be,
must be reporting issuers under Section 12 of the Exchange Act, and must be
current in their reports under Section 13 of the Exchange Act, in order to
maintain price quotation privileges on the OTC Bulletin Board.  If we
fail to remain current on our reporting requirements, we could be removed from
the OTC Bulletin Board.  As a result, the market liquidity for our
securities could be adversely affected by limiting the ability of broker-dealers
to sell our securities and the ability of stockholders to sell their securities
in the secondary market.
Dividend
risk.
At
present, we are not in a financial position to pay dividends on our common stock
and future dividends will depend on our profitability.  Investors are
advised that until such time the return on our common stock is restricted to an
appreciation in the share price.
Anti-takeover
provisions may impede the acquisition of CRC Crystal Research.
Certain
provisions of the Nevada Revised Statutes have anti-takeover effects and may
inhibit a non-negotiated merger or other business combination.  These
provisions are intended to encourage any person interested in acquiring CRC
Crystal Research to negotiate with, and to obtain the approval of, our board of
directors in connection with such a transaction.  As a result, certain
of these provisions may discourage a future acquisition of CRC Crystal Research,
including an acquisition in which the stockholders might otherwise receive a
premium for their shares.
Our
common stock is subject to the "penny stock" rules of the Securities and
Exchange Commission, and the trading market in our common stock is limited,
which makes transactions in our stock cumbersome and may reduce the investment
value of our stock.
Our
shares of common stock are "penny stocks" because they are not registered on a
national securities exchange or listed on an automated quotation system
sponsored by a registered national securities association, pursuant to Rule
3a51-1(a) under the Exchange Act.  For any transaction involving a
penny stock, unless exempt, the rules require:
·
That
      a broker or dealer approve a person's account for transactions in penny
      stocks; and
·
That
      the broker or dealer receives from the investor a written agreement to the
      transaction, setting forth the identity and quantity of the penny stock to
      be purchased.
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Securities and Exchange Commission
relating to the penny stock market, which, in highlight form:
·
Sets
      forth the basis on which the broker or dealer made the suitability
      determination; and
·
That
      the broker or dealer received a signed, written agreement from the
      investor prior to the transaction.
12
Risks
Associated With This Offering - continued
Generally,
brokers may be less willing to execute transactions in securities subject to the
"penny stock" rules.  This may make it more difficult for investors to
dispose of our common stock and cause a decline in the market value of our
stock.
Disclosure
also has to be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities and the rights and remedies available to an investor in cases of
fraud in penny stock transactions.  Finally, monthly statements have
to be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks.
The
market for penny stocks has suffered in recent years from patterns of fraud and
abuse.
Stockholders
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:
·
Control
      of the market for the security by one or a few broker-dealers that are
      often related to the promoter or
issuer;
·
Manipulation
      of prices through prearranged matching of purchases and sales and false
      and misleading press releases;
·
Boiler
      room practices involving high-pressure sales tactics and unrealistic price
      projections by inexperienced
salespersons;
·
Excessive
      and undisclosed bid-ask differential and markups by selling
      broker-dealers; and
·
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 consequential
      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.
Shares
eligible for future sale by our current stockholders may adversely affect our
stock price.
To date,
we have had a very limited trading volume in our common stock.  As
long as this condition continues, the sale of a significant number of shares of
common stock at any particular time could be difficult to achieve at the market
prices prevailing immediately before such shares are offered.  In
addition, sales of substantial amounts of common stock, including shares issued
upon the exercise of outstanding options and warrants, under Securities and
Exchange Commission Rule 144 or otherwise could adversely affect the prevailing
market price of our common stock and could impair our ability to raise capital
at that time through the sale of our securities.
13
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS.
This
prospectus contains forward-looking statements about Crystal Research business,
financial condition, and prospects that reflect Crystal Research management's
assumptions and beliefs based on information currently available. Crystal
Research can give no assurance that the expectations indicated by such
forward-looking statements will be realized. If any of Crystal Research
assumptions should prove incorrect, or if any of the risks and uncertainties
underlying such expectations should materialize, the actual results may differ
materially from those indicated by the forward-looking statements.
The key
factors that are not within Crystal Research's control and that may have a
direct bearing on operating results include, but are not limited to, acceptance
of the proposed advertising monitors that Crystal Research expects to market,
Crystal Research's ability to establish a customer base, managements' ability to
raise capital in the future, the retention of key employees and changes in the
regulation of the industry in which Crystal Research functions.
There may
be other risks and circumstances that management may be unable to predict to
sustain operations. When used in this prospectus, words such as, "believes,"
"expects," "intends," "plans," "anticipates," "estimates" and similar
expressions are intended to identify and qualify forward-looking statements,
although there may be certain forward-looking statements not accompanied by such
expressions.
USE
OF PROCEEDS
The
Registrant shall not receive any part of the proceeds from the registration of
the 11,770,270 common shares and therefore there is no Use of
Proceeds.
DETERMINATION
OF OFFERING PRICE
The
offering price of the common stock has been arbitrarily determined and bears no
relationship to any objective criterion of value. The price does not bear any
relationship to Crystal Research's assets, book value, historical earnings, or
net worth. In determining the offering price, management considered such factors
as the prospects, if any, for similar companies, anticipated results of
operations, present financial resources and the likelihood of acceptance of this
offering.  Accordingly, the offering price should not be considered an
indication of the actual value of our securities.
DILUTION
OF THE PRICE YOU PAY FOR YOUR SHARES
"Dilution"
represents the difference between the offering price of the shares of common
stock and the net book value per share of common stock immediately after
completion of the offering. "Net Tangible Book Value" is the amount that results
from subtracting total liabilities and intangible assets from total assets. In
this offering, the level of dilution is increased as a result of the relatively
low book value of Crystal Research's issued and outstanding stock. This is due
in part because of the common stock issued to the Crystal Research shareholders,
officers, directors, and employees totaling 12,327,449 shares at par value
$0.001 per share. Please refer to the section titled "Certain Transactions",
herein, for more information.  Registrant is seeking to register
11,770,270 common shares at a price of $0.001 per share.  No new
shares are being registered.
PLAN
OF DISTRIBUTION
OFFERING
WILL BE SOLD BY OUR OFFICERS AND DIRECTOR
This is a
self-underwritten offering.  This Prospectus is part of a Prospectus
that permits our officer and directors to sell the Shares directly to the
public, with no commission or other remuneration payable to him for any Shares
that are sold by him.  There are no plans or arrangements to enter
into any contracts or agreements to sell the Shares with a broker or
dealer.  Kiril A. Pandelisev, our officer and director, will see the
Shares and intend to offer them to friends, family members and business
acquaintances.  In offering the securities on our behalf, they will
rely on the safe harbor from broker dealer registration set out in Rule 3a4-1
under the Securities Exchange Act of 1934.
14
PLAN OF DISTRIBUTION
-
continued
OFFERING WILL BE SOLD BY
OUR OFFICERS AND DIRECTORS -
continued
They will
register as a broker-dealer pursuant to Section 15 of the Securities Exchange
Act of 1934, in reliance upon Rule 3a4-1, which sets forth those conditions
under which a person associated with an Issuer may participate in the offering
of the Issuer's securities and not be deemed to be a broker-dealer.
a.
Our
      officers and directors are not subject to a statutory disqualification, as
      that term
is
      defined in Section 3(a)(39) of the Act, at the time of their
      participation; and
b.
Our
      officers and directors will not be compensated in connection with
      their
participation
      by the payment of commissions or other remuneration based either
directly
      or indirectly on transactions in securities; and
c.
Our
      officers and directors are not, nor will they be at the time of their
      participation
in
      the offering, an associated person of a broker-dealer; and
d.
Our
      officers and directors meet the conditions of paragraph (a)(4)(ii) of Rule
      3a4-1
of
      the Exchange Act, in that they (A) primarily perform, or intend primarily
      to
perform
      at the end of the offering, substantial duties for or on behalf of our
company,
      other than in connection with transactions in securities; and (B) are not
a
      broker or dealer, or been associated person of a broker or dealer, within
the
      preceding twelve months; and (C) has not participated in selling and
      offering
securities
      for any Issuer more than once every twelve months other than in
reliance
      on Paragraphs (a)(4)(i)  and (a)(4)(iii).
Our
officers, directors, control persons and affiliates of same do not intend to
purchase any shares in this offering.
TERMS
OF THE OFFERING
The
Registrant intends to register 11,770,270 common shares at the fixed price of
$.001 per share and will not receive any funds from the offering.
DEPOSIT
OF OFFERING PROCEEDS
The
Company is receiving no funds from this offering.
PROCEDURES
FOR AND REQUIREMENTS FOR SUBSCRIBING
There are
no procedures or requirements for subscription as the Company is registering
already issued and outstanding common shares.
DESCRIPTION
OF SECURITIES
COMMON
STOCK
The
Company is authorized to issue 450,000,000 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 $0.001 per share. As of December 31, 2007, there were 12,327,449 shares
of common stock were issued and outstanding, and no shares of preferred
stock.
Each
outstanding share of common stock is entitled to one vote, either in person or
by proxy, on all matters that may be voted upon by the owners thereof at
meetings of the stockholders.  Holders of our common
stock
15
DESCRIPTION OF SECURITIES
-
continued
(i)
have equal ratable
      rights to dividends from funds legally available therefore, if declared by
      our Board of Directors,
(ii)
are
      entitled to share ratably in all our assets available for distribution to
      holders of common stock upon our liquidation, dissolution or winding
      up;
(iii)
do
      not have preemptive, subscription or conversion rights or redemption or
      sinking fund provisions; and
(iv)
are
      entitled to one non-cumulative vote per share on all matters on which
      stockholders may vote at all meetings of our
  stockholders.
The
holders of shares of our common stock do not have cumulative voting rights,
which means that the holders of more than fifty percent (50%) of outstanding
shares voting for the election of directors can elect all of our directors if
they so choose and, in such event, the holders of the remaining shares will not
be able to elect any of our directors.
All of
the Company's outstanding shares of common stock are validly issued, fully paid
and non-assessable.  Integrity Stock Transfer, Inc. serves as transfer
agent for the common stock.
NON-CUMULATIVE
VOTING
Holders
of shares of our common stock do not have cumulative voting rights, which means
that the holders of more than 50% of the outstanding shares, voting for the
election of directors, can elect all of the directors to be elected, if they so
choose, and, in such event, the holders of the remaining shares will not be able
to elect any of our directors.  After this offering is completed, the
present stockholders will own the same percentage of our outstanding common
shares as the Company is not registering new shares but merely registering
already issued and outstanding common shares.
CASH
DIVIDENDS
As of the
date of this prospectus, we have not paid any cash dividends to
stockholders.  The declaration of any future cash dividend will be at
the discretion of our Board of Directors and will depend on our earnings, if
any, our capital requirements and financial position, our general economic
conditions, and other pertinent conditions.  It is our present
intention not to pay any cash dividends in the foreseeable future, but rather to
reinvest earnings, if any, in our business operations.
INTEREST
OF NAMED EXPERTS AND COUNSEL
None of
the below described experts or counsel have been hired on a contingent basis and
none of them will receive a direct or indirect interest in the
Company.
Our
audited financial statement for the period from inception to December 31, 2008,
included in this prospectus has been audited by Moore & Associates,
Chartered.  We include the financial statements in reliance on their
report, given upon their authority as experts in accounting and
auditing.  The reviewed financial statements for the 3 months ended
March 31, 2008, prepared by the company are also included in this
prospectus.
The Law
Offices of Joseph L. Pittera, 2214 Torrance Boulevard, Suite 101, Torrance,
California 90501, has passed upon the validity of the shares being offered and
certain other legal matters and is representing us in connection with this
offering.
DESCRIPTION
OF OUR BUSINESS
GENERAL
INFORMATION
CRC
Crystal Research Corporation (the "Company" or the "Registrant") was
incorporated in the State of Nevada on June 9, 2006. The Company is the
successor in interest to CRC Crystal Research Corporation ("Arizona CRC"), which
was incorporated in the State of Arizona on March 22, 1993.  On June
10, 2006, the board of directors of the Company and Arizona CRC approved their
merger in order to redomicile the Arizona CRC in the State of
Nevada.  The redomiciling process was completed by the filing of
Articles of Merger with the Secretary of State of Nevada on September 20, 2006
and with the Secretary of State of Arizona on September 21, 2006.  The
Company was formed by Dr. Kiril Pandelisev to commercialize patents for new
technology and new crystal growing processes in the manufacture Crystals and new
methods and technology for various crystals and Crystal Products. The technology
encompasses a new crystal grower design, new crystal growing processes, and new
technology for fabrication of various crystals and more sensitive Crystal and
other Products. Management believes that the new technology allows the Company
to manufacture Crystal Products faster, less expensively, and at a higher
quality level than that which current industry methods provide.
