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    <div style="TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As filed
with the Securities and Exchange Commission on June 11, 2008</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Reg. No.
333-_________</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">SECURITIES
AND EXCHANGE COMMISSION</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 12pt; FONT-FAMILY: Times New Roman">Washington,
D.C. 20549</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">FORM
S-8</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">REGISTRATION
STATEMENT</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">UNDER</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">THE
SECURITIES ACT OF 1933</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 18pt; FONT-FAMILY: Times New Roman">XELR8
Holdings, Inc.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
name of registrant as specified in its charter)</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="center">
      <table cellpadding="0" cellspacing="0" width="80%">
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            <td valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Nevada</font></div>
            </td>
            <td valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">84-1575085</font></div>
            </td>
          </tr>
          <tr>
            <td valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(State
      or other jurisdiction of</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">incorporation
      or organization)</font></div>
            </td>
            <td valign="top" width="40%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(I.R.S.
      Employer</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">identification
      No.)</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">480
S. Holly Street</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Denver,
Colorado 80246</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(303)
316-8577</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Address,
including zip code, and telephone number,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">including
area code, of registrant&#8217;s principal executive offices)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003
STOCK INCENTIVE PLAN</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Full
title of plan)</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John
D. Pougnet</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chief
Executive Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">XELR8
Holdings,&#160;Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">480
S. Holly Street</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Denver,
Colorado 80246</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(303)
316-8577</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Name,
address, including zip code, and telephone number,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">including
area code, of agent for service)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Copies
to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Gar</font>y<font style="DISPLAY: inline; FONT-WEIGHT: bold"> A. Agron</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-WEIGHT: bold">Law Office of G</font>a<font style="DISPLAY: inline; FONT-WEIGHT: bold">ry A. Agron</font></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5445
DTC Parkway, Suite&#160;520,</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Greenwood
Village, Colorado 80111</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(303)
770-7254</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
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      <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: 8pt; FONT-FAMILY: Times New Roman">&#160;
</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
        </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; LINE-HEIGHT: 1.25; 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; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="95%">
          <tr>
            <td valign="bottom" width="18%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Title
      of Securities</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">to be Registered</font></font></div>
            </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="19%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Amount
      to be</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Registered</font></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="19%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proposed
      Maximum</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Offering Price Per Share</font></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="18%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proposed
      Maximum</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Aggregate Offering Price</font></font></div>
            </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 valign="bottom" width="18%" style="BORDER-BOTTOM: black 2px solid">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Proposed
      Maximum</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><font style="DISPLAY: inline">Registration Fee</font></font></div>
            </td>
          </tr>
          <tr>
            <td valign="bottom" width="18%">
              <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Common
      Stock</font></div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">(no
      par value)</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%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">3,000,000</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; VERTICAL-ALIGN: super; FONT-FAMILY: times new roman">(1)</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">$</font></td>
            <td align="right" valign="bottom" width="18%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">1.30</font></td>
            <td align="left" nowrap valign="bottom" width="1%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; VERTICAL-ALIGN: super; FONT-FAMILY: times new roman">(2)</font></td>
            <td valign="bottom" width="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$3,900,000</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="18%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">$153.27</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <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">(1)</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Registration Statement also covers any additional common shares which
      become issuable under the Registrant&#8217;s 2003 Stock Incentive Plan by reason
      of any stock dividend, stock split, recapitalization or other similar
      transaction effected without the receipt of consideration which results in
      an increase in the number of outstanding common shares of the
      Registrant.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <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">(2)</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Estimated
      solely for the purpose of determining the amount of registration fee and
      pursuant to Rules 457(c) and 457 (h) of the General Rules and Regulations
      under the Securities Act of 1993, based upon the closing price per share
      on the American Stock Exchange of the Registrant&#8217;s common stock as of June
      9, 2008.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INFORMATION
REQUIRED IN THE SECTION 10(a) PROSPECTUS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Pursuant to the requirements of the
Note to Part I of Form S-8 and Rule 428(b)(1) of the Rules under the Securities
Act of 1933, as amended, the information required by Part I of Form S-8 is
included in the resale prospectus which follows. The resale prospectus together
with the documents incorporated by reference pursuant to Item 3 of Part II of
this Registration Statement constitute the Section 10(a)
prospectus.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RESALE
PROSPECTUS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The material which follows, up to but
not including the page beginning Part II of this Registration Statement,
constitutes a prospectus, prepared on Form S-3, in accordance with General
Instruction C to Form S-8, to be used in connection with resales of securities
acquired under the Registrant&#8217;s 2006 Equity Incentive Plan by officers or
directors of the Registrant, as defined in Rule 405 under the Securities Act of
1933, as amended.</font></div>
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      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RESALE
PROSPECTUS</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,000,000
SHARES OF</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">XELR8
HOLDINGS, INC.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003
STOCK INCENTIVE PLAN</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>You should read this prospectus
carefully before investing. We are offering on behalf of certain of our
employees, officers, directors and consultants up to 3,000,000 shares of our no
par value common stock purchasable by such employees, officers, directors and
consultants pursuant to common stock options granted under our Plan. As of this
date 2,935,200 options issued under the Plan are outstanding.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>This prospectus will be used by our
non-affiliates as well as persons who are &#8220;affiliates&#8221; to resell the shares. We
will not receive any part of the proceeds of such sales although we will receive
the exercise price for the stock options. Please see &#8220;Selling Stockholders&#8221; for
a list of our affiliates who may offer their shares for sale. We refer to these
individuals as &#8220;selling stockholders.&#8221;</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
selling stockholders may offer their common stock through public or private
transactions, at prevailing market prices or at privately negotiated prices.
These future market prices are not currently known.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
common stock is quoted on the American Stock Exchange under the symbol &#8220;BZI.&#8221; On
June 9, 2008, the closing price for the common stock on the Exchange was $1.30
per share.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See &#8220;Risk
Factors&#8221; beginning on page 3 to read about factors you should consider before
buying shares of our common stock.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF
THE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>No person is authorized to give any
information or to make any representation regarding the securities we are
offering and investors should not rely on any such information. The information
provided in the prospectus is as of this date only.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The date
of this prospectus is June 11, 2008.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div><br>
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    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>We are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, including
Sections 14(a) and 14(c) relating to proxy and information statements, and in
accordance therewith we file reports and other information with the Securities
and Exchange Commission. Reports and other information which we file can be
inspected and copied at the public reference facilities maintained by the
Commission at 100 F Street, NE, Washington, DC 20549. Copies of such material
can be obtained from the Public Reference Section of the Commission, 100 F
Street, NE, Washington, DC 20549 at prescribed rates. Our common stock is traded
on the American Stock Exchange under the symbol &#8220;BZI.&#8221; Reports, proxy and
information statements may also be inspected at the Commission&#8217;s Web site at
www.sec.gov.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>We furnish annual reports to our
shareholders which include audited financial statements. We may furnish such
other reports as may be authorized, from time to time, by our Board of
Directors.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>You may also want to refer to our Web
site at XELR8.com. Our Web site is not a part of this prospectus.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">INCORPORATION
BY REFERENCE</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Certain documents have been
incorporated by reference into this prospectus, either in whole or in part,
including but not limited to an Annual Report on Form 10-KSB for the year ended
December 31, 2007, Quarterly Reports on Form 10-Q for the quarters ended March
31, 2008, September 30, 2007, and June 30, 2007, and any Current Reports on Form
8-K filed after March 31, 2008, including the current report on 8-K dated May
15, 2008. We will provide without charge (1) to each person to whom a prospectus
is delivered, upon written or oral request, a copy of any and all of the
information that has been incorporated by reference (not including exhibits to
the information unless such exhibits are specifically incorporated by reference
into the information), and (2) documents and information required to be
delivered to directors pursuant to Rule 428(b). Requests for any information
shall be addressed to us at 480 South Holly Street, Denver, Colorado 80246,
telephone (303) 316-8577.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="toc">TABLE OF CONTENTS</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr bgcolor="linen">
            <td align="left" valign="top" width="61%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#aboutus">ABOUT US</a></font></div>
            </td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none">
              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      1</font></div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none">
              <div style="TEXT-ALIGN: right">&#160;</div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="linen">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 27pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#riskfactors">RISK FACTORS</a></font></div>
            </td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none">
              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      1</font></div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="linen">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 27pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#selling">SELLING STOCKHOLDERS</a></font></div>
            </td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none">
              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      16</font></div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="linen">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 27pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#planofdist">PLAN OF DISTRIBUTION</a></font></div>
            </td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none">
              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      16</font></div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="linen">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 27pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#secposition">SEC POSITION REGARDING
    INDEMNIFICATION</a></font></div>
            </td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none">
              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      17</font></div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="linen">
            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 27pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#descriptionofplan">DESCRIPTION OF THE PLAN</a></font></div>
            </td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none">
              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      18</font></div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="white">
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    RESTRICTIONS</a></font></div>
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              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      19</font></div>
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            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
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              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      20</font></div>
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              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      20</font></div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
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            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none; BORDER-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="8%" style="BORDER-RIGHT: medium none; BORDER-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none; BORDER-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
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            <td align="left" valign="top" width="61%" style="BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 27pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman"><a href="#experts">EXPERTS</a></font></div>
            </td>
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              <div style="TEXT-ALIGN: right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
      20</font></div>
            </td>
            <td valign="top" width="1%" style="BORDER-RIGHT: medium none; BORDER-BOTTOM: 4px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
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    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; 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: 8pt; FONT-FAMILY: Times New Roman">&#160;
<font style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">i</font></font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%; TEXT-ALIGN: left" align="right">
        </div>
      </div><font style="FONT-STYLE: italic"><a href="#toc">Table of
Contents</a></font></div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 36pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="aboutus">ABOUT US</a></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 16pt"></font>We develop, sell, market and distribute
nutritional supplement products primarily through a direct sales or network
marketing system in which independent distributors sell our products, as well as
purchase them for their own personal use. We also sell our products directly to
professional and Olympic athletes and to professional sports teams.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;We
formulated our original &#8220;legacy&#8221; products in 2000 and 2001 for sale to
professional and Olympic athletes. We launched our sales and marketing programs
to the general public in early 2002 through our internal sales force targeting
specialty retail stores, health clubs and personal trainers. During 2003, we
refocused our marketing and sales strategy on direct selling through independent
distributors. We believe, based upon our sales experience in 2001 and 2002, our
products can be more effectively sold through the face-to-face sales method
afforded by direct selling. During 2005, we formulated a new line of products
that would have a wider appeal to the general public, as they were more
functional foods than nutritional supplements, and began marketing them through
our existing independent distributors in the latter part of 2005.&#160; In
conjunction with this, we rebranded the network marketing company and all the
products with the name of XELR8. During 2006 we formulated a new product, Bazi&#8482;,
a liquid dietary supplement. In January&#160;2007 we introduced this product to
our network of independent distributors and athlete endorsers. In late 2007 we
decided to change the sales focus of our independent distributors from multiple
products to a single product, Bazi&#8482;, and announced this to our sales force in
February&#160;2008.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;We
distribute and sell our products through a network marketing system, a form of
direct selling, using independent distributors (&#8220;Distributors&#8221;). We also sell
sales and marketing tools designed to assist our distributors in growing their
business and selling our products. Distributors not only purchase our products
for their own consumption, but are encouraged to build and manage their own
sales group by recruiting, managing and training others to sell our products.
Distributors are compensated on sales generated by their group or downline
organization.&#160; We also sell our products directly to &#8220;Preferred&#8221; or
&#8220;Direct&#8221; customers, who purchase our products for personal consumption, and are
not permitted to resell or distribute the products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;&#160;&#160;&#160;&#160;A
key part of our marketing strategy, in conjunction with our direct sales
program, is the endorsement of our products by sports celebrities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
maintain our principal executive offices at 480 South Holly Street, Denver,
Colorado 80246, and our telephone number is (303)&#160;316-8577. Our website is
located at http://www.XELR8.com. The information on our website does not
constitute a part of this prospectus.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">RIS<a name="riskfactors">K FACTORS</a></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: Times New Roman">Investment
in our securities involves a high degree of risk. You should carefully consider
the risks described below together with all of the other information included in
this prospectus before making an investment decision. If any of the following
risks actually occurs, our business, financial condition or results of
operations could suffer. In that case, the trading price of our securities could
decline, and you may lose all or part of your investment.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
have a history of operating losses and a significant accumulated deficit, and we
may&#160;never achieve profitability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
not been profitable since inception in 2001. We had net losses for the three
months ending March 31, 2008 of $749,362 and $3,241,730for the year ending
December&#160;31, 2007. At March&#160;31, 2008, we had an accumulated deficit of
$ 21,241,373. We may&#160;never achieve or maintain profitability. Our <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ability
to achieve and maintain a profit is dependent upon our attracting and retaining
a large base of independent distributors who generate our
sales.</font></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">1</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </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; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may need to raise additional funds to fund operations which cannot be assured
and would result in dilution to the existing shareholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To date,
our operating funds have been provided primarily from sales of our common stock
($15,413,421), and by loans from our founder and by various stockholders
($3,989,209), through December&#160;31, 2007, and to a lesser degree, cash flow
provided by sales of our products. We used $215,700 of cash for operations in
the three months ended March&#160;31, 2008, compared to $176,519 of cash for
operations in the three months ended March&#160;31, 2007 and $1,178,996 of cash
for operations in the year ended December&#160;31, 2007. If our business
operations do not result in increased product sales, our business viability,
financial position, results of operations and cash flows will likely be
adversely affected. Further, if we are not successful in achieving
profitability, additional capital will be required to conduct ongoing
operations. We cannot predict the terms upon which we could raise such capital
or if any capital would be available at all, and what dilution will be caused to
the existing shareholders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
limited operating history and recent change in marketing strategy make it
difficult to evaluate our prospects.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have a
limited operating history on which to evaluate our business and prospects. Our
current flagship product, Bazi&#8482; was formulated in 2006 and introduced to the
public for sale in January&#160;2007. Our other, legacy products were formulated
from 2000 through 2005, and we began selling these products to the general
public in early 2002 through 2005, with limited market success. In late 2003, we
began to refocus our sales and marketing efforts on direct sales of products
through our network of independent distributors. In 2005, we rebranded the
network marketing company and launched new products. In February&#160;2008, we
decided to change our sales focus from multiple products, to a single product
focus on Bazi&#8482;, our liquid dietary supplement drink. There is no assurance that
we will achieve significant sales as a result of us focusing our sales efforts
on this single product.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We also
may&#160;not be successful in addressing our operating challenges such as
establishing a viable network of independent distributors, developing brand
awareness and expanding our market presence. Our prospects for profitability
must be considered in light of our evolving business model. These factors make
it difficult to assess our prospects.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
failure to recruit, maintain and motivate a large base of productive independent
distributors could limit our ability to generate revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
increase revenue, we must increase the sales and recruiting productivity of our
independent distributors. We cannot assure you that we will be successful in
recruiting and retaining productive independent distributors, particularly since
direct sales organizations usually experience high turnover rates of independent
distributors. Our independent distributors can terminate their relationships
with us at any time. The distributors also typically work on a part-time basis
and may&#160;engage in other business activities, which may&#160;reduce their
efforts for us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
recruiting and keeping independent distributors, we will be subject to
significant competition from other direct sales organizations, both inside and
outside our industry. Our ability to attract and retain independent distributors
will be dependent on the attractiveness of our compensation plan, our product
mix, and the support we offer to our independent distributors. Adverse publicity
concerning direct sales marketing and public perception of direct selling
businesses generally could negatively affect our ability to attract, motivate
and retain independent distributors.</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>
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        <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="1">
        </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; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Based on
our knowledge of the direct selling industry, we anticipate that our independent
distributor organization will be headed by a relatively small number of key
independent distributors who together with their downline network will be
responsible for a disproportionate amount of revenues. We believe this structure
is typical in the direct selling industry, as sales leaders emerge in these
organizations, and it is the current situation with us. The loss of a key
independent distributor will adversely affect our revenues and could adversely
affect our ability to attract other independent distributors, especially if an
independent distributor takes other independent distributors of ours to a
competitor or to any other organization.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
are dependent on the level of effort that our independent distributors make in
selling our products and we do not have control over their methods of marketing
our products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
dependent on our non-employee, independent distributors to market and sell our
products. Our independent distributors purchase products from us for their own
personal use and to use in marketing their business. Additionally, we have a
large number independent distributors in relation to the small number of
corporate employees who are responsible for providing motivational support and
recognition to these independent distributors. We also, typically have a high
turnover in the number of independent distributors who join our business each
year, who require training and motivation from both their enrollers, key
independent distributor leaders and corporate staff. We rely on this training
and the policies and procedures included in the independent distributor
agreement to ensure that each independent distributor is aware of laws
concerning the making of certain claims regarding the products or income
potential from the distribution on our products. We take what we believe to be
reasonable efforts to monitor distributor activities to prevent
misrepresentations, illegal acts or unethical behavior while they conduct their
business activities. There can be no assurance, however, that our efforts to
train, motivate, educate and govern their activities will be successful, and may
result in lower recruiting and negative publicity and legal actions against
us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
change in the amount of compensation paid to our independent distributors could
reduce our ability to recruit and retain them.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">One of
our significant expenses is the payment of compensation to our independent
distributors. This compensation includes commissions, bonuses, awards and
prizes. From the date we changed our sales method to direct sales through
independent distributors, August&#160;1, 2003, through December&#160;31, 2007,
compensation paid to our independent distributors represented 50% of our total
revenues. We may&#160;change our independent distributor compensation plan in
seeking to better manage these incentives, to monitor the amount of independent
distributor compensation paid and to prevent independent distributor
compensation from having a significant adverse effect on our revenues. Changes
to our independent distributor compensation plan may&#160;make it difficult for
us to recruit and retain qualified and motivated independent distributors. We do
not have any current plans to change our distributor compensation plan. Further,
as we expand into foreign markets in the future, the laws of those countries may
force us to alter our compensation plan, which may cause a negative trend
amongst our distributors and consequently sales.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
are not in a position to exert the same level of influence or control over our
independent distributors as we could if they were our employees, and we
may&#160;be subject to significant costs and reputation harm in the event our
independent distributors violate any laws or regulations applicable to our
operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
independent distributors are independent contractors and, accordingly, we are
not in a position to provide the same level of control and oversight as we would
if independent distributors were our</font></div><br>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">employees.
While we have implemented independent distributor policies and procedures
designed to govern independent distributor conduct and to protect our goodwill,
there can be no assurance that our independent distributors will comply with our
policies and procedures. Violations by our independent distributors of
applicable law or of our policies and procedures dealing with customers could
reflect negatively on our products and operations and harm our business
reputation. To date, we have not experienced any significant problems affecting
our products, operations or business reputation caused by distributor violations
of our policies and procedures. Additionally, as we expand from our present to
future markets, our marketing system could be found not to comply with these
laws and regulations or may be prohibited. Failure to comply with current or
future markets laws could have a material adverse effect on our business,
financial condition, and results of operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
addition, extensive federal, state and local laws regulate our direct selling
program. The Federal Trade Commission (&#8220;FTC&#8221;) or a court could hold us liable
for the actions of our independent distributors. The FTC could also find us
liable civilly for deceptive advertising if health benefit representations made
by our independent distributors are not supported by competent and reliable
scientific evidence. If any of these representations made by our independent
distributors were deemed fraudulent, the FTC could refer the matter to the
Department of Justice for criminal fraud prosecution. Also, the Food and Drug
Administration (&#8220;FDA&#8221;) could seek to hold us civilly and criminally liable for
misbranding, for adulteration, or for sale of an unapproved new drug if an
independent distributor were to make false or misleading claims, sell a product
past its shelf life, or represent that any of our products were intended for use
in the cure, treatment, or prevention of a disease or health-related condition.
While we train our independent distributors and attempt to monitor our
independent distributors&#8217; marketing claims and sales materials, we cannot ensure
that all of these materials comply with applicable law.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
direct selling program through independent distributors could be found not to be
in compliance with current or newly adopted laws or regulations, which could
subject us to increased costs and reduced distributor participation in sales
efforts, and our revenues would decrease significantly.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
direct marketing program could be found to violate laws or regulations
applicable to direct selling marketing organizations. These laws and regulations
generally are directed at preventing fraudulent or deceptive schemes, often
referred to as &#8220;pyramid&#8221; or &#8220;chain sales&#8221; schemes, by ensuring that product
sales ultimately are made to consumers and that advancement within an
organization is based on sales of the organization&#8217;s products rather than
investments in the organization or other non-retail sales-related criteria. The
regulations concerning these types of marketing programs do not include &#8220;bright
line&#8221; rules&#160;and are inherently fact-based. Thus, even in jurisdictions
where we believe that our direct selling program is in full compliance with
applicable laws or regulations governing direct selling programs, we are subject
to the risk that these laws or regulations or the enforcement or interpretation
of them by governmental agencies or courts can change. The failure of our direct
selling program to comply with current or newly adopted laws or regulations
could result in costs and fines to us and make our independent distributors
reluctant to continue their sales efforts, which would reduce our revenues
significantly.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
also subject to the risk of private party challenges to the legality of our
direct selling program. Direct selling programs of some other companies have
been successfully challenged in the past. The challenges centered on whether the
marketing programs of direct selling companies are investment contracts in
violation of applicable securities laws and pyramid schemes in violation of
applicable FTC rules&#160;and regulations. These challenges have caused direct
selling companies to focus greater attention on generating product sales to
non-participants or non-distributors. Direct selling companies have addressed
these issues by promoting retail sales incentives, tying sales commissions more
directly to retail sales and reclassifying those persons who enroll as
distributors but do not make sales to other persons as retail</font></div><br>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">customers.
An adverse judicial determination with respect to our direct selling program, or
in proceedings not involving us directly but which challenge the legality of
direct selling systems, could have a material adverse effect on our sales
efforts, leading to lower revenues. To date, we have not been subject to any
adverse judicial determination with respect to our direct selling
program.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
April&#160;12, 2006, the Federal Trade Commission (&#8220;FTC&#8221;) proposed a new
Business Opportunity Rule. Under the current Business Opportunity Rule&#160;(16
C.F.R. &#167; 437), the Company does not meet the definition of a &#8220;Business
Opportunity&#8221; and therefore is not subject to the rule. If the proposed Business
Opportunity Rule&#160;is made final by the FTC as proposed, the Company (as well
as all other network marketing companies) will fall within the definition of a
Business Opportunity and will be required to comply with the requirements of the
rule.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Following
publication of the proposed rule, the FTC accepted comments from those who
wished to make a submission. The comment and rebuttal periods have since closed.
In addition to receiving thousands of comments in opposition to the proposed
rule&#160;from direct selling companies and individuals engaged in direct
selling, several members of Congress advised the FTC of their opposition to the
proposed rule.&#160; It is unknown when the FTC will issue a final version of
the proposed rule. The rule, when made final, by the FTC may differ
significantly from the proposed rule. If made final as it is currently proposed,
the proposed rule&#160;would require, among other things, that that all network
marketing companies, including the Company, to provide all prospective
distributors with extensive disclosures at least seven days prior to enrolling
as a distributor.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Company or the sponsor of the prospective distributor will be required to
disclose:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(a)&#160;Identifying
Information: This includes the name, address and telephone number of the
Company, the name of the sponsor of the prospective distributor, and the date on
which the Disclosure Document is provided to the prospect;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(b)&#160;Earnings
Claim Information: If the Company or the sponsor of the prospective distributor
makes earnings claims to the prospective distributor in association with the
opportunity, an Earnings Claim Statement must be provided. The Earnings Claim
Statement must disclose (i)&#160;the beginning and ending dates when the
represented earnings were achieved, (ii)&#160;the number and percentage of all
distributors who achieved that level of earnings within such time period,
(iii)&#160;any specific characteristics applicable to the person making the
earnings claim that differ from the characteristics of the prospect (e.g., a
different geographic location), and (iv)&#160;a statement that written
substantiation for the earnings claim will be made available to the prospective
distributor upon request;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(c)&#160;Legal
Claims: If the Company, or any affiliate or prior business of the Company, or
any of its&#8217;s officers, directors, managers or similar individuals have been the
subject of any civil or criminal action involving misrepresentation, fraud,
securities law violations, or unfair or deceptive practices in the ten years
preceding the date of the Disclosure Document, the full caption of each such
action must be disclosed;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(d)&#160;Refund
Policy: The Company will be required to disclose the terms of its refund
policy;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(e)&#160;Cancellation
and Refund Requests: The Company will be required to disclose the total number
of purchasers who have cancelled their business within the preceding two
years;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(f)&#160;Reference
List: The Company will be required to list the name, city, state, and telephone
numbers of ten people who have enrolled as distributors within the three year
period preceding the date of the Disclosure Document who are located nearest to
the prospective distributor. Alternatively, the Company may disclose such
information for all distributors. The Disclosure Document must also advise
prospective distributors that if they become distributors, their personal
contact information may be disclosed to future prospective
distributors.</font></div><br>
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      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
impact of the proposed rule&#160;could be: (1)&#160;the advance seven day
disclosure will cause a reduction in enrollments; (2)&#160;providing 10
references closest to an applicant will require a significant investment in
advanced software systems; (3)&#160;the reference requirement creates a
confidentiality problem, as it completely ignores distributors right to have
their personal information maintained confidential; (4)&#160;the identity of our
distributors is currently protected as trade secret information and such status
will be compromised; and (5)&#160;the disclosure of legal claims within the
specified categories applies to even those claims that were settled without
admission of liability, and even applies to disclosure of claims in which the
company prevailed on the claims. All of these could cause a significant decrease
in the recruiting of independent distributors to the Company and consequently
affect our ability to sell our products.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
March&#160;18, 2008, the Federal Trade Commission (FTC) issued a revised Notice
of Proposed Rulemaking on March&#160;18, 2008, recommending significant
revisions to the proposed Business Opportunity Rule&#160;that the FTC announced
previously. The revised proposed Rule&#160;indicates that the FTC intends to
<font style="DISPLAY: inline; FONT-STYLE: italic">exempt </font>direct sellers
from coverage of the Revised Proposed Business Opportunity Rule.&#160; The FTC
concluded major revisions to the initial Rule&#160;were necessary to &#8220;avoid
broadly sweeping in sellers of multilevel marketing opportunities&#8221; and &#8220;that the
proposed Rule&#160;is too blunt an instrument to cure fraud in the MLM
industry.&#8221;&#160; Rather, the FTC determined that it will continue to use the
flexibility it has in existing law to enforce and address individual cases of
fraud on a case-by-case basis.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In its
comments and analysis announcing the revisions to the proposed rule, the FTC
made extensive observations that may have as much significance as the revisions
themselves. Specifically, the FTC comments and analysis address:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font>The
inapplicability of the Proposed Rule, as amended, to direct
sellers;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font>The difference
between legitimate multilevel companies and pyramid schemes;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font>The lack of a
need for a specific anti-pyramid rule;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font>The lack of
evidence of&#160; prevalent deceptive practices in the &#8220;MLM [direct selling]
industry&#8221;;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font>The preference
for a fact specific inquiry into the legitimacy of any one entity on a
case-by-case basis rather than a broad rule; and</div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font>The
difficulties and undesirability of imposing a uniform earnings disclosure
requirement across the direct selling industry.</font></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">&#160;
</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In the
proposed revision the FTC has set forth specific language redefining a &#8220;business
opportunity&#8221;, and relies upon three aspects of the definition to effectively
remove direct sellers from coverage.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;</font></font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">First,
the FTC limits coverage to those business relationships in which the prospective
purchasers makes a required payment, but excludes from the definition those
relationships in which the only required payment is for inventory at bona fide
wholesale prices.</font></div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;</font></font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Second,
the application of the Rule&#160;would no longer be triggered by virtue of an
earnings claim being made, i.e. the mere representation by a company that an
individual might make money will not trigger the rule</font></div>
      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; TEXT-INDENT: -9pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;</font></font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Third, in
order to be considered a &#8220;business opportunity&#8221; the company would have to offer
&#8220;business assistance&#8221; to a prospect.&#160; &#8220;Business Assistance&#8221; is defined as
providing locations, outlets, accounts, or customers, or promising to buy back
goods or services that an individual makes.</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">&#160;
</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
provisions significantly narrow the scope of the initially proposed
rule&#160;and reflect the FTC&#8217;s intent to remove direct sellers from coverage.
While the FTC Business Opportunity rulemaking is not complete, it appears to be
the intention of the FTC to remove direct sellers from the coverage of
the</font></div><br>
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      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">revised
Rule, it is still too early to evaluate the effect that the rule would have on
the us and our distributors to attract and retain other distributors and
customers .</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may&#160;be held responsible for taxes or assessments relating to the activities
of our independent distributors resulting in greater costs to us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We treat
our independent distributors as independent contractors and do not pay
employment taxes, like social security, or similar taxes in other countries with
respect to compensation paid to them. In the event that an local regulatory
authority in which our distributors operate deem the distributor to be an
employee, we may&#160;be held responsible for a variety of obligations imposed
on employers relating to their employees, including, but limited to, employment
taxes (social security) and related taxes, plus any related assessments and
penalties, which could significantly increase our operating costs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
are affected by extensive laws, governmental regulations, administrative
determinations, court decisions and similar constraints which can make
compliance costly and subject us to enforcement actions by governmental
agencies.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
formulation, manufacturing, packaging, labeling, holding, storage, distribution,
advertising and sale of our products are affected by extensive laws,
governmental regulations and policies, administrative determinations, court
decisions and similar constraints at the federal, state and local levels, both
within the United States and any country that we conduct business in. There can
be no assurance that we or our independent distributors will be in compliance
with all of these regulations. A failure by us or our distributors to comply
with these laws and regulations could lead to governmental investigations, civil
and criminal prosecutions, administrative hearings and court proceedings, civil
and criminal penalties, injunctions against product sales or advertising, civil
and criminal liability for the Company and/or its principals, bad publicity, and
tort claims arising out of governmental or judicial findings of fact or
conclusions of law adverse to the Company or its principals. In addition, the
adoption of new regulations and policies or changes in the interpretations of
existing regulations and policies may&#160;result in significant new compliance
costs or discontinuation of product sales and may&#160;adversely affect the
marketing of our products, resulting in decreases in revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The U.S.
Food and Drug Administration, the FDA, and other similar government agencies in
other countries, regulate our products and our product labeling. Among other
matters, the FDA and other foreign agencies regulate nutrient content and
ingredient information, claims of the effect of a dietary supplement or dietary
ingredient on a body structure or function, and claims of the effect of a
dietary supplement or dietary ingredient on disease or risk of disease. The FDA
and other foreign agencies can initiate civil and criminal proceedings against
persons who make false or misleading claims on labels or in labeling, who engage
in misbranding, who evidence an intent to sell their products for a therapeutic
use not approved by the agency, who sell misbranded products, or who sell
adulterated products. The FDA and other foreign agencies can also require the
recall of all products that are misbranded or adulterated.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The U.S.