16
DESCRIPTION OF OUR
BUSINESS
-
continued
The
Company has a non-exclusive license to all technology owned by Single Crystal
Technologies, Inc. ("SCT"), which is owned by Dr. Kiril A.
Pandelisev.  Dr. Pandelisev is the Company's sole officer and
director. The licensed technology includes patents, whether approved, pending or
in process of filing, other contractual agreements, and technical measures
relating to the manufacture of Crystals, Crystal Products and ultra pure
materials and products made from them.  The Company plans to raise
capital to fund the development of initial manufacturing capabilities to
manufacture Crystals, Crystal Products ultra pure materials and products made
from ultra pure materials and alloys for sale in various industrial markets. The
Company has never produced any Crystal Products or other products for commercial
sale.
INDUSTRY
BACKGROUND
Crystals
are very pure concentrations of elements or compounds that have been melted and
then allowed to solidify in such a fashion that their atomic or molecular
structure forms a crystal lattice.  A distinguishing characteristic of
crystals is that they have a uniform, low energy state as compared to
non-crystal concentrations of the same elements or compounds.  When
certain impurities (or dopants) are intentionally added to a crystal, the
properties of the crystal are altered.  Dopants can be added while the
crystal is grown and/or during the processing of the crystal into a finished
product.  One significant alteration is that, with certain impurities,
the crystal can be made to react to electromagnetic waves, and the reaction can
be detected with detection devices.  In addition, impurities at
certain concentrations can alter the temperature at which the crystal will react
to electromagnetic wages.  By measuring the strength of the reaction
to electromagnetic waves, it is possible to measure features of an item or
process that is emitting the electromagnetic waves.
The
effectiveness and quality of a crystal is dependent on the purity of the element
or compound used for the crystal, and the number of flaws in the crystal lattice
structure, which is determined by the crystal growth process. Optical
transmission, scintillation properties and heat tolerance also depend on the
uniformity of a crystal, as well as the amount and uniformity of distributions
of dopants within the crystal.  For instance, sodium iodide (NaI) in
its pure state can detect gamma rays only at very low temperatures. By adding a
small amount of Thallium metal to the crystal (about 0.01%), the crystal can
detect gamma rays or nuclear particles at much higher temperatures. Sodium
iodide detectors used in the medical imaging need only work at room temperature,
while sodium iodide detectors used in energy exploration operate can be made to
work in temperatures as high as 200
o
C by
altering the concentrations of Thallium metal added as a dopant.
A wide
variety of commercial and industrial applications have been developed to take
advantage of the properties of crystals.  For example:
Medial Imaging
:  In
medical imaging applications (i.e., a CAT scan), sodium iodide crystals are
shaped into plates and placed around a patient that has been injected with
radioactive tracer material. The gamma rays emitted from the patient enter the
crystal plates and cause a scintillation event, or flash of light, when they
strike a Thallium atom which is used as the dopant.  A light sensor,
such as photo multiplier tube (PMT), detects the scintillation events, converts
each scintillation event into an electrical pulse and assigns coordinates to the
scintillation event. Special electronics amplify these signals and analyze
billions of events per second. The result of the analysis is the image of the
organ that is scanned. Since healthy tissue absorbs the injected radioactive
material differently than cancerous tissue, a radiologist can detect the
cancerous material as darker or brighter material (depending on the radioactive
material injected). SCT has developed technology that it believes can make the
crystals at lower cost and more sensitive, which will enable more accurate
diagnosis of the patient.
17
DESCRIPTION OF OUR
BUSINESS
-
continued
Petroleum
Exploration
:  When drilling for oil or gas, it is important to
know the geological formations which are being penetrated. By adding a
scintillation crystal to the drilling assembly, a geologist on the surface can
be provided with that information. Oil well surveys are conducted by injecting
small traces of radioactive materials into wells under high steam pressure.
Gamma rays emitted from the walls of the well and detected by the crystal can be
analyzed and interpreted to show the composition of the geological formation in
which the crystal is located and whether it contains hydrocarbons. This
measurement is called oil well logging and is often referred to as "measured
while drilling." When the driller encounters a potential producing zone, a
geologist can use the crystal measurements to assess how much oil is present in
the zone and determine whether to stop drilling or continue drilling in search
for a more productive zone.  SCT's patents provide technology for more
sensitive soil and hydrocarbon detection and can sustain rougher, hotter
environments without being damaged.
Homeland
Security
:  In homeland security applications, crystal detection
devices are commonly used in airports, courthouses, government buildings,
nuclear plants and other sensitive areas to for scanning people, luggage and
shipping containers for weapons and "dirty bomb" materials.
Bridgman-Stockbarger
Method of Crystal Production
The
predominant method of crystal production for industrial uses is the
Bridgman-Stockbarger Method, which was perfected in the 1930's.  Under
the Bridgman Stockbarger Method, a crucible is filled with particulate raw
materials and melted at a high temperature.  The melted material is
then allowed to solidify by slowly lowering it into a cooling section, which
cools the bottom of the crucible.  The entire crystal is formed by
slowly cooling the entire crucible from the bottom to the
top.  Particularly with respect to non-metallic crystals, which are
characterized by poor heat conductivity, the Bridgman-Stockbarger Method suffers
from the following manufacturing problems:
·
The
      yield for marketable crystals is low, and for large crystals can be as low
      as 1-3%;
·
There
      are limitations on the maximum possible size of the
    crystals;
·
The
      growth rate of the crystals is low, thus inhibiting volume production and
      increasing crystal production time;
·
There
      is significant impurity variation within crystals. Often, less than 10% of
      the crystal produced is within the desired
  range;
·
The
      capital investment for mass production is
large.
The
Bridgeman-Stockbarger Method is inefficient and costly, particularly for
non-metallic crystals that are based upon elements or compounds with low heat
conductivity.  The Bridgman-Stockbarger Method requires special
melting and annealing stations, expensive platinum crucibles, heavy material
handling equipment and considerable personnel. Conventional Bridgman-Stockbarger
furnaces can cost over one million dollars to build. Presently, crystals are
taken out of furnaces when they are over 900°F, exposing personnel to unhealthy
concentrations of iodine and thallium iodide vapors. The crystals produced are
subject to thermal induced stress damage, production yields of 70% or less, and
size limited to a maximum of 30 inches in diagonal dimension.
18
DESCRIPTION OF OUR
BUSINESS
-
continued
PRINCIPAL
PRODUCTS AND THEIR MARKETS
The uses
for CRC's Crystal Products are numerous. For example:
·
the
      medical imaging industry uses NaI crystal plates to transform invisible
      gamma rays into visible light, which can be converted into an image of the
      object examined;
·
bottlers
      use NaI crystal detectors to prevent overfilling of aluminum
      cans;
·
automobile
      manufacturers use crystal detectors to control the paint spraying process
      to guarantee proper color mixing;
·
steel
      manufacturers use NaI crystal detectors to adjust gigantic rollers to
      insure uniform thickness of rolled
steel;
·
nuclear
      power plants use thousands of small NaI crystal detectors to measure
      radiation levels throughout the plant and control any possible leakage of
      radioactive material that might threaten the general
      population;
·
Engine
      manufacturers use scintillation technology to ensure proper engine wall
      thickness, alloy uniformity and crack free
  parts;
·
Airports
      use crystals in personal and baggage scanners for detection of controlled
      substances, explosives and radioactive
material;
·
Borders
      and ports use scintillation based detectors for detection of controlled
      substances, explosives and radioactive
material.
Various
federal agencies, including the Homeland Security Agency, the Environmental
Protection Agency and the Nuclear Regulatory Commission, use crystal detectors
for qualitative and quantitative composition assessment of nuclear waste. They
are effective in providing for the safety of the nuclear waste depositories by
detecting possible leaks from the containers caused by chemical reactions and
the effects of nuclear particles bombardment. Crystal detectors are also used to
maintain inventory records of nuclear stockpiles and to impose sophisticated
security protection measures for these materials, especially those materials
used for military applications.
The
following table sets forth certain crystal types, their applications, and market
information:
Crystal
      Type/High Tech Product
Application
Market
      Information
Sodium
      Iodide (NaI)
Homeland
      Security; Borders, Ports, and inland applications.
Major
      Customers: US Government, Lockheed Martin, General Electric,
      Others.
Current
      Market Size:  Approximately $362 Billion
Current
      Producer:  Saint Gobain, Foreign Corporation.
Sodium
      Iodide (NaI)
Oil
      Well Logging Detectors
Major
      Customers: Schlumberger, Halliburton, Baker Hughes
Current
      Market Size:  Approximately $100 Million
Current
      Producer:  Saint Gobain, Foreign Corporation.
Sodium
      Iodide (NaI)
Medical
      Imaging
Major
      Customers: GE, ADAC, Siemens, Toshiba
Current
      Market Size: Over $400 Million
Current
      Producer: Saint Gobain, Foreign Corporation.
Cesium
      Iodide
High
      Energy Physics
Major
      Customers: U.S. Nat'l Research Facilities
Current
      Market Size: Approximately Over >$100 Million
Current
      Producer:  Saint Gobain, Foreign Corporation, and several
      Chinese Government owned entities.
Calcium
      Fluoride (CaF
2
)
Semiconductor
      Equipment manufacturing, Space Applications, Consumer optical
      products
Major
      Customers: Nikon, Canon, ASML, Zeiss, US Government.
Current
      Market Size: Over $1 Billion(per Deutche Bank report)
Current
      Producers: Canon, Nikon, Corning, Shott Lithotech
19
DESCRIPTION OF OUR
BUSINESS
-
continued
Barium
      Fluoride (BaF
2
);
      Strontium Fluoride (SrF
2
)
Airborne
      Laser Defense Systems; Medical Imaging; Semiconductor Equipment
      Manufacturing
Major
      Customers: Lockheed Martin, Northrop Grumman, Boeing, GE,
      Phillips.
Current
      Market Size: Over $1 Billion
Current
      Producers: Korth Kristale (Germany), Russian and Chinese Government
      Companies.
Metal
      and Metal  Alloys
Jet
      Engine Turbine Blades, Space applications
Major
      customers: Honeywell International, GE, Rolls Royce
Current
      Market Size: Over $1 Billion
Major
      producers: No major producers,
Silicon/Silicon
      Alloy products
Semiconductor
      Manufacturing, Chemical Industry, Space Applications
Major
      customers: Intel, Freescale, TI, Sony, AMD, Others.
Current
      Market Size: Over $5 Billion
Major
      producers: Toshiba, Norton, Kyocera,
High
      Purity Quartz & Quartz products
Semiconductor
      manufacturing, Fiber Optic Industry; Food industry
Major
      customers: Intel, Freescale, Sony, AMD, Others
Current
      Market Size: Over $1 Billion
Major
      producers Corning, Asahi, Shott Glass
Except
for the Deutche Bank report and US Government reports, the market size estimates
are based on published data that management could find or management estimates,
but is not based on a formal CRC commissioned market study.
STRATEGY
Management
believes its innovative, manufacturing process will significantly reduce
production costs of certain non-metallic crystals; reduce the capital
expenditures needed to finance a manufacturing facility; more than triple the
rate of crystal production; provide a product yield ranging from approximately
80 to 90% and produce higher quality crystals and crystal products.
Initially,
the Company will focus on production of NaI and other scintillation Crystals and
Crystal Products for Homeland Security applications and for Energy Exploration
applications. Currently, the market for NaI Crystal Products for oil well
drilling and nuclear detection applications is serviced solely by Saint Gobain
and its subsidiary, Harshaw-Bicron Corporation. Management believes that many
NaI and other scintillation Crystals and Crystal Products customers will welcome
a new supplier that can supply higher quality products, without long and
uncertain delivery times and constant price increases.
With
respect to the Homeland Security market, the Company is in negotiations to be
the sodium iodide crystal supplier for scintillation crystals and nuclear
detection devices incorporating the crystal detectors that would be purchased
directly or indirectly by entities that need such devices, such as cities,
states, ports, mass transit authorities, and military
installations.  With the government contracts, the Company plans to
develop a Nuclear/Radioactive Isotope Detection System that is based on
radiation detected by sodium iodide and other scintillation crystals and
detectors . Available software algorithms allow the system to distinguish threat
isotopes (e.g., cobalt-60, cesium-137, iridium-192, and strontium-90) from
isotopes naturally occurring in household items, such as fish, bananas, and
ceramic tile, or those used for medical purposes (e.g., potassium-40,
thorium-232, and technetium-99m).
The
system also measures background radiation at predetermined intervals against a
standard low-level radiation source within the detector unit to constantly
benchmark naturally occurring radiation levels. This will eliminate the
possibility of false positive alarms. The sensor system has centralized
detection and monitoring capabilities for identifying both the type and amount
of radioactive isotopes.
20
DESCRIPTION OF OUR
BUSINESS
-
continued
The
Company, directly or indirectly, plans to deploy system to work seamlessly
without disrupting daily operations and workflow with nuisance false-positives.
Alarms occur only when a valid threat is detected through the presence of a
threat isotope or an unusually large presence of a non-threat
isotope.  For example, the system could be mounted under the spreader
bars of the cranes that unload cargo containers, so that the system will be able
to silently monitor each container as it is unloaded without any additional
steps by port workers.  The system would also be mounted in U-Frames,
which could be placed at entrances to ports, government and business complexes,
airports, train platforms, schools, toll booths, and special public events to
silently monitor vehicles and pedestrian traffic as the pass through the
U-Frame.  Finally, the Company plans for portable model to use to
verify positive readings generated by the stationary models.
With
respect to the Energy Exploration market, the Company is working with
consultants to become a crystal supplier to the major oilfield services
companies, who are currently the suppliers of oil well logging detectors to the
oil and gas exploration industry.
After the
Company has entered the homeland security and energy exploration markets, the
Company intends to enter into the gamma camera market, the optical industry for
semiconductor process applications and air-borne laser defense applications, the
development of high purity materials for support of the crystal growth process
and for the fabrication of chip processing chambers.
DISTRIBUTION
METHODS
We plan
to offer our products to major customers having a need for products with our
technology incorporated therein and to serve as sub-contractor to many US
Government contractors that sell various security and other systems to the US
Government and Military but have no in-house manufacturing of crystals and
crystal detectors.
STATUS OF
ANY PUBLICLY ANNOUNCED NEW PRODUCTS
CRC is
basing its technology on substantial number of patents and related intellectual
property that present a significant opportunity for future sales growth and
profitability.
The
patents in USA and elsewhere could lead to products for the following markets
(to name few, and not in any specific order):
1.
Ultra
      pure materials – high purity metals and alloys for direct or indirect use
      in the semiconductor, medical, energy exploration, military, space, and
      other leading edge industries.
2.
Crystals
      and crystal products for the semiconductor industry, optics industry,
      medical applications, military and defense applications, homeland
      security, aerospace industry, deep space applications, and other
      industries.
3.
Semiconductor
      manufacturing system components – high purity, high temperature silicon
      based wafer processing chamber
components.
4.
Equipment
      and Process for production of ultra-pure materials for semiconductor,
      space and military applications.
5.
All
      silicon CVD equipment and
processes.
6.
Equipment
      and process for crystal growth for the semiconductor industry, space
      applications and many defense industry
products.
7.
Equipment
      and single crystals for Medical Imaging System
  Assemblies.
8.
Energy
      Exploration drilling sensor assemblies and drilling tools employing
      them.
9.
Airport
      security screening systems
10.
Nuclear
      material radiation sensing and inspecting
  systems.
11.
Fiber
      optic products – fused silica grain with desired size and purity,
      preforms, and near-net-shape fused silica
  products.
12.
Equipment
      and Process for fiber optic
preforms.
13.
Fused
      silica processes
14.
Sensors
      and systems for industrial safety and
control.
21
DESCRIPTION OF OUR
BUSINESS
-
continued
In particular,
the Pandelisev patents cover:
·
A
      novel approach for full body scanning
technology.
·
A
      novel approach for full body scanning
  technology.
·
The
      growth of large, high purity crystals of several important compounds such
      as sodium iodide, cesium iodide, calcium fluoride, barium fluoride – all
      doped and un-doped materials (by adding or subtracting specific
      impurities).
·
The
      process and technology for purification of materials and materials
      mixtures.
·
The
      process and technology to manufacture components for the semiconductor
      industry.
·
The
      process and technology to manufacture fiber optic enhanced sensor
      technology for energy applications (MWD and LWD included), homeland
      security, nuclear stockpile storage, airport security and other
      applications.
The customers
for many of our
technology made products are many large corporations such as
Siemens, GE, Lockheed Martin,
Honeywell, Boeing, Northrop Grumman, Intel, IBM, Hitachi, Toshiba,
Schlumberger
,  to name a few. Once the prototypes are completed
we will revisit our discussions with them regarding the sale of our products and
services, as well as many joint venture programs.  We are in
discussions regarding various needs of our products in the Homeland security,
defense and many military applications in general. Having working prototypes
will reactivate many of these discussions and initiate our entry to those multi
billion dollar markets.
COMPETITION
The
competitive environment in the sodium iodide scintillation crystal detector
market is quite unique in today's global economy, in that a
single
supplier dominates the world market.
This supplier, St. Gobain
of France ($15+ Billion Company), has
over 90%
share
of the market. The two largest other suppliers, Russian Imports and
Horiba Instruments, are very small, with a very limited product offering. It is
our understanding that all known competitors utilize the outdated
Bridgeman-Stockbarger (developed in the 1930's) crystal growth
technology.
It
appears that all current suppliers have failed to keep pace with their
customers' needs in the areas of product performance, delivery, reliability and
customer service.  Their detector products are often described as
being of inconsistent quality, with long and erratic delivery times. These
characteristics coupled with an aging technology that cannot provide cost
effective, high performance scintillation crystal detectors lead to a
significant
opportunity for CRC.
In
addition to the competition described above, there are competing technologies
that present a choice for the user of gamma radiation detectors. Some of these
technologies include rare earth scintillators, plastic scintillators and
ionization tubes.  Detectors based on these technologies have a
relatively narrow, limited use in specialized applications.  They do
not currently pose a threat to erode or replace the alkali halide detector
market due to many performance price and/or performance
limitations.
SOURCES
AND AVAILABILITY OF PRODUCTS
There are
numerous applications for the technology of the Registrant.  As
discussed in the Description of Business section of this prospectus we
anticipate offering many different products based on our technology to a number
of major customers involved in various segments of the industrial, and national
security sectors of the economy.
DEPENDENCE
ON ONE OR A FEW MAJOR CUSTOMERS
The
energy exploration is dominated by very large original equipment
manufacturers.  The nuclear research customers consist of the national
and international Laboratories, while the homeland security detector segment is
made up of the US Government and numerous relatively small specialty equipment
manufacturers.
22
DESCRIPTION OF OUR
BUSINESS
-
continued
The petroleum exploration
segment led by Halliburton (with Dresser Industries), and followed by
Schlumberger, and Baker Hughes Inteq (including the acquisition of Western
Atlas) represents over half of the market. Medium size companies (Tensor, now
part of Honeywell, Computalog, etc.) and numerous small companies that provide
drilling and logging services to the exploration community represent the
remaining half.
Some time
ago
Halliburton
has provided
CRC
with the
specification requirements for  some of their
measurement-while-drilling (MWD) crystal detector and has agreed to provide the
use of their laboratory for the characterization and qualification of CRC's
detectors.
This MWD detector will be among CRC's initial
products.  CRC is currently opening a similar
dialogue
with other major
users.
The nuclear research and homeland
security
segment is comprised of the national and international
Laboratories, while the homeland security detector segment is made up of the US
Government and numerous relatively small specialty equipment manufacturers.
These potential customers use standard general-purpose detectors as well as
one-of-a-kind custom designed, complex detector
configurations.  Portions of these customers are resellers of crystal
detectors.  CRC continues its efforts to establish proper
dialogue
with these customers
regarding designing CRC's detectors into their instruments.
CRC will
"target"
major
customers
within each industry and work with these customers to
create
value
for them through the
improved
performance and reliability
of our crystal detectors. Our focus will be
on solving customers' problems and creating value by providing detectors that
offer improved performance and reliability, and creating new products for their
new and more demanding applications.  We will also be able to be
more
responsive to customers
' needs due to our shorter manufacturing time and
customer-focused management.
PATENTS
AND TRADEMARKS
The
Company has entered into a non-exclusive license of technology from Single
Crystal Technologies, Inc. ("SCT"), which is owned by Dr.
Pandelisev.  SCT holds patents obtained by Dr. Pandelisev pertaining
to a new method of growing crystals, purifying base compounds, introducing
dopants and incorporating finished crystals into industrial
applications.  Among the patents issued to Dr. Pandelisev and licensed
to the Company by SCT are:
Patents
Issued
v
6,402,840  Crystal
      growth employing embedded purification
chamber
v
6,352,588  Material
      Purification
v
6,334,899  Continuous
      crystal plate growth apparatus
v
6,153,011  Continuous
      crystal plate growth process and
apparatus
v
6,071,339  Continuous
      crystal plate growth process and
apparatus
v
5,993,540  Continuous
      crystal plate growth process and
apparatus
v
5,753,918  Superior
      performance subassembly for scintillation detection and detectors
      employing the subassembly
v
5,614,721  Modular
      gamma camera plate assembly with enhanced energy detection  and
      resolution
v
5,548,116  Long
      life oil well logging assembly
v
5,521,385  Long
      life gamma camera plate assembly with improved reflector
      system
v
5,229,613  Extended
      lifetime scintillation camera plate
assembly
v
5,178,719  Continuous
      refill crystal growth method
v
6,743,294
      Continuous crystal plate growth process and
  apparatus
v
6,800,137  Binary
      and ternary crystal purification and growth method and
      apparatus
23
DESCRIPTION OF OUR
BUSINESS
-
continued
In
addition, the SCT and Dr. Pandelisev have the following pending patents that
relating the manufacture of Crystals and the development of Crystal
Products:
Publication (Pending
Application)
v
20020117625
      Fiber optic enhanced scintillation
detector
v
20020092465
      Binary and ternary crystal purification and growth method and
      apparatus
v
20020083741
      Hot substrate deposition of fused
silica
v
20020083740
      Process and apparatus for production of silica grain having desired
      properties and their fiber optic and semiconductor
    application
v
20020083739
      Hot substrate deposition fiber optic performs and perform components
      process and apparatus
v
20020062784
      Material purification
v
20020053317
      Material purification
v
20020040675
      Continuous crystal plate growth process and
  apparatus
Global
Filings
Patents
in U.S., Europe and Asia with an impressive 100 supporting claims
NEED FOR
ANY GOVERNMENT APPROVAL OR PRINCIPAL PRODUCTS
We do not
require any government approval for our services.
GOVERNMENT
AND INDUSTRY REGULATION
We will
be subject to federal laws and regulations that relate directly or indirectly to
our operations including securities laws.  We will also be subject to
common business and tax rules and regulations pertaining to the operation of our
business
RESEARCH
AND DEVELOPMENT ACTIVITIES
Directly
or indirectly through SCT the Company continues to keep abreast of the
technology developments through new patent filings, in house technology
development, applications for various research grants, etc.
24
DESCRIPTION OF OUR
BUSINESS
-
continued
ENVIRONMENTAL
LAWS
The
materials supplied to manufacture the Crystal Products, the crystal
manufacturing process, or refuse produced by the crystal manufacturing process
are subject to any federal or state environmental regulations. The refuse
discarded after the planned production of Crystals and Crystal Products is not
classified as a "hazardous substance" under either federal or state law, and the
airborne, chemicals emitted from the production process do not exceed federal or
state ambient air quality standards.
EMPLOYEES
AND EMPLOYMENT AGREEMENTS
On order
to achieve our planned growth as set in our business plan the company has
executed three employment agreements as described in the 8-K being concurrently
filed. Dr. Kiril A. Pandelisev, serves as Chief Executive Officer and Director,
Gen. Charles Searock serves as President and Director and Don Meyers serves as
Chief financial officer.  The contracts are effective May 1,
2008  The company is in contractual negotiations with 5 other
individuals that will constitute the initial management and technical team for
CRC.
On June
21, 2007 the following individuals were elected to the Board of Directors of the
Company as Directors: Charlie Searock, Don Jackson, and Shariar
Motakef.  On January 31, 2008 the company added Professor Alexandar
Ostrogorsky from Renselaer Polytechnic Institute in New York to the Board of
Directors. The Directors have also agreed to allocate a portion of their time to
the Company's activities. As reported all directors are compensated by common
stock for their services.