Federal Trade Commission, the FTC and their counterpart agencies in other
countries that we may operate in, have jurisdiction over our product
advertising. These agencies can initiate civil proceedings for deceptive
advertising and deceptive advertising practices. It can seek for companies to
make payments to consumers or disgorgement of profits from the sale of any
product held to have been deceptively advertised. These agencies or a court of
law can require a company found liable to give notice of the availability of
refunds in part&#160;or whole for the product purchase price for all products
sold through use of advertising deemed deceptive.</font></div><br>
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</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">State and
local authorities may&#160;likewise bring enforcement actions for misbranding,
adulteration, and deceptive advertising. Those actions may&#160;be pursued
simultaneously with federal actions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
August&#160;25, 2007 the FDA adopted the final regulations for manufacturers of
a standard originally proposed in March&#160;2003 of the current Good
Manufacturing Practices guidelines (&#8220;cGMPs&#8221;) for the manufacturing, packing,
holding and distributing dietary ingredients and nutritional supplements. The
new regulations will require nutritional supplements to be prepared, packaged,
and held in compliance with strict rules, and will require quality control
provisions that may mandate redundant testing of product ingredients at each
separate stage of manufacture and are intended to ensure that products are
accurately labeled and don&#8217;t contain adulterants and contaminants. While the
rule&#160;allowed for medium and small manufacturers to have until 2009 and
2010, respectively, to comply with the cGMPs, most of our contract manufacturers
did not qualify as small or medium. As a result, many of our contract
manufacturers began following the proposed cGMPs or even pharmaceutical cGMPs
well before the final rule&#160;was published. We expect to see an increase in
our manufacturing costs as a result of the necessary increase in testing of raw
ingredients and finished products and compliance with higher quality standards,
although we are not certain of the amount of these costs. We expect that the
cGMPs will increase our product costs by requiring our various contract
manufacturers to expend additional capital and resources on quality control
testing, new personnel, plant redesign, new equipment, facilities placement,
recordkeeping and ingredient and product testing.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The FDA,
other state and local regulatory authorities, and the Direct Selling
Association, invite the public to complain if they experience any adverse
effects from the consumption of nutritional supplements. These complaints
may&#160;be made public. Regardless of whether complaints of this kind are
substantiated or proven, public release of complaints of this type may&#160;have
an adverse effect upon public perception of us, the quality of our products or
the prudence of taking our products. Changes in consumer attitudes based on
adverse event reports could adversely affect the potential market for and sales
of our products and make it more difficult to recruit and retain independent
distributors and obtain endorsers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
ability to grow sales is dependent on growing in our existing markets as well as
expanding into new markets in other countries. As we expand into foreign
markets, we will become subject to different political, cultural, exchange rate,
economic, legal and operational risks. We may invest significant amounts in
these expansions with little success.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
currently are focusing our marketing efforts on the United States and Canadian
markets to grow the number of independent distributors and consequently our
sales. We believe that our future growth will come from both the markets that we
are currently operating in and other international markets. We do not have any
history of international expansion, and there for have no assurance that any
efforts will result in increased revenue. Additionally, we may need to overcome
significant regulatory and legal barriers in order to sell our products and
whether our distribution method will be accepted. These markets may require that
we reformulate our product to comply with local customs and laws, however, there
is no guarantee that the reformulated product will be approved for sale by these
regulatory agencies or attract local distributors. These countries may not
accept our current compensation plan for distributors which may result in an
inability to attract and retain local distributors. International taxing laws
may also prevent us from operating or repatriating profits from operations in
these countries, and the complexity of transfer pricing laws could diminish the
effective returns from investments in foreign countries. Many of our competitors
already have significant international operations which could be an additional
barrier for entry into a foreign market as the local population may be
established in other compensation opportunities and similar products. We believe
that success in foreign markets will be dependent on the integration of these
markets in a seamless way into our current compensation plan and also the
ability of our existing distributors to assist in building downline sales
organizations.</font></div><br>
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      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
are dependent on a limited number of independent suppliers and manufacturers of
our products, which may&#160;affect our ability to deliver our products in a
timely manner. If we are not able to ensure timely product deliveries, potential
distributors and customers may&#160;not order our products, and our revenues
may&#160;decrease.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We rely
entirely on a limited number of third parties to supply and manufacture our
products. Our flagship product, Bazi&#8482;, is manufactured by Arizona Packaging and
Production under the terms of a five year exclusive manufacturing agreement,
which stipulates certain prices, quantities and delivery timelines. For our
other legacy products, manufacturers produce these products on a purchase order
basis only and can terminate their relationships with us at will. Our two other
primary manufacturers are Valentine Industries,&#160;Inc. and GMP Laboratories
of America,&#160;Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
third party manufacturing parties may&#160;be unable to satisfy our supply
requirements, manufacture our products on a timely basis, fill and ship our
orders promptly, provide services at competitive costs or offer reliable
products and services. The failure to meet of any of these critical needs would
delay or reduce product shipment and adversely affect our revenues, as well as
jeopardize our relationships with our independent distributors and customers. In
the event any of our third party manufacturers were to become unable or
unwilling to continue to provide us with products in required volumes and at
suitable quality levels, we would be required to identify and obtain acceptable
replacement manufacturing sources. There is no assurance that we would be able
to obtain alternative manufacturing sources on a timely basis. Additionally, all
our third party manufactures source the raw materials for our products, and if
we were to use alternative manufacturers we may not be able to duplicate the
exact taste and consistency profile of the product from the original
manufacturer. An extended interruption in the supply of our products would
result in decreased product sales and our revenues would likely decline. We
believe that we can meet our current supply and manufacturing requirements with
our current suppliers and manufacturers or with available substitute suppliers
and manufacturers. Historically, we have not experienced any delays or
disruptions to our business caused by difficulties in obtaining
supplies.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
are dependent on our third party manufacturers to supply our products in the
compositions we require, and we do not independently analyze our products. Any
errors in our product manufacturing could result in product recalls, significant
legal exposure, and reduced revenues and the loss of distributors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">While we
require that our manufacturers verify the accuracy of the contents of our
products, we do not have the expertise or personnel to monitor the production of
products by these third parties. We rely exclusively, without independent
verification, on certificates of analysis regarding product content provided by
our third party suppliers and limited safety testing by them. We cannot be
assured that these outside manufacturers will continue to supply products to us
reliably in the compositions we require. Errors in the manufacture of our
products could result in product recalls, significant legal exposure, adverse
publicity, decreased revenues, and loss of distributors and
endorsers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
face significant competition from existing suppliers of products similar to
ours. If we are not able to compete with these companies effectively, then we
may&#160;not be profitable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We face
intense competition from numerous resellers, manufacturers and wholesalers of
liquid nutritional supplements, energy drinks, protein shakes and nutritional
supplements similar to ours, including other network marketing channels, retail,
online and mail order providers. We consider the significant competing products
in the U.S. market for our flagship product Bazi&#8482; to be FreeLife International&#174;,
Xango&#174; and Monavie&#174; for a liquid nutrition drinks, and for our legacy products
to be Myoplex&#174; for protein drinks, Gatorade&#174;, Powerade&#174;, Acclerade&#174;, and All
Sport&#174; for energy drinks,</font></div><br>
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</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and that
Nature&#8217;s Bounty,&#160;Inc. and General Nutrition Centers,&#160;Inc. are the
significant producers of vitamins. Most of our competitors have longer operating
histories, established brands in the marketplace, revenues significantly greater
than ours, more capital and better access to capital than us. We expect that
these competitors may&#160;use their resources to engage in various business
activities that could result in reduced sales of our products. Companies with
greater capital and research capabilities could re-formulate existing products
or formulate new products that could gain wide marketplace acceptance, which
could have a depressive effect on our future sales. In addition, aggressive
advertising and promotion by our competitors may&#160;require us to compete by
lowering prices because we do not have the resources to engage in marketing
campaigns against these competitors, and the economic viability of our
operations likely would be diminished.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Customers
and distributors may&#160;not be able to distinguish our products by name from
competitor&#8217;s products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Due to
the similarity of our company name to those of many of our competitor&#8217;s products
may&#160;result in the loss of customers and distributors as well as impair the
recruiting efforts of our independent distributors. This could result in the
loss of repeat business as well as the inability to generate increased revenue
and attract future independent distributors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Adverse
publicity associated with our products, ingredients or direct selling program,
or those of similar companies, could adversely affect our sales and
revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Adverse
publicity concerning any actual or purported failure of our Company or our
independent distributors to comply with applicable laws and regulations
regarding any aspect of our business could have an adverse effect on the public
perception of our Company. This, in turn, could negatively affect our ability to
obtain endorsers and attract, motivate and retain independent distributors,
which would have a material adverse effect on our ability to generate sales and
revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
independent distributors&#8217; and customers&#8217; perception of the safety and quality of
our products as well as similar products distributed by others can be
significantly influenced by national media attention, publicized scientific
research or findings, product liability claims and other publicity concerning
our products or similar products distributed by others. Adverse publicity,
whether or not accurate, that associates consumption of our products or any
similar products with illness or other adverse effects, will likely diminish the
public&#8217;s perception of our products. Claims that any products are ineffective,
inappropriately labeled or have inaccurate instructions as to their use, could
have a material adverse effect on the market demand for our products, including
reducing our sales and revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
results of new nutritional dietary supplement studies could be contrary to
general industry knowledge on which the formulation and marketing of our
products are based and could materially and adversely impact our product sales.
The federal government, research institutes, universities and others regularly
conduct research into the use, effectiveness and potential for adverse results
from the use of nutritional dietary supplements. Even if adverse studies are
subject to substantial criticism or not supported by accepted scientific
methodology, publicity surrounding the reports of these studies may&#160;result
in flat or decreased sales of our products. In the past few years, the
effectiveness of, and potential for harm from, some of the leading herbal
supplements, which contain ingredients not in our products, have come into
question as a result of research studies. These negative study results and other
negative publicity could adversely affect the potential market and sales of our
products, as well as increase our product returns, resulting in increased
expenses to us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">While we
have not received any direct negative publicity, the publicized studies
associating increased mortality rates with high dosages of Vitamin E has
increased awareness of our consumers relating to the</font></div><br>
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</font></div>
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</font></div>
        <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">safety of
the ingredients in our supplements. Additionally, in 2007 there was a study
published regarding increased mortality rates in higher doses of antioxidants
other than those from natural fruit, berry and vegetable sources which again
increased awareness among our consumers relating to the safety of the
ingredients in our products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Nutritional
supplement products may&#160;be supported by only limited conclusive clinical
studies resulting in less market acceptance of these products and lower revenues
or lower growth rates in revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
nutritional supplement products are made from vitamins, minerals, amino acids,
herbs, botanicals, fruits, berries and other substances for which there is a
long history of human consumption. However, there is little long-term experience
with human consumption of certain product ingredients or combinations of
ingredients in concentrated form. Although we believe all of our products fall
within the generally known safe limits for daily doses of each ingredient
contained within them, nutrition science is imperfect. Moreover, some people
have peculiar sensitivities or reactions to nutrients commonly found in foods
and may&#160;have similar sensitivities or reactions to nutrients contained in
our products. Furthermore, nutrition science is subject to change based on new
research. New scientific evidence may&#160;disprove the efficacy of our products
or prove our products to have effects not previously known. We could be
adversely affected in the event that our products should prove to be or if they
are asserted to be ineffective or harmful to consumers, or if adverse effects
are associated with a competitor&#8217;s similar products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
products may&#160;have higher prices than the products of most of our
competitors, which may&#160;make it difficult for us to achieve significant
revenues.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may&#160;have difficulty in achieving market acceptance of our products because
our products are among the highest priced in their categories due to the
ingredients that we require in our products. While we believe that our products
are superior to competing, lower priced products, consumers must be educated
about our products. If we are unable to achieve market acceptance, we will have
difficulty in achieving revenue growth, which would likely result in continuing
operating losses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
sale of our products involves product liability and related risks that could
expose us to significant insurance and loss expenses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We face
an inherent risk of exposure to product liability claims if the use of our
products results in, or is believed to have resulted in, illness or injury. Most
of our products contain combinations of ingredients, and there is little
long-term experience with the effect of these combinations. In addition,
interactions of these products with other products, prescription medicines and
over-the-counter drugs have not been fully explored or understood and
may&#160;have unintended consequences. While our third party manufacturers
perform&#160;tests in connection with the formulations of our products, these
tests are not designed to evaluate the inherent safety of our
products.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
we maintain product liability insurance, it may&#160;not be sufficient to cover
product liability claims and such claims could have a material adverse effect on
our business. The successful assertion or settlement of an uninsured claim, a
significant number of insured claims or a claim exceeding the limits of our
insurance coverage would harm us by adding further costs to our business and by
diverting the attention of our senior management from the operation of our
business. Even if we successfully defend a liability claim, the uninsured
litigation costs and adverse publicity may&#160;be harmful to our
business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
product liability claim may&#160;increase our costs, and adversely affect our
revenues and operating income. Moreover, liability claims arising from a serious
adverse event may&#160;increase our costs through higher insurance premiums and
deductibles, and may&#160;make it more difficult to secure adequate
insurance</font></div><br>
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</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">coverage
in the future. In addition, our product liability insurance may&#160;fail to
cover future product liability claims, which if adversely determined could
subject us to substantial monetary damages.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">A
slower growth rate in the nutritional supplement industry could lessen our sales
and make it more difficult for us to achieve growth and become
profitable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">According
to the Nutrition Business Journal (NBJ) (July/August&#160;2007), the $85-billion
U.S. nutrition industry grew 10% in 2006, its highest annual growth since 1998.
The more mature supplement segment topped $22.4 billion and 5% growth, and the
other three major categories were in double digits. Functional foods posted
$31.4 billion in sales and its highest growth since 2002 on a strong performance
in beverages and niche categories. There have continued to be negative impacts
of Echinacea, Ephedra on the supplement market and low-carb products affected
minerals and liquid meal replacements. The negative tide of media is no longer
putting problematic categories like ephedra or prohormones at stake, but
foundation categories like E, C and even multivitamins and in 2007 antioxidants
were subject to the same scrutiny. All these factors could have a negative
impact on our sale growth.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" 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">&#160;
</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">New
products may&#160;render our products obsolete and our sales
may&#160;suffer.</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">&#160;
</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
nutritional supplement market historically has been influenced by &#8220;fad&#8221; products
that became popular due to changing consumer tastes and media attention. Our
products may&#160;be rendered obsolete by changes in popular tastes as well as
media attention on new products or adverse media attention on nutritional
supplements, which could reduce our sales. It may&#160;be difficult for us to
change our product line to adapt to changing tastes. In addition, other &#8220;fad&#8221;
food regimens, such as low carbohydrate diets, may&#160;decrease the overall
popularity and use of our products, as well as result in higher returns of our
products, thereby increasing our expenses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may&#160;from time to time write off obsolete inventories resulting in higher
expenses and consequently greater net losses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
we maintain high levels of inventories to meet the product needs of our
independent distributors and customers, a change by us of our product mix could
result in write downs of our inventories. During 2007 we decided to modify the
sales efforts from multiple products to a single product focus on our flagship
product Bazi&#8482;. As a consequence of this decision, we deemed the inventory of
certain of the legacy products to be obsolete due to the low likelihood that we
would sell these products before their expiration. Likewise, in 2006 we
discontinued certain other legacy products and sales tools, and therefore we
deemed the remaining inventory to be obsolete. As a result we incurred a
write-down against inventory for the year ended December&#160;31, 2007 of
$189,403 and a charge against obsolete inventory of $123,511 in 2006. Write
downs and charges of this type have historically increased our net losses, and
if experienced in the future, will make it more difficult for us to achieve
profitability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Product
returns in excess of our estimates could require us to incur significant
additional expenses, which would make it difficult for us to achieve
profitability.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We have
established a reserve in our financial statements for product returns which is
based upon our historical experience. Additionally, we only have limited sales
experience with Bazi&#8482; as the product was only introduced to the market in
January&#160;2007. If this reserve were to be inadequate, we may&#160;incur
significant expenses for product returns. As we gain more operating experience,
we may&#160;need to revise our reserves for product returns.</font></div>
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          <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; TEXT-ALIGN: left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
we are not able to adequately protect our intellectual property, then we
may&#160;not be able to compete effectively and we may&#160;not be
profitable.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
existing proprietary rights may&#160;not afford remedies and protections
necessary to prevent infringement, reformulation, theft, misappropriation and
other improper use of our products by competitors. We own the formulations
contained in some our products. We consider these product formulations our
critical proprietary property, which must be protected from competitors. We do
not have any patents because we do not believe they are necessary to protect our
proprietary rights. Although trade secret, trademark, copyright and patent laws
generally provide such protection and we attempt to protect ourselves through
contracts with manufacturers of our products, we may&#160;not be successful in
enforcing our rights. In addition, enforcement of our proprietary rights
may&#160;require lengthy and expensive litigation. We have attempted to protect
some of the trade names and trademarks used for our products by registering them
with the U.S. Patent and Trademark Office, but we must rely on common law
trademark rights to protect our unregistered trademarks. Common law trademark
rights do not provide the same remedies as are granted to federally registered
trademarks and the rights of a common law trademark are limited to the
geographic area in which the trademark is actually used. Our inability to
protect our intellectual property could have a material adverse impact on our
ability to compete and could make it difficult for us to achieve a
profit.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If
we were to lose one of our significant independent distributor leaders, there
could be an adverse result on our sales.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
current distribution model relies on the efforts of our independent distributors
in buying our products and recruiting and retaining new independent distributors
in their downline organization. Our successful independent distributor leaders
have significant downline organizations that they personally train and
communicate with, and consequently develop business relationships. The loss of
one of these leaders could result in lower recruitment and the inability of us
to retain the downline organization, which could result in a significant
decrease in revenue and an increased cost for us to attract and retain new
distributors for replace the distributors that left our company. The loss of a
leader may be a result of our actions, like changes to the compensation plan or
changing the products that we sell or as a result of factors that we have no
control over, like business and economic conditions, public perception of
network marketing, public perception of nutritional products, other competing
network marketing companies or the results of ruling by regulatory bodies
against us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Interruptions
to or failure of our information processing systems may&#160;disrupt our
business and our sales may&#160;suffer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We are
dependent on our information processing systems to timely process customer
orders, oversee and manage our distributor network and control our inventory,
and for our distributors to communicate with their customers and distributors in
their network. Since the initial purchase of our technology system in 2001
through December&#160;31, 2007, we had spent $335,763 on technology system
upgrades. We have experienced interruptions and may&#160;in the future
experience interruptions to or failure of our information processing system;
however, none of the interruptions to date have materially disrupted our
business. Interruptions to or failure of our information processing systems
may&#160;be costly to fix and may&#160;damage our relationships with our
customers and distributors, and cause us to lose customers and distributors. If
we are unable to fix problems with our information processing systems in a
timely manner our sales may&#160;suffer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" 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">&#160;
</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Loss
of key personnel could impair our ability to operate.</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">&#160;
</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
success also depends on hiring, retaining and integrating senior management and
skilled employees, including John Pougnet, our Chief Executive Officer and Chief
Financial Officer, Douglas Ridley, our President, Timothy Transtrum, our Vice
President of Operations, John Hutchinson, Vice</font></div><br>
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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">13</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
          <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; TEXT-ALIGN: left">&#160;</div>
        </div>
      </div>
      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">President
of IT and Web, Sanjeev Javia, our Vice President of Product Development and
Endorser Relations and Sanford D. Greenberg, our founder, in order to expand our
business. Certain of our officers have employment agreements that have
stipulated service terms. As with all personal service providers, our officers
can terminate their relationship with us at will. Our inability to retain these
individuals may&#160;result in our reduced ability to operate our business. We
do not have key man life insurance on any of our executive
officers.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Provisions
in our articles of incorporation and bylaws may prevent a change in control of
us which could limit the price that investors may be willing to pay for our
securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Provisions
contained in our articles of incorporation and bylaws could make it more
difficult for a third party to acquire us or for our shareholders to change our
management. These provisions:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 45pt; TEXT-INDENT: -18pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">give our
board of directors the right to set the number of directors between one and nine
directors;</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">&#160;
</font></div>
    </div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 63pt; TEXT-INDENT: -36pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">permit
the board of directors to fill vacancies resulting from an increase in the
number of directors or the death or resignation of a board
member;</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">&#160;
</font></div>
    </div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 27pt; 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"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">prohibit
cumulative voting in the election of directors; and</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">&#160;
</font></div>
    </div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: -45pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font><font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;<font id="TAB2" style="LETTER-SPACING: 9pt">&#160;&#160;&#160;</font>&#160;</font></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">authorize
our board of directors to issue shares of preferred stock in the future without
shareholder approval and to determine the rights, preferences, privileges and
restrictions of such preferred stock.</font></div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
provisions may limit the price that investors are willing to pay in the future
for our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
price of our securities could be subject to wide fluctuations and your
investment could decline in&#160;value.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
market price of the securities of a company such as ours with little name
recognition in the financial community and without significant revenues can be
subject to wide price swings. For example, the bid price of our common stock has
ranged from a high $16.25 to a low of $0.19 during the twenty quarters ended
December&#160;31, 2007. The market price of our securities may be subject to
wide changes in response to quarterly variations in operating results,
announcements of new products by us or our competitors, reports by securities
analysts, volume trading, or other events or factors. In addition, the financial
markets have experienced significant price and volume fluctuations for a number
of reasons, including the failure of certain companies to meet market
expectations. These broad market price swings, or any industry-specific market
fluctuations, may adversely affect the market price of our
securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Speculative
traders may anticipate a decline in the market price of our securities and
engage in short sales of our securities. Such short sales could further
negatively affect the market price of our securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Companies
that have experienced volatility in the market price of their stock have been
the subject of securities class action litigation. If we were to become the
subject of securities class action litigation, it could result in substantial
costs and a significant diversion of our management&#8217;s attention and
resources.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div><br>
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</font></div>
      </div>
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      </div>
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</font></div>
      </div>
      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><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;
</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
may issue preferred stock with rights senior to the common
stock.</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">&#160;
</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
articles of incorporation authorize the issuance of up to 5,000,000 shares of
preferred stock without shareholder approval and on terms established by our
directors. We have no existing plans to issue shares of preferred stock.
However, the rights and preferences of any such class or series of preferred
stock would be established by our board of directors in its sole discretion and
may have dividend, voting, liquidation and other rights and preferences that are
senior to the rights of the common stock.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" 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">&#160;
</font><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">You
should not rely on an investment in our common stock for the payment of cash
dividends.</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">&#160;
</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Because
of our significant operating losses and because we intend to retain future
profits, if any, to expand our business, we have never paid cash dividends on
our stock and do not anticipate paying any cash dividends in the foreseeable
future. You should not make an investment in our securities if you require
dividend income. Any return on investment in our common stock would only come
from an increase in the market price of our stock, which is uncertain and
unpredictable.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div><br>
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</font></div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </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; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="selling">SELLING STOCKHOLDERS</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>This prospectus covers possible sales
by our officers, directors and affiliates of shares they acquire through
exercise of stock options (&#8220;options&#8221;) granted under our 2003 Incentive Stock
Plan, which we refer to as the &#8220;Plan.&#8221; The names of such individuals who may be
selling stockholders from time to time are listed below, along with the number
of shares of common stock currently owned by them and the number of shares
offered for sale. The address of each individual is in care of us at 480 South
Holly Street, Denver CO 80246..</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The following table shows, as of June
9, 2008:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The name
of each selling stockholder;</font></div>
    </div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">How many
shares the selling stockholder beneficially owns;</font></div>
    </div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font>&#160;&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">How many
shares the selling stockholder can resell under this prospectus;
and</font></div>
    </div>
    <div>
      <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt;" face="Symbol, serif"><font style="DISPLAY: inline; FONT-FAMILY: Times New Roman">&#9679;</font>&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Assuming
a selling stockholder sells all shares listed next to his name, how many shares
the selling stockholder will beneficially own after completion of the
offering.</font></div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
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prospectus form time to time in the future to update or change this list of
selling stockholders and shares that may be resold.</font></div>
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            <td align="left" valign="bottom" width="32%">
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="32%">
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            <td align="right" 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="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>
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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" 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="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
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            <td align="left" valign="bottom" width="32%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Petrelli,
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            <td align="right" 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="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
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          <tr bgcolor="white">
            <td align="left" valign="bottom" width="32%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Pougnet,
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            <td align="right" valign="bottom" width="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
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            <td align="left" valign="bottom" width="32%">
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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="6%"><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">120,000</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="4%"><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="11%"><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="5%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">-</font></td>
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            <td align="left" valign="bottom" width="32%">
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            <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>
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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="6%"><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>
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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="4%"><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="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">20,000</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>
            <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="5%"><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="32%" 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 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="right" 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" 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 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="right" valign="bottom" width="6%" 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="PADDING-BOTTOM: 2px"><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">&#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>
            <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%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="4%" 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="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="11%" style="BORDER-BOTTOM: black 2px solid"><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>
            <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%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            <td align="right" valign="bottom" width="5%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
          </tr>
          <tr bgcolor="linen">
            <td valign="bottom" width="32%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;
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            <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">1,720,537</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="6%"><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">1,435,000</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>
            <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="4%"><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="11%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">600,101</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="5%"><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; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
      all stock options exercisable under the Plan, regardless of vesting. Does
      not include any other shares owned by the selling
    stockholder.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <td align="right" style="WIDTH: 36pt">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)&#160;&#160;</font></div>
            </td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Assumes
      that all of the shares registered in this Prospectus are sold by the
      Selling Stockholders.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="planofdist">PLAN OF DISTRIBUTION</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>We have been advised by the selling
stockholders that they intend to sell all or a portion of the shares offered
from time to time on the American Stock Exchange and that sales will be made at
prices quoted on the American Stock Exchange at the times of sale. The selling
stockholders may also make private sales directly or through brokers who may act
as agents or principals. Further, the selling stockholders may choose to dispose
of their shares by gift to a third party or as a donation to a charitable or
other non-profit entity. In connection with any sales, the selling stockholders
and any participating brokers may be deemed to be underwriters within the
meaning of the Securities Act of 1933.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Any broker-dealer participating as
agent for the selling stockholders or for the purchasers may receive
commissions. Broker-dealers may agree with the selling stockholders to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as</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">16</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </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; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">agent for
the selling stockholders, to purchase as principal any unsold shares at the
price required to fulfill the broker-dealer commitment to the selling
stockholders. Broker-dealers who acquire shares as principal may thereafter
resell such shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above), in the
over-the-counter market, in negotiated transactions or otherwise at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with these resales may pay to or receive commissions from the
purchasers.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>We have advised the selling
stockholders that Regulation M promulgated under the Securities Exchange Act of
1934 may apply to sales in the market and has informed them of the possible need
for delivery of copies of this prospectus. The selling stockholders may
indemnify any broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities arising under
the Securities Act of 1933. Any commissions paid or any discounts or concessions
allowed to any broker-dealers, and, if any broker-dealers purchase shares as
principal, any profits received on the resale of shares, may be deemed to be
underwriting discounts and commissions under the Securities Act of
1933.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Upon notification by a selling
stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a cross or block trade, a
supplemental prospectus will be filed under Rule 424(c) under the Securities Act
of 1933, setting forth the name of the participating broker-dealer(s), the
number of shares involved, the price at which the shares were sold by the
selling stockholders, the commissions paid or discounts or concessions allowed
by the selling stockholders to such broker-dealer(s), and where applicable, that
the broker-dealer(s) did not conduct any investigation to verify the information
set forth in this resale prospectus.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 and 701 under the
Securities Act may be resold under Rule 144 rather than pursuant to this
prospectus. In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated), including any person who may be deemed to
be our &#8220;affiliate,&#8221; is entitled to sell within any three month period
&#8220;restricted shares&#8221; beneficially owned by him or her in an amount that does not
exceed the greater of (i) 1% of the then outstanding shares of common stock or
(ii) the average weekly trading volume in shares of common stock during the four
calendar weeks preceding such sale, provided that at least one year has elapsed
since such shares were acquired from us or our affiliate. Sales are also subject
to certain requirements as to the manner of sale, notice and availability of
current public information regarding us. A person who has not been our
&#8220;affiliate&#8221; at any time within three months prior to the sale is entitled to
sell his or her shares without regard to the volume limitations or the other
requirements of Rule 144, provided that at least one year has elapsed since the
shares were acquired from us or our affiliate. In general, under Rule 701 as
currently in effect, any employee, consultant or advisor of us who purchases
shares from us in connection with a compensatory stock or option plan or other
written agreement related to compensation is eligible to resell these shares in
reliance on Rule 144, but without compliance with the certain restrictions
contained in Rule 144.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="secposition">SEC POSITION REGARDING INDEMNIFICATION</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Our Articles of Incorporation and
Bylaws provide for indemnification of officers and directors, among other
things, in instances in which they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, our best interests and in
which, with respect to criminal proceedings, they had no reasonable cause to
believe their conduct was unlawful.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended, may be
permitted to our directors, officers or persons controlling us under the
provisions described above,</font></div><br>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">we have
been informed that in the opinion of the Securities and Exchange Commission,
indemnification is against public policy as expressed in that Act and is
therefore unenforceable.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="descriptionofplan">DESCRIPTION OF THE PLAN</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2003
Stock Incentive Plan</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; 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;In
June&#160;2003, The 2003 Stock Incentive Plan (the &#8220;Plan&#8221;) was adopted by the
Company. The 2003 Stock Incentive plan included incentive and non-qualified
stock options and restricted stock. The Plan provided that with respect to
incentive stock options (ISOs) the option price per share must be at least the
fair market value (as determined by the Compensation Committee, or in lieu
thereof, the Board of Directors) of the Common Stock on the date the stock
option was granted or based on daily quotes from an exchange or quotation system
designated by the compensation committee as the primary market for the shares.
Under the Plan, if for any reason, a change in control occurred, all shares
subject to the Plan immediately became vested and exercisable.&#160;&#160;The
Plan provided for the number of shares to be granted under the 2003 Stock
Incentive Plan to be 800,000 shares of our Common Stock. The 2003 Stock
Incentive Plan is intended to attract persons of training, experience, and
ability to continue as employees, directors, and consultants of our company, and
to furnish additional incentive to such persons to become stockholders of our
company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Compensation Committee of our Board of Directors, which we refer to as the
&#8220;administrator,&#8221; administers the 2003 Stock Incentive Plan. The administrator
has the discretion to interpret the provisions of the 2003 Stock Incentive Plan.
The administrator will also determine the persons who will receive awards under
the 2003 Stock Incentive Plan, and the number of shares, vesting period, and
other terms and conditions of the awards. Our Board of Directors may amend or
discontinue the 2003 Stock Incentive Plan at any time, and the 2003 Stock
Incentive Plan will expire July&#160;1, 2013.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Options
granted under the 2003 Stock Incentive Plan may be either incentive stock
options, as defined under the Internal Revenue Code, or nonqualified options.
The expiration date, maximum number of shares purchasable, vesting provisions,
and any other provisions of options granted under the 2003 Stock Incentive Plan
will be established at the time of grant. The 2003 Stock Incentive Plan
administrator will set the term of each option, but no options may be granted
for terms of greater than ten years. Options will vest and become exercisable in
whole or in one or more installments at such time as may be determined by the
plan administrator. With respect to incentive stock options granted, the
exercise price may not be less than the fair market value of the Common Stock on
the date of grant, and shall not be less than 110% of the fair market value of
the Common Stock on the date of grant in the event an optionee owns 10% or more
of our Common Stock. With respect to nonqualified options, the exercise price
may be less than the fair market value of the Common Stock on the date of grant.
If the optionee terminates his or her relationship with our Company for any
reason, including death or disability, the optionee (or the optionee&#8217;s estate)
may exercise any vested options for a three-month period following his or her
termination.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We may
grant shares of restricted stock under the 2003 Stock Incentive Plan to eligible
persons upon the payment of consideration, if any, as determined by the plan
administrator. The administrator may establish a performance goal that must be
achieved as a condition to the retention of the restricted stock. The
performance goal may be based on the attainment of performance measurement
criteria, which may differ as to various eligible persons. The administrator
will set the performance criteria and will communicate the criteria in writing
to the award recipient prior to the commencement of the period to which the
performance relates. During the restricted period, and subject to restrictions
on transfer of the shares, the award recipient shall have all voting, dividend,
liquidation, and other rights with respect to the Common Stock. In the event the
eligible person ceases to be an employee, director, or consultant during
a</font></div>
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">restriction
period, or in the event performance goals attributable to a restricted stock
award are not achieved, the shares subject to the award that have not been
earned are subject to forfeiture.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">If any
change is made in the Common Stock subject to the 2003 Stock Incentive Plan, or
subject to any award granted under the 2003 Stock Incentive Plan (through stock
dividends, stock splits, combination of shares, or otherwise), the 2003 Stock
Incentive Plan provides that appropriate adjustments will be made as to the
aggregate number and exercise prices with respect to each outstanding award. In
the event of a merger, consolidation, or other reorganization of our Company,
all restrictions relating to restricted stock awards will lapse, and all
outstanding stock options will vest. Unless the agreement governing the change
in control provides otherwise, upon consummation of the change in control, the
2003 Stock Incentive Plan will terminate and all outstanding options will
terminate if not exercised prior to the consummation of the change in
control.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 27pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
November&#160;17, 2004, the 2003 Stock Incentive Plan was amended to increase
the number of shares available to issue under its terms to 1,000,000 shares of
our Common Stock. Effective July&#160;22, 2005 the shareholders approved a
resolution to increase the number of shares available under the 2003 Stock
Incentive Plan to 1,800,000. On March 7, 2007 the shareholders approved a
resolution to increase the number of shares available under the 2003 Stock
Incentive Plan to 2,200,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
November 12, 2007 the shareholders approved an increased the number of shares
available under the 2003 Stock Incentive Plan to 3,000,000 as our Board of
Directors has determined that additional options are necessary to attract and
retain qualified employees, managers and executive officers and
directors.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="applicable">APPLICABLE SECURITIES LAW RESTRICTIONS</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>If the optionee is deemed to be an
&#8220;affiliate&#8221; (as that term is defined under the Securities Act of 1933, as
amended), the resale of the shares purchased upon exercise of options covered
hereby will be subject to certain restrictions and requirements. Our legal
counsel may be called upon to discuss these applicable restrictions and
requirements with any optionee who may be deemed to be an affiliate, prior to
exercising an option.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>In addition to the requirements imposed
by the Securities Act of 1933, the antifraud provisions of the Securities
Exchange Act of 1934 and the rules thereunder (including Rule 10b-5) are
applicable to any sale of shares acquired pursuant to options.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Up to 3,000,000 shares may be issued
under the Plan. Common shares outstanding and those to be issued upon exercise
of options are fully paid and non-assessable, and each share of stock is
entitled to one vote at all shareholders&#8217; meetings. All shares are equal to each
other with respect to lien rights, liquidation rights and dividend rights. There
are no preemptive rights to purchase additional shares by virtue of the fact
that a person is a shareholder of the Company. Shareholders do not have the
right to cumulate their votes for the election of directors.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Our directors must comply with certain
reporting requirements and resale restrictions pursuant to Sections 16(a) and
16(b) of the Securities Exchange Act of 1934 and the rules thereunder upon the
receipt or disposition of any options.</font></div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="taxconsequences">TAX CONSEQUENCES</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Upon exercise of a non-qualified
option, the optionee will be taxed, as ordinary income, on the difference
between the exercise price of the option and the fair market value of the
underlying shares on the date of exercise. The fair market value then becomes
the optionee&#8217;s basis in the underlying shares.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="legal">LEGAL MATTERS</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The validity of the shares of common
stock offered hereby will be passed on for us by Gary A. Agron, 5445 DTC
Parkway, Suite 520, Greenwood Village, Colorado 80111.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a name="experts">EXPERTS</a></font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Our financial statements for the years
ended December 31, 2007 and 2006, were audited by Gordon, Hughes &amp; Banks,
LLP, an independent registered public accounting firm, as indicated in their
report in our Annual Report on Form10-KSB, and are incorporated herein by
reference.</font></div>
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      <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PART
I.&#160;&#160;Information Required in the Section 10(a) Prospectus</font></div>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      1.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Plan
      Information</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The documents containing the
information specified in Item 1 will be sent or given to participants in the
Registrant&#8217;s 2003 Stock Incentive Plan as specified by Rule 428(b)(1) of the
Securities Act of 1933, as amended (the &#8220;Securities Act&#8221;). Such documents are
not required to be and are not filed with the Securities and Exchange Commission
(the &#8220;SEC&#8221;) either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424. These documents and the documents
incorporated by reference in this Registration Statement pursuant to Item 3 of
Part II of this Form S-8, taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.</font></div>
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      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      2.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Registrant
      Information, the 2003 Stock Incentive
Plan</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Upon written or oral request, any of
the documents incorporated by reference in Item 3 of Part II of this
Registration Statement (which documents are incorporated by reference in this
Section 10(a) prospectus), other documents required to be delivered to eligible
employees, non-employee directors and consultants, pursuant to Rule 428(b) or
additional information about the 2003 Stock Incentive Plan are available without
charge by contacting:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">John D.