DESCRIPTION
OF PROPERTY
CRC
Crystal Research Corporation has administrative offices located at 4952 East
Encanto Street, Mesa, Arizona 85205.  Kiril A. Pandelisev currently
contributes to payment of the rental obligation at the 4952 East Encanto Street,
Mesa, Arizona 85205 property which consists of 500 square feet of
space.  The equipment of the Company is located in a storage facility
whose monthly rental consists of $400 per month for 400 square
feet.
LEGAL
PROCEEDINGS
We are
not involved in any pending legal proceeding nor are we aware of any pending or
threatened litigation against us.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
No public
market currently exists for shares of our common stock.  Concurrently
with the completion of this offering, we are applying to have our common stock
listed for quotation on the Over-the-Counter Bulletin Board.
PENNY
STOCK RULES
The
Securities and Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in penny
stocks.  Penny stocks are generally equity securities with a price of
less than $5.00 (other than securities registered on certain national securities
exchanges or quoted on the Nasdaq system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system).
A
purchaser is purchasing penny stock which limits the ability to sell the
stock.  The shares offered by this prospectus constitute penny stock
under the Securities and Exchange Act.  The shares will remain penny
stocks for the foreseeable future.  The classification of penny stock
makes it more difficult for a broker-dealer to sell the stock into a secondary
market, which makes it more difficult for a purchaser to liquidate his/her
investment.  Any broker-dealer engaged by the purchaser for the
purpose of selling his or her shares in us will be subject to Rules 15g-1
through 15g-10 of the Securities and Exchange Act.  Rather than
creating a need to comply with those rules, some broker-dealers will refuse to
attempt to sell penny stock.
25
MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS -
continued
The penny
stock rules require a broker-dealer, prior to a transaction in a penny stock not
otherwise exempt from those rules, to deliver a standardized risk disclosure
document, which:
-           Contains
a description of the nature and level of risk in the market for penny stock
inboth Public offerings and secondary trading;
-           Contains
a description of the broker's or dealer's duties to the customer and of the
rightsand remedies available to the customer with respect to a violation of such
duties or otherrequirements of the Securities Act of 1934, as
amended;
-           Contains
a brief, clear, narrative description of a dealer market, including "bid" and
"ask"price for the penny stock and the significance of the spread between the
bid and ask price;
-           Contains
a toll-free number for inquiries on disciplinary actions;
-           Defines
significant terms in the disclosure document or in the conduct of trading
pennystocks; and
-           Contains
such other information and is in such form (including language, type, size
andformat) as the Securities and Exchange Commission shall require by rule or
regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, to the customer:
-           The
bid and offer quotations for the penny stock;
-           The
compensation of the broker-dealer and its salesperson in the
transaction;
-           The
number of shares to which such bid and ask prices apply, or other
comparableinformation relating to the depth and liquidity of the market for such
stock; and
-           Monthly
account statements showing the market value of each penny stock held in
thecustomer's account.
In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgement of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.  These disclosure requirements will have the effect of
reducing the trading activity in the secondary market for our stock because it
will be subject to these penny stock rules.  Therefore, stockholders
may have difficulty selling their securities.
REGULATION
M
Our
officer and director, who will offer and sell the Shares, is aware that he is
required to comply with the provisions of Regulation M promulgated under the
Securities Exchange Act of 1934, as amended.  With certain exceptions,
Regulation M precludes the officers and directors, sales agents, any
broker-dealer or other person who participate in the distribution of shares in
this offering from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security which is the subject of the distribution
until the entire distribution is complete.
REPORTS
We are
subject to certain reporting requirements and will furnish annual financial
reports to our stockholders, certified by our independent accountants, and will
furnish un-audited quarterly financial reports in our quarterly reports filed
electronically with the SEC.  All reports and information filed by us
can be found at the SEC website,
www.sec.gov
.
26
MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS -
continued
STOCK
TRANSFER AGENT
Our stock
transfer agent is Pacific Stock Transfer Company, 500 E. Warm Springs Road,
Suite 240, Las Vegas, Nevada 89119, Telephone (702) 361-3033 Extension 106,
Facsimile (702) 433-1979, and website
www.pacificstocktransfer.com.
FINANCIAL
STATEMENTS
Our
fiscal year end is December 31.  We intend to provide financial
statements audited by an Independent Registered Accounting Firm to our
shareholders in our annual reports.  The audited financial statements
for the period from the date of incorporation, June 9, 2006, to December 31,
2007 and the reviewed financials for the 3 months ended March 31,
2008 start on page F-1.
MANAGEMENT'S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We have
generated no revenue since inception and have incurred total losses of $919,453
through December 31, 2007.
The
following table provides selected financial data about our company for the
period from the date of incorporation through December 31, 2007.  For
detailed financial information, see the financial statements included in this
prospectus.
Balance Sheet
      Data
:
12/31/2007
Cash
$
500
Total
      assets
$
500
Total
      liabilities
$
22,306
Shareholders'
      equity
$
(21,806
)
Other
than the shares being registered by this prospectus, no other source of capital
has been identified or sought.
PLAN OF
OPERATION
GOING
CONCERN
In our
audited financial statements as of December 31, 2007 we were issued an opinion
by our auditors that raised substantial doubt about our ability to continue as a
going concern based on our current financial position.
CRITICAL
ACCOUNTING POLICIES
A.
BASIS
      OF ACCOUNTING
The
statements were prepared following generally accepted accounting principles of
the United States of America consistently applied.
B.
BASIC
      EARNINGS PER SHARE
The basic
earnings (loss) per share is calculated by dividing the Company's net income
available to common shareholders by the weighted average number of common shares
during the year. The diluted earnings (loss) per share is calculated by dividing
the Company's net income (loss) available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity.
27
MANAGEMENT'S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION -
continued
C.
CASH
      EQUIVALENTS
The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
D.
USE
      OF ESTIMATES AND ASSUMPTIONS
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 from those
estimates.
E.
INCOME
      TAXES
The
Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes.
SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.  The total
deferred tax asset is $203,248 as of December 31, 2007 which is calculated by
multiplying a 22% estimated tax rate by the cumulative NOL of $923,853 the total
valuation allowance is a comparable $203,248.
The
provision for income taxes for the period ended December 31, 2007 and 2006
follows:
Year
      Ended
December
      31
2007
2006
Deferred Tax
      Asset
$
12,937
$
28,776
Valuation
      Allowance
(12,937
)
(28,776
)
Current Taxes
      Payable
0.00
0.00
Income Tax
      Expense
$
0.00
$
0.00
Below is
a chart showing the estimated federal net operating losses and the years in
which they will expire.
Year
Amount
Expiration
1994
$
60,292
2014
1995
199,109
2015
1996
125,697
2016
1997
175,534
2017
1998
220,547
2018
1999
154,943
2019
2000
231,985
2020
2001
80,558
2021
2002
16,760
2022
2003
18,063
2023
2004
142,763
2024
2005
(773,675
)
2025
2006
130,799
2026
2007
63,206
2027
Total
$
923,853
28
MANAGEMENT'S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION -
continued
NEW ACCOUNTING
PRONOUNCEMENTS
Below is
a listing of the most recent Statement of Financial Accounting Standards (SFAS)
SFAS 155-157 and their effect on the Company.
Statement No. 155 –
Accounting for Certain Hybrid
Financial Instruments
In
February 2006, the FASB issued SFAS No. 155,
Accounting for Certain Hybrid
Financial Instruments
, which amends SFAS No. 133,
Accounting for Derivatives
Instruments and Hedging Activities
and SFAS No. 140,
Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of
Liabilities
.  SFAS No. 155 amends SFAS No. 133 to narrow the
scope exception for interest-only and principal-only strips on debt instruments
to include only such strips representing rights to receive a specified portion
of the contractual interest or principle cash flows.  SFAS No. 155
also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a
passive derivative financial instrument pertaining to beneficial interests that
itself is a derivative instrument.
Statement No. 156 –
Accounting for Servicing of
Financial Assets
In March
2006, the FASB issued SFAS No. 156,
Accounting for Servicing of
Financial Assets,
which provides an approach to simplify efforts to
obtain hedge-like (offset) accounting.  This Statement amends FASB
Statement No. 140,
Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. The Statement (1) requires an entity
to recognize a servicing asset or servicing liability each time it undertakes an
obligation to service a financial asset by entering into a servicing contract in
certain situations; (2) requires that a separately recognized servicing asset or
servicing liability be initially measured at fair value, if practicable; (3)
permits an entity to choose either the amortization method or the fair value
method for subsequent measurement for each class of separately recognized
servicing assets or servicing liabilities; (4) permits at initial adoption a
one-time reclassification of available-for-sale securities to trading securities
by an entity with recognized servicing rights, provided the securities
reclassified offset the entity's exposure to changes in the fair value of the
servicing assets or liabilities; and (5) requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value
in the balance sheet and additional disclosures for all separately recognized
servicing assets and servicing liabilities. SFAS No. 156 is effective for all
separately recognized servicing assets and liabilities as of the beginning of an
entity's fiscal year that begins after September 15, 2006, with earlier adoption
permitted in certain circumstances. The Statement also describes the manner in
which it should be initially applied.
Statement No. 157
–
Fair Value
Measurements
In
September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
, to
clarify how to measure fair value and to expand disclosures about fair value
measurements.  The expanded disclosures include the extent to which
companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value on earnings and is applicable
whenever other standards require (or permit) assets and liabilities to be
measured at fair value.  SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years.
The
adoption of these new Statements is not expected to have a material effect on
the Company's current financial position, results or operations, or cash
flows.
29
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Listed
below are the directors and executive officers of the Company.
Name
Age
First Year as
    Director
Position
Dr. Kiril A.
      Pandelisev
57
1993
CEO/Director
Charles J.
      Searock
71
2007
President/Director
Don
      Meyers
65
2008
Chief
      Financial Officer
Dr. Don
      Jackson
73
2007
Director
Prof.
      Alexander Ostrogorsky
50
2007
Director
Dr. Shariar
      Motakef
50
2007
Director
The term
of office of each director of the Company ends at the next annual meeting of the
Company's stockholders or when such director's successor is elected and
qualifies.  No date for the next annual meeting of stockholders is
specified in the Company's bylaws or has been fixed by the Board of
Directors.  The term of office of each officer of the Company is as
described in the employment agreements effective May 1, 2008.
Directors
are entitled to reimbursement for expenses in attending meetings but receive no
other compensation for services as directors. Directors who are employees may
receive compensation for services other than as director. No compensation was
paid during the fiscal years ended December 31, 2005 and 2006 to directors for
services in their capacity as director.
BACKGROUND
INFORMATION ABOUT OUR OFFICERS AND DIRECTORS
The
following information sets forth the backgrounds and business experience of the
directors and executive officers with or without contract with the
company.
Dr. Kiril A. Pandelisev,
Chief Executive Officer and Chairman of the Board
Dr. Kiril
A. Pandelisev joined the Company at its inception in 1993.  From 1975
to 1984, Dr. Pandelisev was a member of the faculty of St. Cyril and Methodius
University, Skopje, Macedonia.  From 1979 to 1982, Dr. Pandelisev was
an Exchange Scientist at Arizona State University.  From 1985 to 1988,
Dr. Pandelisev was a Research Analyst at Arizona State
University.  From 1988 to 1990, Dr. Pandelisev was a Research
Physicist at Johnson Matthey Electronics.  In 1991, Dr. Pandelisev was
a Senior Scientist at Horiba Instruments, Inc.,  Since 1991, Dr.
Pandelisev has been employee by various private entities which he owns and
controls, including the Company.  Dr. Pandelisev received a B.Sc.
degree in Applied Physics from St. Cyril and Methodius University, Skopje,
Macedonia, in 1973.  Dr. Pandelisev received an M.Sc. degree in
Physics from St. Cyril and Methodius University in 1976.  Dr.
Pandelisev received a Sc.D degree in Physics from St. Cyril and Methodius
University in 1984.  Dr. Pandelisev is an authority on crystal growth,
and is the author or contributing author of 17 papers on the subject published
in various scientific journals.
30
DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS -
continued
Lt.
Gen. Charles J. Searock Jr., USAF Retired, President
and
Director
Lt. Gen.
Charles J. Searock Jr. retired from active duty military service in 1993 after
almost 37 years in the Air Force and two years in the Army National Guard. He
served most recently as the President of the International Tactical Training
Center in Denison, Texas and left that position on 31 Dec 06.  He was
recently reappointed by the Secretary of the Air Force to the Civil Air Patrol
Board of Governors.