Pougnet, Chief Executive Officer</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">480 South
Holly Street</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Denver,
Colorado 80246</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">PART
II.&#160;&#160;Information Required in the Registration Statement</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      3.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Incorporation
      of Documents by Reference</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>The Registrant hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the SEC. In addition, all documents subsequently filed pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 (the
&#8220;Exchange Act&#8221;), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents:</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <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">(a)</font></div>
            </td>
            <td width="923">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Registrant&#8217;s Annual Report on Form 10-KSB for the year ended December 31,
      2007.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <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">(b)</font></div>
            </td>
            <td width="923">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Registrant&#8217;s Quarterly Reports on Form 10-Q for the quarters ended June
      30, 2007; September 30, 2007; and March 31,
  2008.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <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">(c)</font></div>
            </td>
            <td width="923">
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Any
      Current Reports filed by the Registrant on Form 8-K filed with the SEC
      subsequent to March 31, 2008.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      4.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Description
      of Securities</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Not Applicable</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      5.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Interests
      of Named Experts and Counsel</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>None.</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">21</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </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; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
      </div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      6.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Indemnification
      of Directors and Officers</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Registrant&#8217;s Articles of Incorporation, as amended (the &#8220;Articles&#8221;), provide
that the liability of the Registrant&#8217;s directors for monetary damages for breach
of fiduciary duty is eliminated to the fullest extent permitted by Colorado law
and that the Registrant&#8217;s officers and directors shall be indemnified by the
Registrant against any liability to the fullest extent permitted by Nevada law.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the 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; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
Registrant&#8217;s Bylaws, as amended, provide that the Registrant shall indemnify the
currently acting and former directors, officers, employees and agents of the
Registrant or another corporation, partnership, joint venture, trust,
association or other enterprise against reasonably incurred expenses, judgments,
penalties, fines and amounts paid in settlement reasonably incurred by him in
connection with such action, suit or proceeding if it is determined that such
person reasonably believed (i) in the case of conduct in his official capacity
with the Registrant, that his conduct was in the Registrant&#8217;s best interests, or
(ii) in all other cases (except criminal cases), that his conduct was at least
not opposed to the Registrant&#8217;s best interests, or (iii) in the case of any
criminal proceeding, that he had no reasonable cause to believe his conduct was
unlawful.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      7.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exemption
      from Registration Claimed</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>None</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      8.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Exhibits</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Number</font>&#160;&#160;&#160;&#160;
<font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit</font></font></div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -5.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4.01</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2003
      Stock Incentive Plan (1)</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -5.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.1</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Opinion
      of Gary A. Agron</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -5.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23.1</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consent
      of Gordon, Hughes and Banks, LLP, an independent registered public
      accounting firm</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -5.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23.2</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consent
      of Gary A. Agron is contained in Exhibit
5.1</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">
          <tr valign="top" style="LINE-HEIGHT: 1.25;">
            <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">(1)</font></div>
            </td>
            <td>
              <div align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
      by reference to the Registrant&#8217;s Definitive Proxy Statement dated
      September 4, 2007.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div align="left">
      <table cellpadding="0" cellspacing="0" width="100%">
          <tr>
            <td align="left" valign="top" width="6%" style="BORDER-TOP: medium none; BORDER-LEFT: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Item
      9.</font></div>
            </td>
            <td align="left" valign="top" width="94%" style="BORDER-RIGHT: medium none; BORDER-TOP: medium none; BORDER-BOTTOM: 4px">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Undertakings</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>(a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
undersigned registrant hereby undertakes:</font></div>
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file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 108pt"></font>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>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(2)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;That,
for the purpose of determining any liability under the Securities Act of 1933,
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><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="1">
        </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; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 72pt"></font>(3)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;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; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>(b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;The
undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant&#8217;s
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered herein, 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; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>(c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the 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 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><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">23</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="1">
        </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; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><a href="#toc"><font style="DISPLAY: inline; FONT-STYLE: italic; TEXT-DECORATION: underline">Table of
Contents</font></a></font></div>
    </div><br>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">SIGNATURES</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Pursuant to 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 an amendment to a filing on
Form&#160;S-8 and authorized this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in Denver, Colorado on June 11,
2008.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">
      <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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      Holdings, Inc.</font></div>
              </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>
              </td>
              <td align="left" nowrap valign="top" width="35%" style="BORDER-BOTTOM: black 2px solid">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">/s/
      John D. Pougnet</font></div>
              </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%">
                <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
      D. Pougnet</font></div>
              </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%">
                <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Executive Officer</font></div>
              </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>
        </table>
      </div>
    </div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font>Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed
below by the following persons in the capacities indicated on June 11,
2008.</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">
      <div>
        <table border="0" cellpadding="0" cellspacing="0" width="100%">
            <tr>
              <td align="left" valign="top" width="30%" style="BORDER-BOTTOM: black 2px solid">
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              </td>
              <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="top" width="30%" 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">Title</font></div>
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              <td valign="top" width="10%" style="PADDING-BOTTOM: 2px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="top" width="20%" style="PADDING-BOTTOM: 2px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
            </tr>
            <tr>
              <td valign="top" width="30%"><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="30%"><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="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%" 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">/s/
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      D. Pougnet</font></font></div>
              </td>
              <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Executive Officer and Director</font></div>
                </div>
              </td>
              <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" nowrap valign="top" width="20%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
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                </div>
              </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="30%"><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="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td valign="top" width="30%"><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="30%"><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="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%" 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">/s/
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      D. Pougnet</font></font></div>
              </td>
              <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Chief
      Financial Officer</font></div>
                </div>
              </td>
              <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" nowrap valign="top" width="20%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">John
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                </div>
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              <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="30%"><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">(Principal
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              <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td valign="top" width="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td valign="top" width="30%"><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="30%"><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="20%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%" 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">/s/
      <font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-STYLE: italic; FONT-FAMILY: times new roman">Douglas
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              </td>
              <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" valign="top" width="30%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">
                  <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">President
      and Director</font></div>
                </div>
              </td>
              <td valign="top" width="10%"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">&#160;</font></td>
              <td align="left" nowrap valign="top" width="20%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="30%">
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      Ridley</font></div>
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INDEX</font></div>
    <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-WEIGHT: bold; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="DISPLAY: inline; TEXT-DECORATION: underline">Number</font>&#160;&#160;&#160;&#160;&#160;<font style="DISPLAY: inline; TEXT-DECORATION: underline">Exhibit</font></font></div>
    <div>
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          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -5.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">4.01</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25">&#160;</div>
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">2003
      Stock Incentive Plan (1)</font></div>
            </td>
          </tr>
          <tr>
            <td align="left" valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -5.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">5.1</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Opinion
      of Gary A. Agron</font></div>
            </td>
          </tr>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -5.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23.1</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consent
      of Gordon, Hughes and Banks, LLP, an independent registered public
      accounting firm</font></div>
            </td>
          </tr>
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              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: -5.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">23.2</font></div>
            </td>
            <td align="left" valign="top" width="94%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: times new roman">Consent
      of Gary A. Agron is contained in Exhibit
5.1</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">____________________</font></div>
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              <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 align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incorporated
      by reference to the Registrant&#8217;s Definitive Proxy Statement dated
      September 4, 2007.</font></div>
            </td>
          </tr>
      </table>
    </div>
    <div>&#160;</div>
    <div>&#160;</div>
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xelr8_s8.htm
As filed
with the Securities and Exchange Commission on June 11, 2008
Reg. No.
333-_________
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-8
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
XELR8
Holdings, Inc.
(Exact
name of registrant as specified in its charter)
Nevada
84-1575085
(State
      or other jurisdiction of
incorporation
      or organization)
(I.R.S.
      Employer
identification
      No.)
480
S. Holly Street
Denver,
Colorado 80246
(303)
316-8577
(Address,
including zip code, and telephone number,
including
area code, of registrant's principal executive offices)
2003
STOCK INCENTIVE PLAN
(Full
title of plan)
John
D. Pougnet
Chief
Executive Officer
XELR8
Holdings, Inc.
480
S. Holly Street
Denver,
Colorado 80246
(303)
316-8577
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies
to:
Gar
y
A. Agron
Law Office of G
a
ry A. Agron
5445
DTC Parkway, Suite 520,
Greenwood
Village, Colorado 80111
(303)
770-7254
CALCULATION
OF REGISTRATION FEE
Title
      of Securities
to be Registered
Amount
      to be
Registered
Proposed
      Maximum
Offering Price Per Share
Proposed
      Maximum
Aggregate Offering Price
Proposed
      Maximum
Registration Fee
Common
      Stock
(no
      par value)
3,000,000
(1)
$
1.30
(2)
$3,900,000
$153.27
(1)
This
      Registration Statement also covers any additional common shares which
      become issuable under the Registrant's 2003 Stock Incentive Plan by reason
      of any stock dividend, stock split, recapitalization or other similar
      transaction effected without the receipt of consideration which results in
      an increase in the number of outstanding common shares of the
      Registrant.
(2)
Estimated
      solely for the purpose of determining the amount of registration fee and
      pursuant to Rules 457(c) and 457 (h) of the General Rules and Regulations
      under the Securities Act of 1993, based upon the closing price per share
      on the American Stock Exchange of the Registrant's common stock as of June
      9, 2008.
INFORMATION
REQUIRED IN THE SECTION 10(a) PROSPECTUS
Pursuant to the requirements of the
Note to Part I of Form S-8 and Rule 428(b)(1) of the Rules under the Securities
Act of 1933, as amended, the information required by Part I of Form S-8 is
included in the resale prospectus which follows. The resale prospectus together
with the documents incorporated by reference pursuant to Item 3 of Part II of
this Registration Statement constitute the Section 10(a)
prospectus.
RESALE
PROSPECTUS
The material which follows, up to but
not including the page beginning Part II of this Registration Statement,
constitutes a prospectus, prepared on Form S-3, in accordance with General
Instruction C to Form S-8, to be used in connection with resales of securities
acquired under the Registrant's 2006 Equity Incentive Plan by officers or
directors of the Registrant, as defined in Rule 405 under the Securities Act of
1933, as amended.
RESALE
PROSPECTUS
3,000,000
SHARES OF
COMMON
STOCK
XELR8
HOLDINGS, INC.
2003
STOCK INCENTIVE PLAN
You should read this prospectus
carefully before investing. We are offering on behalf of certain of our
employees, officers, directors and consultants up to 3,000,000 shares of our no
par value common stock purchasable by such employees, officers, directors and
consultants pursuant to common stock options granted under our Plan. As of this
date 2,935,200 options issued under the Plan are outstanding.
This prospectus will be used by our
non-affiliates as well as persons who are "affiliates" to resell the shares. We
will not receive any part of the proceeds of such sales although we will receive
the exercise price for the stock options. Please see "Selling Stockholders" for
a list of our affiliates who may offer their shares for sale. We refer to these
individuals as "selling stockholders."
The
selling stockholders may offer their common stock through public or private
transactions, at prevailing market prices or at privately negotiated prices.
These future market prices are not currently known.
Our
common stock is quoted on the American Stock Exchange under the symbol "BZI." On
June 9, 2008, the closing price for the common stock on the Exchange was $1.30
per share.
See "Risk
Factors" beginning on page 3 to read about factors you should consider before
buying shares of our common stock.
NEITHER THE SECURITIES AND EXCHANGE
COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF
THE SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person is authorized to give any
information or to make any representation regarding the securities we are
offering and investors should not rely on any such information. The information
provided in the prospectus is as of this date only.
The date
of this prospectus is June 11, 2008.
AVAILABLE
INFORMATION
We are subject to the informational
requirements of the Securities Exchange Act of 1934, as amended, including
Sections 14(a) and 14(c) relating to proxy and information statements, and in
accordance therewith we file reports and other information with the Securities
and Exchange Commission. Reports and other information which we file can be
inspected and copied at the public reference facilities maintained by the
Commission at 100 F Street, NE, Washington, DC 20549. Copies of such material
can be obtained from the Public Reference Section of the Commission, 100 F
Street, NE, Washington, DC 20549 at prescribed rates. Our common stock is traded
on the American Stock Exchange under the symbol "BZI." Reports, proxy and
information statements may also be inspected at the Commission's Web site at
www.sec.gov.
We furnish annual reports to our
shareholders which include audited financial statements. We may furnish such
other reports as may be authorized, from time to time, by our Board of
Directors.
You may also want to refer to our Web
site at XELR8.com. Our Web site is not a part of this prospectus.
INCORPORATION
BY REFERENCE
Certain documents have been
incorporated by reference into this prospectus, either in whole or in part,
including but not limited to an Annual Report on Form 10-KSB for the year ended
December 31, 2007, Quarterly Reports on Form 10-Q for the quarters ended March
31, 2008, September 30, 2007, and June 30, 2007, and any Current Reports on Form
8-K filed after March 31, 2008, including the current report on 8-K dated May
15, 2008. We will provide without charge (1) to each person to whom a prospectus
is delivered, upon written or oral request, a copy of any and all of the
information that has been incorporated by reference (not including exhibits to
the information unless such exhibits are specifically incorporated by reference
into the information), and (2) documents and information required to be
delivered to directors pursuant to Rule 428(b). Requests for any information
shall be addressed to us at 480 South Holly Street, Denver, Colorado 80246,
telephone (303) 316-8577.
TABLE OF CONTENTS
ABOUT US
1
RISK FACTORS
1
SELLING STOCKHOLDERS
16
PLAN OF DISTRIBUTION
16
SEC POSITION REGARDING
    INDEMNIFICATION
17
DESCRIPTION OF THE PLAN
18
APPLICABLE SECURITIES LAW
    RESTRICTIONS
19
TAX CONSEQUENCES
20
LEGAL MATTERS
20
EXPERTS
20
i
Table of
Contents
ABOUT US
We develop, sell, market and distribute
nutritional supplement products primarily through a direct sales or network
marketing system in which independent distributors sell our products, as well as
purchase them for their own personal use. We also sell our products directly to
professional and Olympic athletes and to professional sports teams.
We
formulated our original "legacy" products in 2000 and 2001 for sale to
professional and Olympic athletes. We launched our sales and marketing programs
to the general public in early 2002 through our internal sales force targeting
specialty retail stores, health clubs and personal trainers. During 2003, we
refocused our marketing and sales strategy on direct selling through independent
distributors. We believe, based upon our sales experience in 2001 and 2002, our
products can be more effectively sold through the face-to-face sales method
afforded by direct selling. During 2005, we formulated a new line of products
that would have a wider appeal to the general public, as they were more
functional foods than nutritional supplements, and began marketing them through
our existing independent distributors in the latter part of 2005.  In
conjunction with this, we rebranded the network marketing company and all the
products with the name of XELR8. During 2006 we formulated a new product, Bazi™,
a liquid dietary supplement. In January 2007 we introduced this product to
our network of independent distributors and athlete endorsers. In late 2007 we
decided to change the sales focus of our independent distributors from multiple
products to a single product, Bazi™, and announced this to our sales force in
February 2008.
We
distribute and sell our products through a network marketing system, a form of
direct selling, using independent distributors ("Distributors"). We also sell
sales and marketing tools designed to assist our distributors in growing their
business and selling our products. Distributors not only purchase our products
for their own consumption, but are encouraged to build and manage their own
sales group by recruiting, managing and training others to sell our products.
Distributors are compensated on sales generated by their group or downline
organization.  We also sell our products directly to "Preferred" or
"Direct" customers, who purchase our products for personal consumption, and are
not permitted to resell or distribute the products.
A
key part of our marketing strategy, in conjunction with our direct sales
program, is the endorsement of our products by sports celebrities.
We
maintain our principal executive offices at 480 South Holly Street, Denver,
Colorado 80246, and our telephone number is (303) 316-8577. Our website is
located at http://www.XELR8.com. The information on our website does not
constitute a part of this prospectus.
RIS
K FACTORS
Investment
in our securities involves a high degree of risk. You should carefully consider
the risks described below together with all of the other information included in
this prospectus before making an investment decision. If any of the following
risks actually occurs, our business, financial condition or results of
operations could suffer. In that case, the trading price of our securities could
decline, and you may lose all or part of your investment.
We
have a history of operating losses and a significant accumulated deficit, and we
may never achieve profitability.
We have
not been profitable since inception in 2001. We had net losses for the three
months ending March 31, 2008 of $749,362 and $3,241,730for the year ending
December 31, 2007. At March 31, 2008, we had an accumulated deficit of
$ 21,241,373. We may never achieve or maintain profitability. Our
ability
to achieve and maintain a profit is dependent upon our attracting and retaining
a large base of independent distributors who generate our
sales.
1
Table of
Contents
We
may need to raise additional funds to fund operations which cannot be assured
and would result in dilution to the existing shareholders.