For the
past six years, the general has consulted in aviation and high technology
matters. His background also includes service on the board of directors and as a
volunteer president of the Air Victory Museum. From 1996 to 2001, he was
CEO/president and a member of the board of directors of Dynasil Corp., a
publicly traded high-tech glass manufacturing company. He also spent four years
in the general aviation industry as the Air Victory Museum's original director,
as executive vice president of Aero Development Corp., the owner/operator of the
South Jersey Regional Airport and as president of Royal Air Inc., a charter air
service company he co-founded.
Searock
is a 1976 Army War College graduate who commanded at the squadron, wing, center
and major command levels. He served as a KC-97 pilot, B-52 pilot/instructor
pilot/flight examiner and FB-111 pilot/instructor pilot. He flew 152 B-52 combat
missions during the Vietnam War and has accumulated over 7,000 hours of flying
time. He was assigned to the Pentagon as a member of the air staff, and he
served as Assistant for Plans to the Military Assistant to the President at the
White House. He maintains his currency as a commercial multi-engine
instrument-rated pilot and is a Civil Air Patrol pilot.
A former
member of the National Aviation Hall of Fame Board of Directors, he continues to
serve as a member of its Nominating Committee.  He currently serves on
the Crystal Research Corporation Board of Directors and is a former member of
the New Jersey Governor's Air and Space Medal Nominating Committee. He is also a
member of the Wings Club in New York City, the Air Force Association, the
Aircraft Owners and Pilots Association, the Experimental Aircraft Association,
the Veterans of Foreign Wars and Military Officers Association.
General
Searock graduated from the University of Nebraska, Omaha in 1962 with a BS in
Education and from Central Michigan University with a MBA in 1975.  He
is married for the past 49+ years to Ann Brackeen Searock and they have four
sons and five grandchildren.
Don
Meyers, Chief Financial O
fficer
Mr. Don
D. Meyers brings strong financial background to the Company both with regulatory
compliance and financial management.  For the past five years Mr.
Meyers has specialized in the preparation of GAAP compliant financial statements
for public companies, three years as a partner with a PCAOB registered CPA firm
and two years as the owner of his own firm.  Mr. Meyers received his
Bachelor of Science in Accounting from Arizona State University in December
1984.  Since that time Mr. Meyers spent almost nine years with the
Defense Contract Audit Agency as a senior auditor performing a variety of
financial and compliance audits resulting is multi-million dollar savings to the
Government on new contracts and the recovery of over $10,000,000 returned to the
Government from contracts found to be in violation of the Truth in Negotiations
act.  Mr. Meyers also spent a year as a fraud auditor with the
Department of Justice where his audits resulted in the recovery of funds and the
conviction of individuals responsible for defrauding the Medicare and Medicaid
programs.  Mr. Meyers has also served as an Operations Officer and
Comptroller with both public and private companies.
Mr.
Meyers spent six years un the U.S. Army as an senior accounting specialist where
he was directly responsible for the preparation and management of multi-million
dollar budgets for battalion size organization or larger.  Mr. Meyers
was often cited for his innovations and sound judgment in the management of
funds allowing for high operational readiness even in times of limited
funding.
Dr. Don Jackson
,
Director
From 2002
to the present, Dr. Jackson has been the chairman and chief executive officer of
Findem, Inc.  Prior to joining Findem, Inc., Dr. Jackson held a variety of
officer and managerial positions in technology and engineering-related
companies, including Prodeo Technologies, Inc., Westech Systems, Inc./IPEC,
The Arena Group, Superwave Technologies, Inc., and Microelectronic
Packaging, Inc.  Dr. Jackson is on the Dean's Advisory Board of Fulton
School of Engineering at Arizona State University and serves as an adjunct
physics professor at Embry Riddle Aeronautical University in Prescott, Arizona.
 Dr. Jackson has an AB degree in Physics from William Jewell College, an
M.S. degree in Physics from Iowa State University, and a Ph.D. in Electrical
Engineering from Arizona State University.
31
DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS -
continued
Professor. Alexander
Ostrogorsky, Director
Prof.
Ostrogorsky is with the Mechanical, Aerospace and Nuclear Engineering
Department, Materials Science and Engineering Department, Rensselaer
Polytechnic Institute, in Troy, New York.  Prof. Ostrogorsky received
his B.S. in Mechanical Engineering from University of Belgrade,  M.S.
Nuclear Engineering, Rensselaer Polytechnic Institute and Sc.D. in Mechanical
Engineering from  Massachusetts  Institute of Technology, with Minor
in Nuclear Engineering.  Prior to joining Rensselaer Polytechnic
Institute, he was a Director,  Center for Microgravity and Materials
Research (CMMR) and Professor at the Univ. of Alabama in Huntsville,
Associate Professor at the Mechanical, Aerospace and Mechanics, Rensselaer
Polytechnic Institute and Assistant Professor at the Mechanical Engineering,
Columbia University. Prof Ostrogorsky was a Fulbright Fellow at the Rensselaer
Polytechnic Institute, Nuclear Engineering Dept in 1980-81, and an Alexander von
Humboldt Fellow: Universität Erlangen-Nürnberg, Electronic Materials Lab. In
1991.  Prof. Ostrogorsky is an Associate Editor for the Journal of
Crystal Growth, Member of the Executive Committee at the American Association
for Crystal Growth (AACG); Fellow of the American Society of Mechanical
Engineers (ASME), Associate Fellow at the American Inst. of Aeronautics and
Astronautics (AIAA), and member of many other professional
organizations.  Prof. Ostrogorsky's research encompasses heat and mass
transfer phenomena occurring in solidification/crystal growth, crystals for
gamma ray detectors (semiconductors and scintillators), ternary alloys, and the
design of equipment for biomedical research.
Dr  Shariar
Motakef, Director
Prof.
Motakef is the founder of CAPE Simulations, Inc., a company serving the thermal
engineering, computational, and control needs of the materials processing
industry.  Prof. Motakef was an Associate Professor of Mechanical
Engineering at Massachusetts Institute of Technology for seven
years.  At MIT he was a pioneer in developing high-fidelity
large-scale numerical simulation packages and on-line model-based control
algorithms for the semiconductor processing industry.  He also led an
effort in the development of advanced sensors such as the Full-Field Holographic
Temperature and Species (FHTS) sensor for chemical vapor deposition
applications.  During his stay at MIT, Prof. Motakef taught graduate
and under graduate level courses in thermo-fluids, championed the introduction
of simulation-based projects into graduate level curriculum, and led or
participated in academic research projects with the nearly 2-million dollars
funding provided by DARPA, USAF, NASA, and NSF.  Prof. Motakef has
over 40 publications in technical journals and proceedings and has delivered
more than 30 lectures in the U.S., Europe, and Japan.  At MIT, he was
a consultant to nearly a dozen corporations and a consultant for two Phase I and
Phase II SBIR programs supported by NASA to develop CFD codes for materials
processing applications.  Prof. Motakef is an editor of Journal of
Materials Processing and Manufacturing Science, and a member of the American
society of Mechanical Engineering, American Society of Metals, Materials
Research Society, American Institute of Aeronautics and Astronautics, and the
American Association for Crystal Growth.
The
Company is actively searching for additional directors who have credentials,
experience, and contacts, which will assist us in the fulfillment of our
business plan.  The Company does not have any
committees.  The Company does not have an audit committee financial
expert on its board of directors.
32
DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS -
continued
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our common
stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of change of ownership of our common
stock.  Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish us with copies of all Section 16(a)
forms they file.
We intend
to ensure to the best of our ability that all Section 16(a) filing requirements
applicable to our officers, directors and greater than ten percent beneficial
owners are complied with in a timely fashion.
EXECUTIVE
COMPENSATION
The
compensations for the initial officers and directors is as shown below. The
contracts with the other officer and key technical personal are being discussed
and they have not been signed to date. We do not currently have any benefits,
such as health or life insurance, available.
Summary Compensation
  Table
Annual
      Compensation
Long-Term
      Compensation
Name
      and
Principal
      Position
Year
Salary
      ($)
Bonus
      ($)
Other
      Annual Compensation ($)
Restricted
      Stock Awards ($)
Securities
      Underlying Options (#)
LTIP
      Payouts ($)
All
      Other Compensation ($)
Kiril
      A. Pandelisev
CEO,
      and Director
2008
170,000
-
-
110,000
250000
-
-
Charles
      J. Searock
President,
      Director
2008
130,000
110,000
200,000
Don
      Meyers
Chief
      Financial Officer
2008
120,000
150,000
Dr.
      Don Jackson
Director
110,000
Dr.
      Shariar Motakef
Director
110,000
Prof.
      Alexander Ostrogorsky
Director
110,000
STOCK AND
OPTION
AWARDS
Name
      and
Non-Equity
Principal
Stock
Option
Incentive
      Plan
Position
Year
Salary
Bonus
Awards
Awards
Compensation
Kiril
2005
$
0
$
0
$
0
$
0
Pandelisev
      CEO
2006
$
0
$
0
5,800,000
1
400,000
2
469,844
3
$
0
2007
$
0
$
0
$
0
$
0
$
0
2008
$
0
$
0
$
0
$
0
$
0
33
EXECUTIVE COMPENSATION -
continued
1.
On
      June 10, 2006 the Company issued 5,800,000 common shares at $0.04 per
      share to the Company's CEO in satisfaction of an indebtedness of $232,000
      from the Company to the CEO.
2.
On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
3.
On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
DIRECTORS'
COMPENSATION
Directors
are compensated for services rendered to CRC Crystal Research Corporation, with
110,000 shares of common stock
EMPLOYMENT
CONTRACTS AND OFFICERS' COMPENSATION
The
Company has entered into a number of employment agreements as of May 1,
2008.
On May 1,
2008 the Company entered into an employment agreement with Dr. Kiril A.
Pandelisev  Dr Pandelisev serves as Chief Executive Officer of the
Company.  Dr Pandelisev's base yearly salary payable twice every month
is $170,000, with any unpaid salary converted into options every quarter to
purchase shares of common stock in the Company.
On May 1,
2008 the Company entered into an employment agreement with Lt. Gen. Charles J.
Searock.  Mr. Searock serves as President of the
Company.  Mr. Searock's base yearly salary payable twice every month
is $130,000, with any unpaid salary converted into options every quarter to
purchase shares of common stock in the Company.
On May 1,
2008 the Company entered into an employment agreement with Mr. Don
Meyers.  Mr. Meyers serves as Chief Financial Officer of the
Company.  Mr. Meyers's base yearly salary payable twice every month is
$120,000, with any unpaid salary converted into options every quarter to
purchase shares of common stock in the Company.
STOCK
OPTION PLAN AND OTHER LONG-TERM INCENTIVE PLAN
On June
10, 2006, the Company issued 469,844 shares of common stock to the CEO as a
result of his exercise of an option to purchase such shares at $0.0025 per
share, or $1,175.  The purchase price was paid by the cancellation of
indebtedness from the Company to the CEO in an equal amount.
On June
10, 2006, the Company issued 400,000 shares of common stock to the CEO as a
result of his exercise of an option to purchase such shares at $0.25 per share,
or $100,000.  The purchase price was paid by the cancellation of
indebtedness from the Company to the CEO in an equal amount.
LONG-TERM
INCENTIVE PLAN ("LTIP") AWARDS
There
have been no awards made to a named executive officer in the last completed
fiscal year under any LTIP.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of the date of this prospectus, the total number
of shares owned beneficially by our directors, officers and key employees,
individually and as a group, and the present owners of 5% or more of our total
outstanding shares.  The table also reflects what the percentage of
ownership will be assuming completion of the sale of all shares in this
offering, which we cannot guarantee.  The stockholders listed below
have direct ownership of their shares and possess sole voting and dispositive
power with respect to the shares.
34
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT -
continued
Percent of
      Class
Title
of
Name, Title and Address of
      Beneficial
Amount of
      Beneficial
Before
After
Class
Owner of Shares 
      (1)
Ownership
      (2)
Offering
Offering
      (3)
Common
Kiril A.
      Pandelisev, CEO, and  Director
8,189,844
62.66%
62.66%
Common
Charles J.
      Searock, President and Director
110,000
.84%
.84%
Common
Don
      Meyers
278,000
2.13%
2.13%
Common
Dr. Don
      Jackson
110,000
.84%
.84%
Common
Dr. Shariar
      Motakef
110,000
.84%
.84%
Common
Prof.
      Alexander Ostrogorsky
110,000
.84%
.84%
1.  The
address of each executive officer and director is c/o CRC Crystal Research
Corporation, 4952 East Encanto Street, Mesa, Arizona 85205.