To date,
our operating funds have been provided primarily from sales of our common stock
($15,413,421), and by loans from our founder and by various stockholders
($3,989,209), through December 31, 2007, and to a lesser degree, cash flow
provided by sales of our products. We used $215,700 of cash for operations in
the three months ended March 31, 2008, compared to $176,519 of cash for
operations in the three months ended March 31, 2007 and $1,178,996 of cash
for operations in the year ended December 31, 2007. If our business
operations do not result in increased product sales, our business viability,
financial position, results of operations and cash flows will likely be
adversely affected. Further, if we are not successful in achieving
profitability, additional capital will be required to conduct ongoing
operations. We cannot predict the terms upon which we could raise such capital
or if any capital would be available at all, and what dilution will be caused to
the existing shareholders.
Our
limited operating history and recent change in marketing strategy make it
difficult to evaluate our prospects.
We have a
limited operating history on which to evaluate our business and prospects. Our
current flagship product, Bazi™ was formulated in 2006 and introduced to the
public for sale in January 2007. Our other, legacy products were formulated
from 2000 through 2005, and we began selling these products to the general
public in early 2002 through 2005, with limited market success. In late 2003, we
began to refocus our sales and marketing efforts on direct sales of products
through our network of independent distributors. In 2005, we rebranded the
network marketing company and launched new products. In February 2008, we
decided to change our sales focus from multiple products, to a single product
focus on Bazi™, our liquid dietary supplement drink. There is no assurance that
we will achieve significant sales as a result of us focusing our sales efforts
on this single product.
We also
may not be successful in addressing our operating challenges such as
establishing a viable network of independent distributors, developing brand
awareness and expanding our market presence. Our prospects for profitability
must be considered in light of our evolving business model. These factors make
it difficult to assess our prospects.
Our
failure to recruit, maintain and motivate a large base of productive independent
distributors could limit our ability to generate revenues.
To
increase revenue, we must increase the sales and recruiting productivity of our
independent distributors. We cannot assure you that we will be successful in
recruiting and retaining productive independent distributors, particularly since
direct sales organizations usually experience high turnover rates of independent
distributors. Our independent distributors can terminate their relationships
with us at any time. The distributors also typically work on a part-time basis
and may engage in other business activities, which may reduce their
efforts for us.
In
recruiting and keeping independent distributors, we will be subject to
significant competition from other direct sales organizations, both inside and
outside our industry. Our ability to attract and retain independent distributors
will be dependent on the attractiveness of our compensation plan, our product
mix, and the support we offer to our independent distributors. Adverse publicity
concerning direct sales marketing and public perception of direct selling
businesses generally could negatively affect our ability to attract, motivate
and retain independent distributors.
2
Table of
Contents
Based on
our knowledge of the direct selling industry, we anticipate that our independent
distributor organization will be headed by a relatively small number of key
independent distributors who together with their downline network will be
responsible for a disproportionate amount of revenues. We believe this structure
is typical in the direct selling industry, as sales leaders emerge in these
organizations, and it is the current situation with us. The loss of a key
independent distributor will adversely affect our revenues and could adversely
affect our ability to attract other independent distributors, especially if an
independent distributor takes other independent distributors of ours to a
competitor or to any other organization.
We
are dependent on the level of effort that our independent distributors make in
selling our products and we do not have control over their methods of marketing
our products.
We are
dependent on our non-employee, independent distributors to market and sell our
products. Our independent distributors purchase products from us for their own
personal use and to use in marketing their business. Additionally, we have a
large number independent distributors in relation to the small number of
corporate employees who are responsible for providing motivational support and
recognition to these independent distributors. We also, typically have a high
turnover in the number of independent distributors who join our business each
year, who require training and motivation from both their enrollers, key
independent distributor leaders and corporate staff. We rely on this training
and the policies and procedures included in the independent distributor
agreement to ensure that each independent distributor is aware of laws
concerning the making of certain claims regarding the products or income
potential from the distribution on our products. We take what we believe to be
reasonable efforts to monitor distributor activities to prevent
misrepresentations, illegal acts or unethical behavior while they conduct their
business activities. There can be no assurance, however, that our efforts to
train, motivate, educate and govern their activities will be successful, and may
result in lower recruiting and negative publicity and legal actions against
us.
A
change in the amount of compensation paid to our independent distributors could
reduce our ability to recruit and retain them.
One of
our significant expenses is the payment of compensation to our independent
distributors. This compensation includes commissions, bonuses, awards and
prizes. From the date we changed our sales method to direct sales through
independent distributors, August 1, 2003, through December 31, 2007,
compensation paid to our independent distributors represented 50% of our total
revenues. We may change our independent distributor compensation plan in
seeking to better manage these incentives, to monitor the amount of independent
distributor compensation paid and to prevent independent distributor
compensation from having a significant adverse effect on our revenues. Changes
to our independent distributor compensation plan may make it difficult for
us to recruit and retain qualified and motivated independent distributors. We do
not have any current plans to change our distributor compensation plan. Further,
as we expand into foreign markets in the future, the laws of those countries may
force us to alter our compensation plan, which may cause a negative trend
amongst our distributors and consequently sales.
We
are not in a position to exert the same level of influence or control over our
independent distributors as we could if they were our employees, and we
may be subject to significant costs and reputation harm in the event our
independent distributors violate any laws or regulations applicable to our
operations.
Our
independent distributors are independent contractors and, accordingly, we are
not in a position to provide the same level of control and oversight as we would
if independent distributors were our
3
Table of
Contents
employees.
While we have implemented independent distributor policies and procedures
designed to govern independent distributor conduct and to protect our goodwill,
there can be no assurance that our independent distributors will comply with our
policies and procedures. Violations by our independent distributors of
applicable law or of our policies and procedures dealing with customers could
reflect negatively on our products and operations and harm our business
reputation. To date, we have not experienced any significant problems affecting
our products, operations or business reputation caused by distributor violations
of our policies and procedures. Additionally, as we expand from our present to
future markets, our marketing system could be found not to comply with these
laws and regulations or may be prohibited. Failure to comply with current or
future markets laws could have a material adverse effect on our business,
financial condition, and results of operations.
In
addition, extensive federal, state and local laws regulate our direct selling
program. The Federal Trade Commission ("FTC") or a court could hold us liable
for the actions of our independent distributors. The FTC could also find us
liable civilly for deceptive advertising if health benefit representations made
by our independent distributors are not supported by competent and reliable
scientific evidence. If any of these representations made by our independent
distributors were deemed fraudulent, the FTC could refer the matter to the
Department of Justice for criminal fraud prosecution. Also, the Food and Drug
Administration ("FDA") could seek to hold us civilly and criminally liable for
misbranding, for adulteration, or for sale of an unapproved new drug if an
independent distributor were to make false or misleading claims, sell a product
past its shelf life, or represent that any of our products were intended for use
in the cure, treatment, or prevention of a disease or health-related condition.
While we train our independent distributors and attempt to monitor our
independent distributors' marketing claims and sales materials, we cannot ensure
that all of these materials comply with applicable law.
Our
direct selling program through independent distributors could be found not to be
in compliance with current or newly adopted laws or regulations, which could
subject us to increased costs and reduced distributor participation in sales
efforts, and our revenues would decrease significantly.
Our
direct marketing program could be found to violate laws or regulations
applicable to direct selling marketing organizations. These laws and regulations
generally are directed at preventing fraudulent or deceptive schemes, often
referred to as "pyramid" or "chain sales" schemes, by ensuring that product
sales ultimately are made to consumers and that advancement within an
organization is based on sales of the organization's products rather than
investments in the organization or other non-retail sales-related criteria. The
regulations concerning these types of marketing programs do not include "bright
line" rules and are inherently fact-based. Thus, even in jurisdictions
where we believe that our direct selling program is in full compliance with
applicable laws or regulations governing direct selling programs, we are subject
to the risk that these laws or regulations or the enforcement or interpretation
of them by governmental agencies or courts can change. The failure of our direct
selling program to comply with current or newly adopted laws or regulations
could result in costs and fines to us and make our independent distributors
reluctant to continue their sales efforts, which would reduce our revenues
significantly.
We are
also subject to the risk of private party challenges to the legality of our
direct selling program. Direct selling programs of some other companies have
been successfully challenged in the past. The challenges centered on whether the
marketing programs of direct selling companies are investment contracts in
violation of applicable securities laws and pyramid schemes in violation of
applicable FTC rules and regulations. These challenges have caused direct
selling companies to focus greater attention on generating product sales to
non-participants or non-distributors. Direct selling companies have addressed
these issues by promoting retail sales incentives, tying sales commissions more
directly to retail sales and reclassifying those persons who enroll as
distributors but do not make sales to other persons as retail
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customers.
An adverse judicial determination with respect to our direct selling program, or
in proceedings not involving us directly but which challenge the legality of
direct selling systems, could have a material adverse effect on our sales
efforts, leading to lower revenues. To date, we have not been subject to any
adverse judicial determination with respect to our direct selling
program.
On
April 12, 2006, the Federal Trade Commission ("FTC") proposed a new
Business Opportunity Rule. Under the current Business Opportunity Rule (16
C.F.R. § 437), the Company does not meet the definition of a "Business
Opportunity" and therefore is not subject to the rule. If the proposed Business
Opportunity Rule is made final by the FTC as proposed, the Company (as well
as all other network marketing companies) will fall within the definition of a
Business Opportunity and will be required to comply with the requirements of the
rule.
Following
publication of the proposed rule, the FTC accepted comments from those who
wished to make a submission. The comment and rebuttal periods have since closed.
In addition to receiving thousands of comments in opposition to the proposed
rule from direct selling companies and individuals engaged in direct
selling, several members of Congress advised the FTC of their opposition to the
proposed rule.  It is unknown when the FTC will issue a final version of
the proposed rule. The rule, when made final, by the FTC may differ
significantly from the proposed rule. If made final as it is currently proposed,
the proposed rule would require, among other things, that that all network
marketing companies, including the Company, to provide all prospective
distributors with extensive disclosures at least seven days prior to enrolling
as a distributor.
The
Company or the sponsor of the prospective distributor will be required to
disclose:
(a) Identifying
Information: This includes the name, address and telephone number of the
Company, the name of the sponsor of the prospective distributor, and the date on
which the Disclosure Document is provided to the prospect;
(b) Earnings
Claim Information: If the Company or the sponsor of the prospective distributor
makes earnings claims to the prospective distributor in association with the
opportunity, an Earnings Claim Statement must be provided. The Earnings Claim
Statement must disclose (i) the beginning and ending dates when the
represented earnings were achieved, (ii) the number and percentage of all
distributors who achieved that level of earnings within such time period,
(iii) any specific characteristics applicable to the person making the
earnings claim that differ from the characteristics of the prospect (e.g., a
different geographic location), and (iv) a statement that written
substantiation for the earnings claim will be made available to the prospective
distributor upon request;
(c) Legal
Claims: If the Company, or any affiliate or prior business of the Company, or
any of its's officers, directors, managers or similar individuals have been the
subject of any civil or criminal action involving misrepresentation, fraud,
securities law violations, or unfair or deceptive practices in the ten years
preceding the date of the Disclosure Document, the full caption of each such
action must be disclosed;
(d) Refund
Policy: The Company will be required to disclose the terms of its refund
policy;
(e) Cancellation
and Refund Requests: The Company will be required to disclose the total number
of purchasers who have cancelled their business within the preceding two
years;
(f) Reference
List: The Company will be required to list the name, city, state, and telephone
numbers of ten people who have enrolled as distributors within the three year
period preceding the date of the Disclosure Document who are located nearest to
the prospective distributor. Alternatively, the Company may disclose such
information for all distributors. The Disclosure Document must also advise
prospective distributors that if they become distributors, their personal
contact information may be disclosed to future prospective
distributors.
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The
impact of the proposed rule could be: (1) the advance seven day
disclosure will cause a reduction in enrollments; (2) providing 10
references closest to an applicant will require a significant investment in
advanced software systems; (3) the reference requirement creates a
confidentiality problem, as it completely ignores distributors right to have
their personal information maintained confidential; (4) the identity of our
distributors is currently protected as trade secret information and such status
will be compromised; and (5) the disclosure of legal claims within the
specified categories applies to even those claims that were settled without
admission of liability, and even applies to disclosure of claims in which the
company prevailed on the claims. All of these could cause a significant decrease
in the recruiting of independent distributors to the Company and consequently
affect our ability to sell our products.
On
March 18, 2008, the Federal Trade Commission (FTC) issued a revised Notice
of Proposed Rulemaking on March 18, 2008, recommending significant
revisions to the proposed Business Opportunity Rule that the FTC announced
previously. The revised proposed Rule indicates that the FTC intends to
exempt
direct sellers
from coverage of the Revised Proposed Business Opportunity Rule.  The FTC
concluded major revisions to the initial Rule were necessary to "avoid
broadly sweeping in sellers of multilevel marketing opportunities" and "that the
proposed Rule is too blunt an instrument to cure fraud in the MLM
industry."  Rather, the FTC determined that it will continue to use the
flexibility it has in existing law to enforce and address individual cases of
fraud on a case-by-case basis.
In its
comments and analysis announcing the revisions to the proposed rule, the FTC
made extensive observations that may have as much significance as the revisions
themselves. Specifically, the FTC comments and analysis address:
●
The
inapplicability of the Proposed Rule, as amended, to direct
sellers;
●
The difference
between legitimate multilevel companies and pyramid schemes;
●
The lack of a
need for a specific anti-pyramid rule;
●
The lack of
evidence of  prevalent deceptive practices in the "MLM [direct selling]
industry";
●
The preference
for a fact specific inquiry into the legitimacy of any one entity on a
case-by-case basis rather than a broad rule; and
●
The
difficulties and undesirability of imposing a uniform earnings disclosure
requirement across the direct selling industry.
In the
proposed revision the FTC has set forth specific language redefining a "business
opportunity", and relies upon three aspects of the definition to effectively
remove direct sellers from coverage.
●
First,
the FTC limits coverage to those business relationships in which the prospective
purchasers makes a required payment, but excludes from the definition those
relationships in which the only required payment is for inventory at bona fide
wholesale prices.
●
Second,
the application of the Rule would no longer be triggered by virtue of an
earnings claim being made, i.e. the mere representation by a company that an
individual might make money will not trigger the rule
●
Third, in
order to be considered a "business opportunity" the company would have to offer
"business assistance" to a prospect.  "Business Assistance" is defined as
providing locations, outlets, accounts, or customers, or promising to buy back
goods or services that an individual makes.
These
provisions significantly narrow the scope of the initially proposed
rule and reflect the FTC's intent to remove direct sellers from coverage.
While the FTC Business Opportunity rulemaking is not complete, it appears to be
the intention of the FTC to remove direct sellers from the coverage of
the
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revised
Rule, it is still too early to evaluate the effect that the rule would have on
the us and our distributors to attract and retain other distributors and
customers .
We
may be held responsible for taxes or assessments relating to the activities
of our independent distributors resulting in greater costs to us.
We treat
our independent distributors as independent contractors and do not pay
employment taxes, like social security, or similar taxes in other countries with
respect to compensation paid to them. In the event that an local regulatory
authority in which our distributors operate deem the distributor to be an
employee, we may be held responsible for a variety of obligations imposed
on employers relating to their employees, including, but limited to, employment
taxes (social security) and related taxes, plus any related assessments and
penalties, which could significantly increase our operating costs.
We
are affected by extensive laws, governmental regulations, administrative
determinations, court decisions and similar constraints which can make
compliance costly and subject us to enforcement actions by governmental
agencies.
The
formulation, manufacturing, packaging, labeling, holding, storage, distribution,
advertising and sale of our products are affected by extensive laws,
governmental regulations and policies, administrative determinations, court
decisions and similar constraints at the federal, state and local levels, both
within the United States and any country that we conduct business in. There can
be no assurance that we or our independent distributors will be in compliance
with all of these regulations. A failure by us or our distributors to comply
with these laws and regulations could lead to governmental investigations, civil
and criminal prosecutions, administrative hearings and court proceedings, civil
and criminal penalties, injunctions against product sales or advertising, civil
and criminal liability for the Company and/or its principals, bad publicity, and
tort claims arising out of governmental or judicial findings of fact or
conclusions of law adverse to the Company or its principals. In addition, the
adoption of new regulations and policies or changes in the interpretations of
existing regulations and policies may result in significant new compliance
costs or discontinuation of product sales and may adversely affect the
marketing of our products, resulting in decreases in revenues.
The U.S.
Food and Drug Administration, the FDA, and other similar government agencies in
other countries, regulate our products and our product labeling. Among other
matters, the FDA and other foreign agencies regulate nutrient content and
ingredient information, claims of the effect of a dietary supplement or dietary
ingredient on a body structure or function, and claims of the effect of a
dietary supplement or dietary ingredient on disease or risk of disease. The FDA
and other foreign agencies can initiate civil and criminal proceedings against
persons who make false or misleading claims on labels or in labeling, who engage
in misbranding, who evidence an intent to sell their products for a therapeutic
use not approved by the agency, who sell misbranded products, or who sell
adulterated products. The FDA and other foreign agencies can also require the
recall of all products that are misbranded or adulterated.
The U.S.