2.  As
used in this table, "beneficial ownership" means the sole or shared power to
vote, or to direct the voting of, a security, or the sole or share investment
power with respect to a security (i.e., the power to dispose of, or to direct
the disposition of a security).
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
We do not
currently have any conflicts of interest by or among our current officer,
director, key employee or advisors.  We have not yet formulated a
policy for handling conflicts of interest, however, we intend to do so upon
completion of this offering and, in any event, prior to hiring any additional
employees.
The
Company is authorized to issue 450,000,000 shares of common stock, par value
$0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per
share.  As of December 31, 2006, there were 10,659,449 shares of
common stock outstanding, and no shares of preferred stock
outstanding.   On June 10, 2006, the Company effected a four for
one stock split.  All share amounts herein are adjusted to give effect
to the stock split.
On
February 20, 2008 the Company registered 4,000,000 common shares and 2,000,000
options to purchase common shares under an S-8 Non-Qualified Stock Compensation
Plan. On March 3, the company amended its S-8 filing reducing the registered
shares to 2,000,000 and setting the price per share to $1 per share or option.
Since no common stock was issued or stock options were granted the Company
withdrew both filings on May 5, 2008. A phone call from SEC to Dr. Pandelisev
confirmed the consent for the withdrawal
The
Company did not issue any shares of common stock in 2005.
The
Company issued 6,979,844 shares of common stock in 2006 in the following
transactions:
·
On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
·
On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
·
On
      June 10, 2006, the Company issued 5,800,000 shares of common stock to the
      CEO in satisfaction of $232,000 of indebtedness from the Company to CEO,
      or $0.04 per share.
35
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS -
continued
·
On
      June 10, 2006, the Company issued 300,000 shares of common stock to six
      unrelated parties for services rendered to the Company.  The
      shares were valued at $0.04 per
share.
·
On
      September 30, 2006, the Company issued 10,000 shares of common stock to an
      unrelated person for services rendered to the Company.  The
      shares were valued at $0.04 per
share.
The
Company issued 1,668,000 shares of common stock during the period ended December
31, 2007 as follows:
·
On
      June 15, 2007 the Company issued 1,050,000 common shares at $0.01 for
      professional consulting services of
$10,500.
·
On
      October 1, 2007 the Company issued 440,000 common shares to four board
      members for services in lieu of cash at $0.05 per share or $22,000 and
      178,000 common shares at $0.05 per share to convert accounts payable of
      $8,900.
Warrants and
Options
Information
relating to warrant activity during 2006 and 2005 follows:
Warrants
      Outstanding at December 31, 2004
1,169,844
Less: Warrants
      Issued/Exercised
0
Less: Warrants
      Expired
0
Total Warrants
      outstanding at December 31, 2005
1,169,844
Less: Warrants
      Exercised
869,844
Less: Warrants
      Expired
0
Total Warrants
      Outstanding at December 31, 2006
300,000
On
December 31, 2007, the Company had warrants outstanding for the purchase of an
aggregate of 300,000 shares of its Common Stock, which are summarized in the
table below.
Warrants
Exercise
Expiration
Outstanding
Price
Date
140,000
$0.50
19-Oct-2008
160,000
$0.50
08-Apr-2010
Total
300,000
All
exercise prices and share amounts have been adjusted to account for a 4:1 stock
split effected on June 10, 2006.
INDEMNIFICATION
Pursuant
to the Articles of Incorporation and By-Laws of the corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a law suit, because of his position, if he acted in good faith and in
a manner he reasonably believed to be in our best interest.  In
certain cases, we may advance expenses incurred in defending any such
proceeding.  To the extent that the officer or director is successful
on the merits in any such proceeding as to which such person is to be
indemnified, we must indemnify him against all expenses incurred, including
attorney's fees.  With respect to a derivative action, indemnity may
be made only for expenses actually and reasonably incurred in defending the
proceeding, and if the officer or director is judged liable, only by a court
order.  The indemnification is intended to be to the fullest extent
permitted by the laws of the State of Nevada.
36
INDEMNIFICATION
-
continued
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act, and is, therefore,
unenforceable.
In the
event that a claim for indemnification against such liabilities, other than the
payment by us of expenses incurred or paid by one of our directors, officers, or
controlling persons in the successful defense of any action, suit or proceeding,
is asserted by one of our directors, officers, or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification is
against public policy as expressed in the Securities Act, and we will be
governed by the final adjudication of such issue.
AVAILABLE
INFORMATION
We have
filed a registration statement on Form S-1, of which this prospectus is a part,
with the U.S. Securities and Exchange Commission.  Upon completion of
the registration, we will be subject to the informational requirements of the
Exchange Act and, in accordance therewith, will file all requisite reports, such
as Forms 10-K, 10-Q, and 8-K, proxy statements, under Section 14 of the Exchange
Act and other information with the Commission.  Such reports, proxy
statements, this registration statement and other information, may be inspected
and copied at the public reference facilities maintained by the Commission at
100 Fifth Street NE, Washington, D.C. 20549.  Copies of all materials
may be obtained from the Public Reference Section of the Commission's
Washington, D.C. office at prescribed rates.  You may obtain
information regarding the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330.  The Commission also maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at
http://www.sec.gov
.
37
FINANCIAL STATEMENTS
REPORT OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM
F-2
BALANCE SHEET
F-3
STATEMENT OF OPERATIONS
F-4
STATEMENT OF CASH
      FLOWS
F-5
STATEMENT OF STOCKHOLDER'S
      (DEFICIT)
F-6
NOTES TO FINANCIAL
      STATEMENTS
F-7 -
      F-12
F-1
MOORE
& ASSOCIATES, CHARTERED
ACCOUNTANTS AND
ADVISORS
PCAOB REGISTERED
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors
CRC
Crystal Research Corporation
(A
Development Stage Company)
We have
audited the accompanying balance sheets of CRC Crystal Research Corporation (A
Development Stage Company) as of December 31, 2007 and 2006, and the related
statements of operations, stockholders' equity and cash flows through December
31, 2007, 2006 and Inception on March 22, 1993 through December 31, 2007. 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 audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States).  Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement.  An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation.  We believe that our audits provide 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 CRC Crystal Research Corporation (A
Development Stage Company) as of December 31, 2007 and 2006 and the results of
its operations and its cash flows through December 31, 2007, 2006 and Inception
on March 22, 1993 through December 31, 2007, 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 3 to the
financial statements, the Company has never generated any revenues, has
accumulated a loss of $919,453 and currently lacks the capital
to pursue
its business plan as of December 31, 2007, which raises substantial doubt about
its ability to continue as a going concern.  Management's plans
concerning these matters are also described in Note 3.  The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/
Moore & Associates, Chartered
Moore
& Associates Chartered
Las
Vegas, Nevada
February
26, 2008
2675 S. Jones Blvd. Suite
109, Las Vegas, NV 89146 (702) 253-7499 Fax (702) 253-7501
F-2
BALANCE
SHEET
December
      31,
December
      31,
2007
2006
ASSETS
Current
      Assets
Cash
$
500
$
-
Total
      Current Assets
500
-
Total
      Assets
$
500
$
-
LIABILITIES AND
      STOCKHOLDERS' EQUITY/(DEFICIT)
Current
      Liabilities
Accounts
      Payable
$
750
$
-
Loans
      Payable - Related Parties
21,556
-
Total
      Current Liabilities
22,306
-
Stockholders'
      Equity
Preferred
      Stock, authorized
50,000,000
      shares, par value $0.001,
no
      preferred stock is outstanding
-
-
Common
      Stock, authorized
450,000,000
      shares, par value $0.001,
issued
      and outstanding on December 31,
2007
      and December 31, 2006 is
12,327,805
      and 10,659,449 shares
respectively
12,327
10,659
Paid
      in Capital
889,720
849,988
Accumulated
      Deficit During
Development
      Stage
(923,853
)
(860,647
)
Total
      Stockholders' Equity
(21,806
)
-
Total
      Liabilities and Stockholders' Equity
$
500
$
-
The accompanying Notes are
an integral part of these statements.
F-3
STATEMENT OF
      OPERATIONS
March
      22, 1993
(Inception)
      to
Year
      Ended December 31,
December
      31,
2007
2006
2007
General
      and Administrative
$
29,443
$
18,146
$
1,042,688
Interest
      Expense
-
-
140,683
Research
      and Development
-
-
331,459
Professional
      Fees
33,763
13,722
99,255
Total
      Expenses
63,206
31,868
1,614,085
(63,206
)
(31,868
)
(1,614,085
)
Gain
      on Expiration of Debt
-
-
230,000
Gain
      on Write-down of Deferred
Compensation
-
-
660,000
Other
      Income
-
-
6,654
Loss
      on Sale of Asset
-
-
(7,491
)
Impairment
      of Manufacturing
Equipment
-
(98,931
)
(198,931
)
$
(63,206
)
$
(130,799
)
$
(923,853
)
(Loss)
      per Share
$
(0.01
)
$
(0.02
)
Weighted
      Average
Number
      of Shares
11,385,991
6,543,131
The
accompanying Notes are an integral part of these statements.
F-4
STATEMENT
OF CASH FLOWS
Net
      Income / (Loss)
773,675
773,675
Balance,
      December 31, 2005
3,679,605
3,679
511,393
-
(729,848)
(214,776)
Common
      shares issued for
exercise
      of warrants for debt
10-Jun-06
$   0.12
869,844
870
100,305
101,175
Common
      shares issued for
convertion
      of related party debt
10-Jun-06
$   0.04
5,800,000
5,800
226,200
232,000
Common
      shares issued for services
10-Jun-06
$   0.04
300,000
300
11,700
12,000
Common
      shares issued for services
30-Sep-06
$   0.04
10,000
10
390
400
Net
      (Loss)
(130,799)
(130,799)
Balance,
      December 31, 2006
10,659,449
10,659
849,988
-
(860,647)
-
Common
      shares issued for services
15-Jun-07
$   0.01
1,050,000
1,050
9,450
10,500
Common
      shares issued for services
01-Oct-07
$   0.05
618,000
618
30,282
30,900
Net
      Income / (Loss)
(63,206)
(63,206)
Balance,
      December 31, 2007
12,327,449
$   12,327
$    889,720
$                 -
$     (923,853)
$  (21,806)
On June
9, 2006 the Company exercised articles of conversion from an Arizona corporation
to a Nevada Corporation and changed its capital stock from no par value stock to
a $0.001 par value, this change has been retroactively applied to this
schedule.
On June
10, 2006 the Company exercised a 4:1 forward stock split that has been
retroactively applied to this schedule and increases the number of shares issued
and thereby decreases the price per share.
The
accompanying Notes are an integral part of these statements.
F-5
STATEMENT OF STOCKHOLDER'S
(DEFICIT)
March
      22, 1993
(Inception)
      to
Year
      Ended December 31,
December
      31,
2007
2006
2007
Operating
      Activities:
Net
      Profit / (Loss)
$
(63,206
)
$
(130,799
)
$
(923,853
)
Adjustments
      to reconcile Net (Loss) to cash:
Depreciation
-
2,141
25,545
Loss
      on Sale of Asset
-
-
7,491
Impairment
      of Manufacturing Equipment
-
98,930
198,931
Common
      Stock issued for Service
41,400
12,400
225,000
Gain
      on write-off of convertible Debt
-
-
(230,000
)
Gain
      on write-down of Accrued Liabilities
-
-
(660,000
)
Changes
      in Assets and Liabilities
Increase/(Decrease)
      in Accounts Payable
750
-
750
Increase/(Decrease)
      in Accrued Liabilities
-
-
914,182
Net
      Cash (Used) by Operating Activities
(21,056
)
(17,328
)
(441,954
)
Investment
      Activities:
Equipment
      Purchase
-
-
(17,858
)
Manufacturing
      Equipment Purchase
-
-
(214,109
)
Cash
      Used by Investment Activities
-
-
(231,967
)
Financing
      Activities:
Net
      Proceeds from loans - Related Parties
21,556
17,328
215,549
Proceeds
      from Series A Convertible Notes
-
-
200,000
Proceeds
      from sale of Common Stock
-
-
258,872
Cash
      Provided by Financing Activities
21,556
17,328
674,421
Net
      Increase/(Decrease) in Cash
500
-
500
Cash,
      Beginning of Period
-
-
-
Cash,
      End of Period
$
500
$
-
$
500
Supplemental
      Information:
Interest
      Paid
$
-
$
11,500
$
140,683
Income
      Taxes Paid
$
-
$
-
$
-
Non-Cash
      Activities:
Loss
      on Sale and Impairment of Assets
$
-
$
98,930
$
206,422
Gain
      on write-off of Convertible Debt
$
-
$
-
$
230,000
Gain
      on write-down of Accrued Liabilities
$
-
$
-
$
660,000
Stock
      issued to Convert Notes
$
-
$
-
$
85,000
Stock
      issued  to convert related-party debt
$
-
$
333,175
$
333,175
Stock
      issued in lieu of cash for service
$
41,400
$
12,400
$
225,000
The
      accompanying notes are an integral part of these
statements
F-6
Crystal
Research, INC
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
1.                      GENERAL
ORGANIZATION AND BUSINESS
CRC
Crystal Research Corporation ("CRC Arizona") was organized in the state of
Arizona on March 22, 1993.  CRC Arizona had difficulty obtaining
sufficient capital to maintain operations and ceased active operations in
1999.  In June, 2006, CRC Arizona's board approved a plan to
reincorporate in the State of Nevada.  CRC Arizona completed the
reincorporation by filing of Articles of Merger with the States of Arizona and
Nevada on September 21, 2006, which effected the merger of the CRC Arizona with
and into CRC Crystal Research Corporation ("CRC Nevada"), a Nevada
corporation.  Prior to filing the Articles of Merger, CRC Nevada was a
wholly-owned subsidiary of CRC Arizona.   CRC Arizona and CRC
Nevada shall be referred to collectively as the "Company."