Federal Trade Commission, the FTC and their counterpart agencies in other
countries that we may operate in, have jurisdiction over our product
advertising. These agencies can initiate civil proceedings for deceptive
advertising and deceptive advertising practices. It can seek for companies to
make payments to consumers or disgorgement of profits from the sale of any
product held to have been deceptively advertised. These agencies or a court of
law can require a company found liable to give notice of the availability of
refunds in part or whole for the product purchase price for all products
sold through use of advertising deemed deceptive.
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State and
local authorities may likewise bring enforcement actions for misbranding,
adulteration, and deceptive advertising. Those actions may be pursued
simultaneously with federal actions.
On
August 25, 2007 the FDA adopted the final regulations for manufacturers of
a standard originally proposed in March 2003 of the current Good
Manufacturing Practices guidelines ("cGMPs") for the manufacturing, packing,
holding and distributing dietary ingredients and nutritional supplements. The
new regulations will require nutritional supplements to be prepared, packaged,
and held in compliance with strict rules, and will require quality control
provisions that may mandate redundant testing of product ingredients at each
separate stage of manufacture and are intended to ensure that products are
accurately labeled and don't contain adulterants and contaminants. While the
rule allowed for medium and small manufacturers to have until 2009 and
2010, respectively, to comply with the cGMPs, most of our contract manufacturers
did not qualify as small or medium. As a result, many of our contract
manufacturers began following the proposed cGMPs or even pharmaceutical cGMPs
well before the final rule was published. We expect to see an increase in
our manufacturing costs as a result of the necessary increase in testing of raw
ingredients and finished products and compliance with higher quality standards,
although we are not certain of the amount of these costs. We expect that the
cGMPs will increase our product costs by requiring our various contract
manufacturers to expend additional capital and resources on quality control
testing, new personnel, plant redesign, new equipment, facilities placement,
recordkeeping and ingredient and product testing.
The FDA,
other state and local regulatory authorities, and the Direct Selling
Association, invite the public to complain if they experience any adverse
effects from the consumption of nutritional supplements. These complaints
may be made public. Regardless of whether complaints of this kind are
substantiated or proven, public release of complaints of this type may have
an adverse effect upon public perception of us, the quality of our products or
the prudence of taking our products. Changes in consumer attitudes based on
adverse event reports could adversely affect the potential market for and sales
of our products and make it more difficult to recruit and retain independent
distributors and obtain endorsers.
Our
ability to grow sales is dependent on growing in our existing markets as well as
expanding into new markets in other countries. As we expand into foreign
markets, we will become subject to different political, cultural, exchange rate,
economic, legal and operational risks. We may invest significant amounts in
these expansions with little success.
We
currently are focusing our marketing efforts on the United States and Canadian
markets to grow the number of independent distributors and consequently our
sales. We believe that our future growth will come from both the markets that we
are currently operating in and other international markets. We do not have any
history of international expansion, and there for have no assurance that any
efforts will result in increased revenue. Additionally, we may need to overcome
significant regulatory and legal barriers in order to sell our products and
whether our distribution method will be accepted. These markets may require that
we reformulate our product to comply with local customs and laws, however, there
is no guarantee that the reformulated product will be approved for sale by these
regulatory agencies or attract local distributors. These countries may not
accept our current compensation plan for distributors which may result in an
inability to attract and retain local distributors. International taxing laws
may also prevent us from operating or repatriating profits from operations in
these countries, and the complexity of transfer pricing laws could diminish the
effective returns from investments in foreign countries. Many of our competitors
already have significant international operations which could be an additional
barrier for entry into a foreign market as the local population may be
established in other compensation opportunities and similar products. We believe
that success in foreign markets will be dependent on the integration of these
markets in a seamless way into our current compensation plan and also the
ability of our existing distributors to assist in building downline sales
organizations.
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We
are dependent on a limited number of independent suppliers and manufacturers of
our products, which may affect our ability to deliver our products in a
timely manner. If we are not able to ensure timely product deliveries, potential
distributors and customers may not order our products, and our revenues
may decrease.
We rely
entirely on a limited number of third parties to supply and manufacture our
products. Our flagship product, Bazi™, is manufactured by Arizona Packaging and
Production under the terms of a five year exclusive manufacturing agreement,
which stipulates certain prices, quantities and delivery timelines. For our
other legacy products, manufacturers produce these products on a purchase order
basis only and can terminate their relationships with us at will. Our two other
primary manufacturers are Valentine Industries, Inc. and GMP Laboratories
of America, Inc.
These
third party manufacturing parties may be unable to satisfy our supply
requirements, manufacture our products on a timely basis, fill and ship our
orders promptly, provide services at competitive costs or offer reliable
products and services. The failure to meet of any of these critical needs would
delay or reduce product shipment and adversely affect our revenues, as well as
jeopardize our relationships with our independent distributors and customers. In
the event any of our third party manufacturers were to become unable or
unwilling to continue to provide us with products in required volumes and at
suitable quality levels, we would be required to identify and obtain acceptable
replacement manufacturing sources. There is no assurance that we would be able
to obtain alternative manufacturing sources on a timely basis. Additionally, all
our third party manufactures source the raw materials for our products, and if
we were to use alternative manufacturers we may not be able to duplicate the
exact taste and consistency profile of the product from the original
manufacturer. An extended interruption in the supply of our products would
result in decreased product sales and our revenues would likely decline. We
believe that we can meet our current supply and manufacturing requirements with
our current suppliers and manufacturers or with available substitute suppliers
and manufacturers. Historically, we have not experienced any delays or
disruptions to our business caused by difficulties in obtaining
supplies.
We
are dependent on our third party manufacturers to supply our products in the
compositions we require, and we do not independently analyze our products. Any
errors in our product manufacturing could result in product recalls, significant
legal exposure, and reduced revenues and the loss of distributors.
While we
require that our manufacturers verify the accuracy of the contents of our
products, we do not have the expertise or personnel to monitor the production of
products by these third parties. We rely exclusively, without independent
verification, on certificates of analysis regarding product content provided by
our third party suppliers and limited safety testing by them. We cannot be
assured that these outside manufacturers will continue to supply products to us
reliably in the compositions we require. Errors in the manufacture of our
products could result in product recalls, significant legal exposure, adverse
publicity, decreased revenues, and loss of distributors and
endorsers.
We
face significant competition from existing suppliers of products similar to
ours. If we are not able to compete with these companies effectively, then we
may not be profitable.
We face
intense competition from numerous resellers, manufacturers and wholesalers of
liquid nutritional supplements, energy drinks, protein shakes and nutritional
supplements similar to ours, including other network marketing channels, retail,
online and mail order providers. We consider the significant competing products
in the U.S. market for our flagship product Bazi™ to be FreeLife International®,
Xango® and Monavie® for a liquid nutrition drinks, and for our legacy products
to be Myoplex® for protein drinks, Gatorade®, Powerade®, Acclerade®, and All
Sport® for energy drinks,
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and that
Nature's Bounty, Inc. and General Nutrition Centers, Inc. are the
significant producers of vitamins. Most of our competitors have longer operating
histories, established brands in the marketplace, revenues significantly greater
than ours, more capital and better access to capital than us. We expect that
these competitors may use their resources to engage in various business
activities that could result in reduced sales of our products. Companies with
greater capital and research capabilities could re-formulate existing products
or formulate new products that could gain wide marketplace acceptance, which
could have a depressive effect on our future sales. In addition, aggressive
advertising and promotion by our competitors may require us to compete by
lowering prices because we do not have the resources to engage in marketing
campaigns against these competitors, and the economic viability of our
operations likely would be diminished.
Customers
and distributors may not be able to distinguish our products by name from
competitor's products.
Due to
the similarity of our company name to those of many of our competitor's products
may result in the loss of customers and distributors as well as impair the
recruiting efforts of our independent distributors. This could result in the
loss of repeat business as well as the inability to generate increased revenue
and attract future independent distributors.
Adverse
publicity associated with our products, ingredients or direct selling program,
or those of similar companies, could adversely affect our sales and
revenues.
Adverse
publicity concerning any actual or purported failure of our Company or our
independent distributors to comply with applicable laws and regulations
regarding any aspect of our business could have an adverse effect on the public
perception of our Company. This, in turn, could negatively affect our ability to
obtain endorsers and attract, motivate and retain independent distributors,
which would have a material adverse effect on our ability to generate sales and
revenues.
Our
independent distributors' and customers' perception of the safety and quality of
our products as well as similar products distributed by others can be
significantly influenced by national media attention, publicized scientific
research or findings, product liability claims and other publicity concerning
our products or similar products distributed by others. Adverse publicity,
whether or not accurate, that associates consumption of our products or any
similar products with illness or other adverse effects, will likely diminish the
public's perception of our products. Claims that any products are ineffective,
inappropriately labeled or have inaccurate instructions as to their use, could
have a material adverse effect on the market demand for our products, including
reducing our sales and revenues.
The
results of new nutritional dietary supplement studies could be contrary to
general industry knowledge on which the formulation and marketing of our
products are based and could materially and adversely impact our product sales.
The federal government, research institutes, universities and others regularly
conduct research into the use, effectiveness and potential for adverse results
from the use of nutritional dietary supplements. Even if adverse studies are
subject to substantial criticism or not supported by accepted scientific
methodology, publicity surrounding the reports of these studies may result
in flat or decreased sales of our products. In the past few years, the
effectiveness of, and potential for harm from, some of the leading herbal
supplements, which contain ingredients not in our products, have come into
question as a result of research studies. These negative study results and other
negative publicity could adversely affect the potential market and sales of our
products, as well as increase our product returns, resulting in increased
expenses to us.
While we
have not received any direct negative publicity, the publicized studies
associating increased mortality rates with high dosages of Vitamin E has
increased awareness of our consumers relating to the
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safety of
the ingredients in our supplements. Additionally, in 2007 there was a study
published regarding increased mortality rates in higher doses of antioxidants
other than those from natural fruit, berry and vegetable sources which again
increased awareness among our consumers relating to the safety of the
ingredients in our products.
Nutritional
supplement products may be supported by only limited conclusive clinical
studies resulting in less market acceptance of these products and lower revenues
or lower growth rates in revenues.
Our
nutritional supplement products are made from vitamins, minerals, amino acids,
herbs, botanicals, fruits, berries and other substances for which there is a
long history of human consumption. However, there is little long-term experience
with human consumption of certain product ingredients or combinations of
ingredients in concentrated form. Although we believe all of our products fall
within the generally known safe limits for daily doses of each ingredient
contained within them, nutrition science is imperfect. Moreover, some people
have peculiar sensitivities or reactions to nutrients commonly found in foods
and may have similar sensitivities or reactions to nutrients contained in
our products. Furthermore, nutrition science is subject to change based on new
research. New scientific evidence may disprove the efficacy of our products
or prove our products to have effects not previously known. We could be
adversely affected in the event that our products should prove to be or if they
are asserted to be ineffective or harmful to consumers, or if adverse effects
are associated with a competitor's similar products.
Our
products may have higher prices than the products of most of our
competitors, which may make it difficult for us to achieve significant
revenues.
We
may have difficulty in achieving market acceptance of our products because
our products are among the highest priced in their categories due to the
ingredients that we require in our products. While we believe that our products
are superior to competing, lower priced products, consumers must be educated
about our products. If we are unable to achieve market acceptance, we will have
difficulty in achieving revenue growth, which would likely result in continuing
operating losses.
The
sale of our products involves product liability and related risks that could
expose us to significant insurance and loss expenses.
We face
an inherent risk of exposure to product liability claims if the use of our
products results in, or is believed to have resulted in, illness or injury. Most
of our products contain combinations of ingredients, and there is little
long-term experience with the effect of these combinations. In addition,
interactions of these products with other products, prescription medicines and
over-the-counter drugs have not been fully explored or understood and
may have unintended consequences. While our third party manufacturers
perform tests in connection with the formulations of our products, these
tests are not designed to evaluate the inherent safety of our
products.
Although
we maintain product liability insurance, it may not be sufficient to cover
product liability claims and such claims could have a material adverse effect on
our business. The successful assertion or settlement of an uninsured claim, a
significant number of insured claims or a claim exceeding the limits of our
insurance coverage would harm us by adding further costs to our business and by
diverting the attention of our senior management from the operation of our
business. Even if we successfully defend a liability claim, the uninsured
litigation costs and adverse publicity may be harmful to our
business.
Any
product liability claim may increase our costs, and adversely affect our
revenues and operating income. Moreover, liability claims arising from a serious
adverse event may increase our costs through higher insurance premiums and
deductibles, and may make it more difficult to secure adequate
insurance
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coverage
in the future. In addition, our product liability insurance may fail to
cover future product liability claims, which if adversely determined could
subject us to substantial monetary damages.
A
slower growth rate in the nutritional supplement industry could lessen our sales
and make it more difficult for us to achieve growth and become
profitable.
According
to the Nutrition Business Journal (NBJ) (July/August 2007), the $85-billion
U.S. nutrition industry grew 10% in 2006, its highest annual growth since 1998.
The more mature supplement segment topped $22.4 billion and 5% growth, and the
other three major categories were in double digits. Functional foods posted
$31.4 billion in sales and its highest growth since 2002 on a strong performance
in beverages and niche categories. There have continued to be negative impacts
of Echinacea, Ephedra on the supplement market and low-carb products affected
minerals and liquid meal replacements. The negative tide of media is no longer
putting problematic categories like ephedra or prohormones at stake, but
foundation categories like E, C and even multivitamins and in 2007 antioxidants
were subject to the same scrutiny. All these factors could have a negative
impact on our sale growth.
New
products may render our products obsolete and our sales
may suffer.
The
nutritional supplement market historically has been influenced by "fad" products
that became popular due to changing consumer tastes and media attention. Our
products may be rendered obsolete by changes in popular tastes as well as
media attention on new products or adverse media attention on nutritional
supplements, which could reduce our sales. It may be difficult for us to
change our product line to adapt to changing tastes. In addition, other "fad"
food regimens, such as low carbohydrate diets, may decrease the overall
popularity and use of our products, as well as result in higher returns of our
products, thereby increasing our expenses.
We
may from time to time write off obsolete inventories resulting in higher
expenses and consequently greater net losses.
Because
we maintain high levels of inventories to meet the product needs of our
independent distributors and customers, a change by us of our product mix could
result in write downs of our inventories. During 2007 we decided to modify the
sales efforts from multiple products to a single product focus on our flagship
product Bazi™. As a consequence of this decision, we deemed the inventory of
certain of the legacy products to be obsolete due to the low likelihood that we
would sell these products before their expiration. Likewise, in 2006 we
discontinued certain other legacy products and sales tools, and therefore we
deemed the remaining inventory to be obsolete. As a result we incurred a
write-down against inventory for the year ended December 31, 2007 of
$189,403 and a charge against obsolete inventory of $123,511 in 2006. Write
downs and charges of this type have historically increased our net losses, and
if experienced in the future, will make it more difficult for us to achieve
profitability.
Product
returns in excess of our estimates could require us to incur significant
additional expenses, which would make it difficult for us to achieve
profitability.
We have
established a reserve in our financial statements for product returns which is
based upon our historical experience. Additionally, we only have limited sales
experience with Bazi™ as the product was only introduced to the market in
January 2007. If this reserve were to be inadequate, we may incur
significant expenses for product returns. As we gain more operating experience,
we may need to revise our reserves for product returns.
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If
we are not able to adequately protect our intellectual property, then we
may not be able to compete effectively and we may not be
profitable.
Our
existing proprietary rights may not afford remedies and protections
necessary to prevent infringement, reformulation, theft, misappropriation and
other improper use of our products by competitors. We own the formulations
contained in some our products. We consider these product formulations our
critical proprietary property, which must be protected from competitors. We do
not have any patents because we do not believe they are necessary to protect our
proprietary rights. Although trade secret, trademark, copyright and patent laws
generally provide such protection and we attempt to protect ourselves through
contracts with manufacturers of our products, we may not be successful in
enforcing our rights. In addition, enforcement of our proprietary rights
may require lengthy and expensive litigation. We have attempted to protect
some of the trade names and trademarks used for our products by registering them
with the U.S. Patent and Trademark Office, but we must rely on common law
trademark rights to protect our unregistered trademarks. Common law trademark
rights do not provide the same remedies as are granted to federally registered
trademarks and the rights of a common law trademark are limited to the
geographic area in which the trademark is actually used. Our inability to
protect our intellectual property could have a material adverse impact on our
ability to compete and could make it difficult for us to achieve a
profit.
If
we were to lose one of our significant independent distributor leaders, there
could be an adverse result on our sales.
Our
current distribution model relies on the efforts of our independent distributors
in buying our products and recruiting and retaining new independent distributors
in their downline organization. Our successful independent distributor leaders
have significant downline organizations that they personally train and
communicate with, and consequently develop business relationships. The loss of
one of these leaders could result in lower recruitment and the inability of us
to retain the downline organization, which could result in a significant
decrease in revenue and an increased cost for us to attract and retain new
distributors for replace the distributors that left our company. The loss of a
leader may be a result of our actions, like changes to the compensation plan or
changing the products that we sell or as a result of factors that we have no
control over, like business and economic conditions, public perception of
network marketing, public perception of nutritional products, other competing
network marketing companies or the results of ruling by regulatory bodies
against us.