The
Company is the licensee under a License Agreement dated September 25, 2006, with
Single Crystal Technologies, Inc. ("SCT"), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights owned by SCT to manufacture, use and sell scintillation crystals, well
logging assemblies, scintillation crystal plate assemblies and gamma camera
plate assemblies.  The Company intends to use the rights granted under
the License Agreement to develop product and services for use in energy
exploration and homeland security, among other applications, and is actively
seeking capital to fund the commencement of operations.
NOTE  2.                      SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES
The
relevant accounting policies and procedures are listed below.
Accounting
Basis
The
statements were prepared following generally accepted accounting principles of
the United States of America consistently applied.
Fiscal
Year
The
Company operates on a December 31
st
fiscal
year end.
Earnings
per Share
The basic
earnings (loss) per share is calculated by dividing the Company's net income
available to common shareholders by the weighted average number of common shares
during the year. The diluted earnings (loss) per share is calculated by dividing
the Company's net income (loss) available to common shareholders by the diluted
weighted average number of shares outstanding during the year. The diluted
weighted average number of shares outstanding is the basic weighted number of
shares adjusted for any potentially dilutive debt or equity.
Dividends
The
Company has not yet adopted any policy regarding payment of dividends. No
dividends have been paid during the periods shown.
F-7
Crystal
Research, INC
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE  2.                      SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES -
continued
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America 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 from those
estimates.
Property
and Equipment
Property
and equipment are carried at cost and depreciated on a straight-line bases over
their useful lives.  Office Equipment is depreciated over five
years.  Manufacturing equipment is depreciated over ten years and is
periodically reviewed for impairment.  A gain or loss on disposal is
included in the statement of operation net of cost and accumulated depreciation
for all disposed assets.  During 2004 the Company sold an asset and
recorded a loss on disposition of $7,491.
The net
book value of manufacturing equipment at December 31, 2004 was
$203,212.  Because the Company had been inactive and the manufacturing
equipment had been in storage for several years, the Company decided to review
the equipment for impairment.  It was determined that not all
components were still useful.  Accordingly, the Company recorded an
impairment charge of $100,000 at December 31, 2005, which represented the value
of the book value components which the Company determined were no longer
useful.  As of December 31, 2006, the Company reviewed the
manufacturing equipment again, and decided to fully impair the equipment, which
resulted in an impairment charge of $98,931 in the year ended December 31,
2006.
Income
Taxes
The
provision for income taxes is the total of the current taxes payable and the net
of the change in the deferred income taxes. Provision is made for the deferred
income taxes where differences exist between the period in which transactions
affect current taxable income and the period in which they enter into the
determination of net income in the financial statements.
NOTE
3.                      GOING
CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of its
assets and the liquidation of its liabilities in the normal course of
business.  However, the Company has never generated revenues, has
accumulated a loss of $919,453 during its development stage, and currently lacks
the capital to pursue its business plan.  This raises substantial
doubt about the Company's ability to continue as a going concern.  The
financial statements do not include any adjustments that might result from this
uncertainty.
Management's
Plan
Management
plans to seek funding from its shareholders and other qualified investors to
pursue its business plan.
F-8
Crystal
Research, INC
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
4.                      STOCKHOLDERS'
EQUITY
Common
Stock
The
Company is authorized to issue 450,000,000 shares of common stock, par value
$0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per
share.  As of December 31, 2006, there were 10,659,449 shares of
common stock outstanding, and no shares of preferred stock
outstanding.   On June 10, 2006, the Company effected a four for
one stock split.  All share amounts herein are adjusted to give effect
to the stock split.
On
December 3, 2007 the Company registered 4,000,000 common shares and 2,000,000
options to purchase common shares under an S-8 Non-Qualified Stock Compensation
Plan to assist in the acquisition of services and provide incentives for
employees as it executes its business plan of which zero shares have been issued
or committed as of December 31, 2007.
The
Company did not issue any shares of common stock in 2005.
The
Company issued 6,979,844 shares of common stock in 2006 in the following
transactions:
·
On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
·
On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
·
On
      June 10, 2006, the Company issued 5,800,000 shares of common stock to the
      CEO in satisfaction of $232,000 of indebtedness from the Company to CEO,
      or $0.04 per share.
·
On
      June 10, 2006, the Company issued 300,000 shares of common stock to six
      unrelated parties for services rendered to the Company.  The
      shares were valued at $0.04 per
share.
·
On
      September 30, 2006, the Company issued 10,000 shares of common stock to an
      unrelated person for services rendered to the Company.  The
      shares were valued at $0.04 per
share.
The
Company issued 1,668,000 shares of common stock during the period ended December
31, 2007 as follows:
·
On
      June 15, 2007 the Company issued 1,050,000 common shares at $0.01 for
      professional consulting services of
$10,500.
·
On
      October 1, 2007 the Company issued 440,000 common shares to four board
      members for services in lieu of cash at $0.05 per share or $22,000 and
      178,000 common shares at $0.05 per share to convert accounts payable of
      $8,900.
Warrants and
Options
Information
relating to warrant activity during 2006 and 2005 follows:
Warrants
      Outstanding at December 31, 2004
1,169,844
Less: Warrants
      Issued/Exercised
0
Less: Warrants
      Expired
0
Total Warrants
      outstanding at December 31, 2005
1,169,844
Less: Warrants
      Exercised
869,844
Less: Warrants
      Expired
0
Total Warrants
      Outstanding at December 31, 2006
300,000
F-9
Crystal
Research, INC
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
4.                      STOCKHOLDERS'
EQUITY -
continued
On
December 31, 2007, the Company had warrants outstanding for the purchase of an
aggregate of 300,000 shares of its Common Stock, which are summarized in the
table below.
Warrants
Exercise
Expiration
Outstanding
Price
Date
140,000
$0.50
19-Oct-2008
160,000
$0.50
08-Apr-2010
Total
300,000
All
exercise prices and share amounts have been adjusted to account for a 4:1 stock
split effected on June 10, 2006.
NOTE
5.                      RELATED
PARTY PAYABLES
Loans from Kiril A.
Pandelisev
During
the fiscal year ended December 31, 2005, the Company received loans from the
Company's sole officer and director, and its majority shareholder.  As
of December 31, 2005, the Company was indebted to the CEO in the amount of
$176,665.
During
the fiscal year ended December 31, 2006, the Company received loans from the CEO
in the amount of $17,327.
The loans
made by the CEO to the Company in 2005 and 2006 were used to fund general and
administrative expenses of the Company.  The loans were not evidenced
by a note, were unsecured, did not bear interest and were payable on
demand.
On June
10, 2006, the CEO utilized the amount due him by the Company to pay the exercise
price under warrants held by him (see below).
Employment Agreement with
the CEO
The
Company was a party to an Employment Agreement with its CEO dated March 31,
1997.  The Employment Agreement provided that the CEO was entitled to
base compensation of $120,000 per year, among other provisions.  The
Employment Agreement terminated by its terms on March 31, 2002.
As of
December 31, 2005 the Company had accrued $799,182 in deferred salary under an
Employment Agreement with the CEO.
As of
December 31, 2005, the CEO agreed to forgive any claim for $660,000 of the
accrual compensation, and as a result the Company recorded an unusual gain in
that amount in fiscal 2005.  As a result of the forgiveness, the
balance owed to CEO at December 31, 2005 for accrued compensation was $139,182
accrued salary.
Satisfaction of Amounts Due
the CEO
On June
10, 2006, the CEO agreed to satisfy the amounts due him for accrued compensation
under his Employment Agreement and for loans he had made the Company by
exercising his options in the Company and converting the balance of the
indebtedness into additional shares of common stock.
As of
June 10, 2006, the CEO held options to purchase 400,000 shares of common stock
at $0.25 per share, and options to purchase 469,844 shares of common stock at
$0.0025 per share.  The aggregate exercise price under both options
was $101,175.  The CEO applied $101,175 of the indebtedness due him by
the Company to the exercise price under the options, which resulted in him
acquiring 869,844 shares of common stock.
F-10
Crystal
Research, INC
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
5.                      RELATED
PARTY PAYABLES -
continued
After
exercising the options, the balance owed to the CEO was $232,000, which was
converted into 5,800,000 shares of common stock at $0.04 per share.
License Agreement with
Single Crystal Technologies, Inc.
On
September 25, 2006, the Company entered into a License Agreement with Single
Crystal Technologies, Inc. ("SCT"), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights owned by SCT to manufacture, use and sell scintillation crystals, well
logging assemblies, scintillation crystal plate assemblies and gamma camera
plate assemblies.
SCT is
owned by the Company's CEO.  Under the License Agreement, the Company
is obligated to pay SCT a license fee of $50,000 when it raises at least $50,000
in capital.  In addition, the Company will be obligated to pay SCT
royalties in varying percentages based on the revenues received from products
that incorporate the technology licensed to the Company under the License
Agreement.  In the event the Company fails to commence the production
of products incorporating the technology licensed under the License Agreement
within two years of the date of the Agreement, SCT may terminate the License
Agreement at its option.
Current Loans from the
CEO
During
the year ended December 31, 2007, Mr. Pandelisev has provided short term
operating capital to the company in the amount of $21,556.  This is
non-interest bearing demand loans.
NOTE
6.                      PROVISION
FOR INCOME TAXES
The
Company provides for income taxes under Statement of Financial Accounting
Standards NO. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes.
SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.  The total
deferred tax asset is $203,248 as of December 31, 2007 which is calculated by
multiplying a 22% estimated tax rate by the cumulative NOL of $923,853 the total
valuation allowance is a comparable $203,248.
The
provision for income taxes for the period ended December 31, 2007 and 2006
follows:
Year
      Ended
December
      31
2007
2006
Deferred Tax
      Asset
$
12,937
$
28,776
Valuation
      Allowance
(12,937
)
(28,776
)
Current Taxes
      Payable
0.00
0.00
Income Tax
      Expense
$
0.00
$
0.00
Below is
a chart showing the estimated federal net operating losses and the years in
which they will expire.
Year
Amount
Expiration
1994
$
60,292
2014
1995
199,109
2015
1996
125,697
2016
1997
175,534
2017
1998
220,547
2018
1999
154,943
2019
2000
231,985
2020
2001
80,558
2021
2002
16,760
2022
2003
18,063
2023
2004
142,763
2024
2005
(773,675
)
2025
2006
130,799
2026
2007
63,206
2027
Total
$
923,853
F-11
Crystal
Research, INC
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
NOTE
7.                      COMMITMENTS
AND CONTINGENCIES
On
September 25, 2006, the Company entered into a License Agreement with Single
Crystal Technologies, Inc. ("SCT"), under which the Company holds a
non-exclusive, worldwide license to use and employ certain intellectual property
rights owned by SCT to manufacture, use and sell scintillation crystals, well
logging assemblies, scintillation crystal plate assemblies and gamma camera
plate assemblies.
SCT is
owned by the Company's CEO.  Under the License Agreement, the Company
is obligated to pay SCT a license fee of $50,000 when it raises at least $50,000
in capital. The Company has not recorded a liability to SCT because it is
uncertain at this time that the Company will be able to raise sufficient capital
to trigger the obligation to make this payment.
In
addition, the Company will be obligated to pay SCT royalties in varying
percentages based on the revenues received from products that incorporate the
technology licensed to the Company under the License Agreement.  In
the event the Company fails to commence the production of products incorporating
the technology licensed under the License Agreement within two years of the date
of the Agreement, SCT may terminate the License Agreement at its
option.
NOTE  8.                      
THE EFFECT OF RECENTLY ISSUED ACCOUNTING  STANDARDS
Below is
a listing of the most recent Statement of Financial Accounting Standards (SFAS)
SFAS 155-157 and their effect on the Company.
Statement No. 155 –
Accounting for Certain Hybrid
Financial Instruments
In
February 2006, the FASB issued SFAS No. 155,
Accounting for Certain Hybrid
Financial Instruments
, which amends SFAS No. 133,
Accounting for Derivatives
Instruments and Hedging Activities
and SFAS No. 140,
Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of
Liabilities
.  SFAS No. 155 amends SFAS No. 133 to narrow the
scope exception for interest-only and principal-only strips on debt instruments
to include only such strips representing rights to receive a specified portion
of the contractual interest or principle cash flows.  SFAS No. 155
also amends SFAS No. 140 to allow qualifying special-purpose entities to hold a
passive derivative financial instrument pertaining to beneficial interests that
itself is a derivative instrument.
Statement No. 156 –
Accounting for Servicing of
Financial Assets
In March
2006, the FASB issued SFAS No. 156,
Accounting for Servicing of
Financial Assets,
which provides an approach to simplify efforts to
obtain hedge-like (offset) accounting.  This Statement amends FASB
Statement No. 140,
Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities
, with respect to the accounting for separately recognized
servicing assets and servicing liabilities. The Statement (1) requires an entity
to recognize a servicing asset or servicing liability each time it undertakes an
obligation to service a financial asset by entering into a servicing contract in
certain situations; (2) requires that a separately recognized servicing asset or
servicing liability be initially measured at fair value, if practicable; (3)
permits an entity to choose either the amortization method or the fair value
method for subsequent measurement for each class of separately recognized
servicing assets or servicing liabilities; (4) permits at initial adoption a
one-time reclassification of available-for-sale securities to trading securities
by an entity with recognized servicing rights, provided the securities
reclassified offset the entity's exposure to changes in the fair value of the
servicing assets or liabilities; and (5) requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value
in the balance sheet and additional disclosures for all separately recognized
servicing assets and servicing liabilities. SFAS No. 156 is effective for all
separately recognized servicing assets and liabilities as of the beginning of an
entity's fiscal year that begins after September 15, 2006, with earlier adoption
permitted in certain circumstances. The Statement also describes the manner in
which it should be initially applied.
Statement No. 157
–
Fair Value
Measurements
In
September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
, to
clarify how to measure fair value and to expand disclosures about fair value
measurements.  The expanded disclosures include the extent to which
companies measure assets and liabilities at fair value, the information used to
measure fair value, and the effect of fair value on earnings and is applicable
whenever other standards require (or permit) assets and liabilities to be
measured at fair value.  SFAS 157 is effective for financial
statements issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years.
The
adoption of these new Statements is not expected to have a material effect on
the Company's current financial position, results or operations, or cash
flows.
NOTE  9.                      
SUBSEQUENT EVENTS
On
January 22, 2008 the company entered in to a consulting agreement with Mirador
Consulting Inc. (Mirador) for Investor Relations consulting.  The
Company is obligated to pay $3,000 per month payable in arrears at the time
Mirador raises not less that $250,000, a 5% finders fee on any money raised by
them and 600,000 restricted shares of common stock, 300,000 shares to be issued
upon execution of the agreement and 300,000 common shares when the Company
receives $250,000 in investments brought by Mirador.
F-12
PART
II – INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13.  OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION
The
following table sets forth the costs and expenses payable by Crystal Research in
connection with registering the sale of the common stock. Crystal Research has
agreed to pay all costs and expenses in connection with this offering of common
stock. Set for the below is the estimated expenses of issuance and distribution,
assuming the maximum proceeds are raised.
Legal
      and Professional Fees
$
5,000.00
Accounting
      Fees
$
Blue
      Sky Qualification Fees
$
Total
$
5,000.00
ITEM
14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS
CRC
Crystal Research Corporation's Articles of Incorporation and Bylaws provide for
the indemnification of a present or former director or officer. Crystal Research
indemnifies any director, officer, employee or agent who is successful on the
merits or otherwise in defense on any action or suit. Such indemnification shall
include, but not necessarily be limited to, expenses, including attorney's fees
actually or reasonably incurred by him. Nevada law also provides for
discretionary indemnification for each person who serves as or at Crystal
Research request as an officer or director. Crystal Research may indemnify such
individual against all costs, expenses, and liabilities incurred in a
threatened, pending or completed action, suit, or proceeding brought because
such individual is a director or officer. Such individual must have conducted
himself in good faith and reasonably believed that his conduct was in, or not
opposed to, Crystal Research's best interests. In a criminal action, he must not
have had a reasonable cause to believe his conduct was unlawful.
NEVADA
LAW
Pursuant
to the provisions of Nevada Revised Statutes 78.751, Crystal Research shall
indemnify any director, officer and employee as follows: Every director,
officer, or employee of Crystal Research shall be indemnified by us against all
expenses and liabilities, including counsel fees, reasonably incurred by or
imposed upon him/her in connection with any proceeding to which he/she may be
made a party, or in which he/she may become involved, by reason of being or
having been a director, officer, employee or agent of Crystal Research or is or
was serving at the request of Crystal Research as a director, officer, employee
or agent of Crystal Research, partnership, joint venture, trust or enterprise,
or any settlement thereof, whether or not he/she is a director, officer,
employee or agent at the time such expenses are incurred, except in such cases
wherein the director, officer, employee or agent is adjudged guilty of willful
misfeasance or malfeasance in the performance of his/her duties; provided that
in the event of a settlement the indemnification herein shall apply only when
the Board of Directors approves such settlement and reimbursement as being for
the best interests of Crystal Research. Crystal Research shall provide to any
person who is or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of CRC Crystal Research Corporation as a
director, officer, employee or agent of the corporation, partnership, joint
venture, trust or enterprise, the indemnity against expenses of a suit,
litigation or other proceedings which is specifically permissible under
applicable law.
As to
indemnification for liabilities arising under the Securities Act of 1933, as
amended, for directors, officers or coolling persons, we have been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy and is, therefore, unenforceable.
ITEM
15.     RECENT SALES OF UNREGISTERED
SECURITIES.
Set forth
below is information regarding the issuance and sales of securities without
registration since inception.  No such sales involved the use of an
underwriter; no advertising or public solicitation was involved; the securities
bear a restrictive legend; and no commissions were paid in connection with the
sale of any securities.
The
Company is authorized to issue 450,000,000 shares of common stock, par value
$0.001 per share, and 50,000,000 shares of preferred stock, par value $0.001 per
share.  As of December 31, 2006, there were 10,659,449 shares of
common stock outstanding, and no shares of preferred stock
outstanding.   On June 10, 2006, the Company effected a four for
one stock split.  All share amounts herein are adjusted to give effect
to the stock split.
On
December 3, 2007 the Company registered 4,000,000 common shares and 2,000,000
options to purchase common shares under an S-8 Non-Qualified Stock Compensation
Plan to assist in the acquisition of services and provide incentives for
employees as it executes its business plan of which zero shares have been issued
or committed as of December 31, 2007.
38
ITEM
15.     RECENT SALES OF UNREGISTERED SECURITIES -
continued
The
Company did not issue any shares of common stock in 2005.
The
Company issued 6,979,844 shares of common stock in 2006 in the following
transactions:
·
On
      June 10, 2006, the Company issued 469,844 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.0025 per share, or $1,175.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
·
On
      June 10, 2006, the Company issued 400,000 shares of common stock to the
      CEO as a result of his exercise of an option to purchase such shares at
      $0.25 per share, or $100,000.  The purchase price was paid by
      the cancellation of indebtedness from the Company to the CEO in an equal
      amount.
·
On
      June 10, 2006, the Company issued 5,800,000 shares of common stock to the
      CEO in satisfaction of $232,000 of indebtedness from the Company to CEO,
      or $0.04 per share.
·
On
      June 10, 2006, the Company issued 300,000 shares of common stock to six
      unrelated parties for services rendered to the Company.  The
      shares were valued at $0.04 per
share.
·
On
      September 30, 2006, the Company issued 10,000 shares of common stock to an
      unrelated person for services rendered to the Company.  The
      shares were valued at $0.04 per
share.
The
Company issued 1,668,000 shares of common stock during the period ended December
31, 2007 as follows:
·
On
      June 15, 2007 the Company issued 1,050,000 common shares at $0.01 for
      professional consulting services of
$10,500.
·
On
      October 1, 2007 the Company issued 440,000 common shares to four board
      members for services in lieu of cash at $0.05 per share or $22,000 and
      178,000 common shares at $0.05 per share to convert accounts payable of
      $8,900.
Warrants and
Options
Information
relating to warrant activity during 2006 and 2005 follows:
Warrants
      Outstanding at December 31, 2004
1,169,844
Less: Warrants
      Issued/Exercised
0
Less: Warrants
      Expired
0
Total Warrants
      outstanding at December 31, 2005
1,169,844
Less: Warrants
      Exercised
869,844
Less: Warrants
      Expired
0
Total Warrants
      Outstanding at December 31, 2006
300,000
On
December 31, 2007, the Company had warrants outstanding for the purchase of an
aggregate of 300,000 shares of its Common Stock, which are summarized in the
table below.
Warrants
Exercise
Expiration
Outstanding
Price
Date
140,000
$0.50
19-Oct-2008
160,000
$0.50
08-Apr-2010
Total
300,000
All
exercise prices and share amounts have been adjusted to account for a 4:1 stock
split effected on June 10, 2006.
These
securities were issued in reliance upon the exemption contained in Section 4(2)
of the Securities Act of 1933.
39
ITEM 16.    EXHIBITS.
The
following exhibits are included with this registration statement:
Exhibit Number.
Name/Identification of
    Exhibit
2
Agreement
      and Plan of Merger Dated September 20, 2006
3.1
Articles
      of Incorporation dated June 9, 2006*
3.2
Amended
      and Restated Bylaws dated February 9, 2007*
3.3
Amendment
      to Articles of Incorporation dated September 22, 2006*
5
Opinion
      of Joseph L. Pittera, Esq.
13
Form
      10-Q for March 31, 2008*
23.1
Consent
      of Independent Auditor
23.2
Consent
      of Counsel (See Exhibit 5)
*Incorporated
      by reference to Form 10-SB filed February 13, 2007, and Form 10-Q for
      March 31, 2008 filed May 12,
2008.
40
ITEM 17.   UNDERTAKINGS.
Under
Rule 415 of the Securities Act, we are registering securities for an offering to
be made on a continuous or delayed basis in the future. The registration
statement pertains only to securities (a) the offering of which will be
commenced promptly, will be made on a continuous basis and may continue for a
period in excess of 30 days from the date of initial effectiveness and (b) are
registered in an amount which, at the time the registration statement becomes
effective, is reasonably expected to be offered and sold within two years from
the initial effective date of the registration.
Based on
the above-referenced facts and in compliance with the above-referenced rules,
Crystal Research includes the following undertakings in this Registration
Statement:
A. The
undersigned Registrant hereby undertakes:
(1) To
file, during any period, in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933, as amended;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of the Registration Fee" table in the
effective Registration Statement; and
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(1) That,
for the purpose of determining any liability under the Securities Act of 1933,
as amended, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(2) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
B.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the  Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
41
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-1 and authorized this Registration Statement to
be signed on its behalf by the undersigned, in the City of Mesa, State of
Arizona on May 29, 2008.
CRC Crystal Research
      Corporation
(Registrant)
By:
/s/ Kiril
      A. Pandelisev
Name:
      Kiril A. Pandelisev
Title:
President,
      Treasurer, and Director
In
accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated:
Signature
Title
Date
/s/ Kiril A. Pandelisev
CEO
      and Director
May
      29, 2008
Kiril
      A. Pandelisev
/s/
      Charles J. Searock
President
      and Director
May
      29, 2008
Charles
      J. Searock
/s/
      Dr. Don Jackson
Director
May
      29, 2008
Dr.
      Don Jackson
/s/
      Dr. Shariar Motakef
Director
May
      29, 2008
Dr.
      Shariar Motakef
/s/
      Alexander Ostrogorsky
Director
May
      29, 2008
Alexander
      Ostrogorsky
42