Interruptions
to or failure of our information processing systems may disrupt our
business and our sales may suffer.
We are
dependent on our information processing systems to timely process customer
orders, oversee and manage our distributor network and control our inventory,
and for our distributors to communicate with their customers and distributors in
their network. Since the initial purchase of our technology system in 2001
through December 31, 2007, we had spent $335,763 on technology system
upgrades. We have experienced interruptions and may in the future
experience interruptions to or failure of our information processing system;
however, none of the interruptions to date have materially disrupted our
business. Interruptions to or failure of our information processing systems
may be costly to fix and may damage our relationships with our
customers and distributors, and cause us to lose customers and distributors. If
we are unable to fix problems with our information processing systems in a
timely manner our sales may suffer.
Loss
of key personnel could impair our ability to operate.
Our
success also depends on hiring, retaining and integrating senior management and
skilled employees, including John Pougnet, our Chief Executive Officer and Chief
Financial Officer, Douglas Ridley, our President, Timothy Transtrum, our Vice
President of Operations, John Hutchinson, Vice
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President
of IT and Web, Sanjeev Javia, our Vice President of Product Development and
Endorser Relations and Sanford D. Greenberg, our founder, in order to expand our
business. Certain of our officers have employment agreements that have
stipulated service terms. As with all personal service providers, our officers
can terminate their relationship with us at will. Our inability to retain these
individuals may result in our reduced ability to operate our business. We
do not have key man life insurance on any of our executive
officers.
Provisions
in our articles of incorporation and bylaws may prevent a change in control of
us which could limit the price that investors may be willing to pay for our
securities.
Provisions
contained in our articles of incorporation and bylaws could make it more
difficult for a third party to acquire us or for our shareholders to change our
management. These provisions:
●
give our
board of directors the right to set the number of directors between one and nine
directors;
●
permit
the board of directors to fill vacancies resulting from an increase in the
number of directors or the death or resignation of a board
member;
●
prohibit
cumulative voting in the election of directors; and
●
authorize
our board of directors to issue shares of preferred stock in the future without
shareholder approval and to determine the rights, preferences, privileges and
restrictions of such preferred stock.
These
provisions may limit the price that investors are willing to pay in the future
for our securities.
The
price of our securities could be subject to wide fluctuations and your
investment could decline in value.
The
market price of the securities of a company such as ours with little name
recognition in the financial community and without significant revenues can be
subject to wide price swings. For example, the bid price of our common stock has
ranged from a high $16.25 to a low of $0.19 during the twenty quarters ended
December 31, 2007. The market price of our securities may be subject to
wide changes in response to quarterly variations in operating results,
announcements of new products by us or our competitors, reports by securities
analysts, volume trading, or other events or factors. In addition, the financial
markets have experienced significant price and volume fluctuations for a number
of reasons, including the failure of certain companies to meet market
expectations. These broad market price swings, or any industry-specific market
fluctuations, may adversely affect the market price of our
securities.
Speculative
traders may anticipate a decline in the market price of our securities and
engage in short sales of our securities. Such short sales could further
negatively affect the market price of our securities.
Companies
that have experienced volatility in the market price of their stock have been
the subject of securities class action litigation. If we were to become the
subject of securities class action litigation, it could result in substantial
costs and a significant diversion of our management's attention and
resources.
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We
may issue preferred stock with rights senior to the common
stock.
Our
articles of incorporation authorize the issuance of up to 5,000,000 shares of
preferred stock without shareholder approval and on terms established by our
directors. We have no existing plans to issue shares of preferred stock.
However, the rights and preferences of any such class or series of preferred
stock would be established by our board of directors in its sole discretion and
may have dividend, voting, liquidation and other rights and preferences that are
senior to the rights of the common stock.
You
should not rely on an investment in our common stock for the payment of cash
dividends.
Because
of our significant operating losses and because we intend to retain future
profits, if any, to expand our business, we have never paid cash dividends on
our stock and do not anticipate paying any cash dividends in the foreseeable
future. You should not make an investment in our securities if you require
dividend income. Any return on investment in our common stock would only come
from an increase in the market price of our stock, which is uncertain and
unpredictable.
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SELLING STOCKHOLDERS
This prospectus covers possible sales
by our officers, directors and affiliates of shares they acquire through
exercise of stock options ("options") granted under our 2003 Incentive Stock
Plan, which we refer to as the "Plan." The names of such individuals who may be
selling stockholders from time to time are listed below, along with the number
of shares of common stock currently owned by them and the number of shares
offered for sale. The address of each individual is in care of us at 480 South
Holly Street, Denver CO 80246..
The following table shows, as of June
9, 2008:
●
The name
of each selling stockholder;
●
How many
shares the selling stockholder beneficially owns;
●
How many
shares the selling stockholder can resell under this prospectus;
and
●
Assuming
a selling stockholder sells all shares listed next to his name, how many shares
the selling stockholder will beneficially own after completion of the
offering.
We may amend or supplement this
prospectus form time to time in the future to update or change this list of
selling stockholders and shares that may be resold.
Number
      of Shares Beneficially Owned
Number
      Shares Offered for Sale (1)
Number
      of Shares Owned after the offering (2)
%
%
%
DiGiandomenico,
      Anthony
580,351
3.7%
170,000
1.1%
410,351
2.5%
McCandless,
      John
190,000
1.2%
190,000
1.2%
-
-
Petrelli,
      Anthony
112,750
-
100,000
-
20,250
-
Pougnet,
      John
319,936
2.0%
375,000
2.3%
129,500
-
Ridley,
      Doug
307,500
1.9%
400,000
2.5%
20,000
-
Robbins,
      AJ
120,000
-
120,000
-
-
-
Rumsey,
      Daniel
90,000
-
80,000
-
20,000
-
1,720,537
1,435,000
600,101
____________________
(1)
Includes
      all stock options exercisable under the Plan, regardless of vesting. Does
      not include any other shares owned by the selling
    stockholder.
(2)
Assumes
      that all of the shares registered in this Prospectus are sold by the
      Selling Stockholders.
PLAN OF DISTRIBUTION
We have been advised by the selling
stockholders that they intend to sell all or a portion of the shares offered
from time to time on the American Stock Exchange and that sales will be made at
prices quoted on the American Stock Exchange at the times of sale. The selling
stockholders may also make private sales directly or through brokers who may act
as agents or principals. Further, the selling stockholders may choose to dispose
of their shares by gift to a third party or as a donation to a charitable or
other non-profit entity. In connection with any sales, the selling stockholders
and any participating brokers may be deemed to be underwriters within the
meaning of the Securities Act of 1933.
Any broker-dealer participating as
agent for the selling stockholders or for the purchasers may receive
commissions. Broker-dealers may agree with the selling stockholders to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as
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agent for
the selling stockholders, to purchase as principal any unsold shares at the
price required to fulfill the broker-dealer commitment to the selling
stockholders. Broker-dealers who acquire shares as principal may thereafter
resell such shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above), in the
over-the-counter market, in negotiated transactions or otherwise at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with these resales may pay to or receive commissions from the
purchasers.
We have advised the selling
stockholders that Regulation M promulgated under the Securities Exchange Act of
1934 may apply to sales in the market and has informed them of the possible need
for delivery of copies of this prospectus. The selling stockholders may
indemnify any broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities arising under
the Securities Act of 1933. Any commissions paid or any discounts or concessions
allowed to any broker-dealers, and, if any broker-dealers purchase shares as
principal, any profits received on the resale of shares, may be deemed to be
underwriting discounts and commissions under the Securities Act of
1933.
Upon notification by a selling
stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares through a cross or block trade, a
supplemental prospectus will be filed under Rule 424(c) under the Securities Act
of 1933, setting forth the name of the participating broker-dealer(s), the
number of shares involved, the price at which the shares were sold by the
selling stockholders, the commissions paid or discounts or concessions allowed
by the selling stockholders to such broker-dealer(s), and where applicable, that
the broker-dealer(s) did not conduct any investigation to verify the information
set forth in this resale prospectus.
Any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 and 701 under the
Securities Act may be resold under Rule 144 rather than pursuant to this
prospectus. In general, under Rule 144 as currently in effect, a person (or
persons whose shares are aggregated), including any person who may be deemed to
be our "affiliate," is entitled to sell within any three month period
"restricted shares" beneficially owned by him or her in an amount that does not
exceed the greater of (i) 1% of the then outstanding shares of common stock or
(ii) the average weekly trading volume in shares of common stock during the four
calendar weeks preceding such sale, provided that at least one year has elapsed
since such shares were acquired from us or our affiliate. Sales are also subject
to certain requirements as to the manner of sale, notice and availability of
current public information regarding us. A person who has not been our
"affiliate" at any time within three months prior to the sale is entitled to
sell his or her shares without regard to the volume limitations or the other
requirements of Rule 144, provided that at least one year has elapsed since the
shares were acquired from us or our affiliate. In general, under Rule 701 as
currently in effect, any employee, consultant or advisor of us who purchases
shares from us in connection with a compensatory stock or option plan or other
written agreement related to compensation is eligible to resell these shares in
reliance on Rule 144, but without compliance with the certain restrictions
contained in Rule 144.
SEC POSITION REGARDING INDEMNIFICATION
Our Articles of Incorporation and
Bylaws provide for indemnification of officers and directors, among other
things, in instances in which they acted in good faith and in a manner they
reasonably believed to be in, or not opposed to, our best interests and in
which, with respect to criminal proceedings, they had no reasonable cause to
believe their conduct was unlawful.
Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended, may be
permitted to our directors, officers or persons controlling us under the
provisions described above,
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we have
been informed that in the opinion of the Securities and Exchange Commission,
indemnification is against public policy as expressed in that Act and is
therefore unenforceable.
DESCRIPTION OF THE PLAN
2003
Stock Incentive Plan
In
June 2003, The 2003 Stock Incentive Plan (the "Plan") was adopted by the
Company. The 2003 Stock Incentive plan included incentive and non-qualified
stock options and restricted stock. The Plan provided that with respect to
incentive stock options (ISOs) the option price per share must be at least the
fair market value (as determined by the Compensation Committee, or in lieu
thereof, the Board of Directors) of the Common Stock on the date the stock
option was granted or based on daily quotes from an exchange or quotation system
designated by the compensation committee as the primary market for the shares.
Under the Plan, if for any reason, a change in control occurred, all shares
subject to the Plan immediately became vested and exercisable.  The
Plan provided for the number of shares to be granted under the 2003 Stock
Incentive Plan to be 800,000 shares of our Common Stock. The 2003 Stock
Incentive Plan is intended to attract persons of training, experience, and
ability to continue as employees, directors, and consultants of our company, and
to furnish additional incentive to such persons to become stockholders of our
company.
The
Compensation Committee of our Board of Directors, which we refer to as the
"administrator," administers the 2003 Stock Incentive Plan. The administrator
has the discretion to interpret the provisions of the 2003 Stock Incentive Plan.
The administrator will also determine the persons who will receive awards under
the 2003 Stock Incentive Plan, and the number of shares, vesting period, and
other terms and conditions of the awards. Our Board of Directors may amend or
discontinue the 2003 Stock Incentive Plan at any time, and the 2003 Stock
Incentive Plan will expire July 1, 2013.
Options
granted under the 2003 Stock Incentive Plan may be either incentive stock
options, as defined under the Internal Revenue Code, or nonqualified options.
The expiration date, maximum number of shares purchasable, vesting provisions,
and any other provisions of options granted under the 2003 Stock Incentive Plan
will be established at the time of grant. The 2003 Stock Incentive Plan
administrator will set the term of each option, but no options may be granted
for terms of greater than ten years. Options will vest and become exercisable in
whole or in one or more installments at such time as may be determined by the
plan administrator. With respect to incentive stock options granted, the
exercise price may not be less than the fair market value of the Common Stock on
the date of grant, and shall not be less than 110% of the fair market value of
the Common Stock on the date of grant in the event an optionee owns 10% or more
of our Common Stock. With respect to nonqualified options, the exercise price
may be less than the fair market value of the Common Stock on the date of grant.
If the optionee terminates his or her relationship with our Company for any
reason, including death or disability, the optionee (or the optionee's estate)
may exercise any vested options for a three-month period following his or her
termination.
We may
grant shares of restricted stock under the 2003 Stock Incentive Plan to eligible
persons upon the payment of consideration, if any, as determined by the plan
administrator. The administrator may establish a performance goal that must be
achieved as a condition to the retention of the restricted stock. The
performance goal may be based on the attainment of performance measurement
criteria, which may differ as to various eligible persons. The administrator
will set the performance criteria and will communicate the criteria in writing
to the award recipient prior to the commencement of the period to which the
performance relates. During the restricted period, and subject to restrictions
on transfer of the shares, the award recipient shall have all voting, dividend,
liquidation, and other rights with respect to the Common Stock. In the event the
eligible person ceases to be an employee, director, or consultant during
a
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restriction
period, or in the event performance goals attributable to a restricted stock
award are not achieved, the shares subject to the award that have not been
earned are subject to forfeiture.
If any
change is made in the Common Stock subject to the 2003 Stock Incentive Plan, or
subject to any award granted under the 2003 Stock Incentive Plan (through stock
dividends, stock splits, combination of shares, or otherwise), the 2003 Stock
Incentive Plan provides that appropriate adjustments will be made as to the
aggregate number and exercise prices with respect to each outstanding award. In
the event of a merger, consolidation, or other reorganization of our Company,
all restrictions relating to restricted stock awards will lapse, and all
outstanding stock options will vest. Unless the agreement governing the change
in control provides otherwise, upon consummation of the change in control, the
2003 Stock Incentive Plan will terminate and all outstanding options will
terminate if not exercised prior to the consummation of the change in
control.
Effective
November 17, 2004, the 2003 Stock Incentive Plan was amended to increase
the number of shares available to issue under its terms to 1,000,000 shares of
our Common Stock. Effective July 22, 2005 the shareholders approved a
resolution to increase the number of shares available under the 2003 Stock
Incentive Plan to 1,800,000. On March 7, 2007 the shareholders approved a
resolution to increase the number of shares available under the 2003 Stock
Incentive Plan to 2,200,000.
On
November 12, 2007 the shareholders approved an increased the number of shares
available under the 2003 Stock Incentive Plan to 3,000,000 as our Board of
Directors has determined that additional options are necessary to attract and
retain qualified employees, managers and executive officers and
directors.
APPLICABLE SECURITIES LAW RESTRICTIONS
If the optionee is deemed to be an
"affiliate" (as that term is defined under the Securities Act of 1933, as
amended), the resale of the shares purchased upon exercise of options covered
hereby will be subject to certain restrictions and requirements. Our legal
counsel may be called upon to discuss these applicable restrictions and
requirements with any optionee who may be deemed to be an affiliate, prior to
exercising an option.
In addition to the requirements imposed
by the Securities Act of 1933, the antifraud provisions of the Securities
Exchange Act of 1934 and the rules thereunder (including Rule 10b-5) are
applicable to any sale of shares acquired pursuant to options.
Up to 3,000,000 shares may be issued
under the Plan. Common shares outstanding and those to be issued upon exercise
of options are fully paid and non-assessable, and each share of stock is
entitled to one vote at all shareholders' meetings. All shares are equal to each
other with respect to lien rights, liquidation rights and dividend rights. There
are no preemptive rights to purchase additional shares by virtue of the fact
that a person is a shareholder of the Company. Shareholders do not have the
right to cumulate their votes for the election of directors.
Our directors must comply with certain
reporting requirements and resale restrictions pursuant to Sections 16(a) and
16(b) of the Securities Exchange Act of 1934 and the rules thereunder upon the
receipt or disposition of any options.
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TAX CONSEQUENCES
Upon exercise of a non-qualified
option, the optionee will be taxed, as ordinary income, on the difference
between the exercise price of the option and the fair market value of the
underlying shares on the date of exercise. The fair market value then becomes
the optionee's basis in the underlying shares.
LEGAL MATTERS
The validity of the shares of common
stock offered hereby will be passed on for us by Gary A. Agron, 5445 DTC
Parkway, Suite 520, Greenwood Village, Colorado 80111.
EXPERTS
Our financial statements for the years
ended December 31, 2007 and 2006, were audited by Gordon, Hughes & Banks,
LLP, an independent registered public accounting firm, as indicated in their
report in our Annual Report on Form10-KSB, and are incorporated herein by
reference.
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PART
I.  Information Required in the Section 10(a) Prospectus
Item
      1.
Plan
      Information
The documents containing the
information specified in Item 1 will be sent or given to participants in the
Registrant's 2003 Stock Incentive Plan as specified by Rule 428(b)(1) of the
Securities Act of 1933, as amended (the "Securities Act"). Such documents are
not required to be and are not filed with the Securities and Exchange Commission
(the "SEC") either as part of this Registration Statement or as prospectuses or
prospectus supplements pursuant to Rule 424. These documents and the documents
incorporated by reference in this Registration Statement pursuant to Item 3 of
Part II of this Form S-8, taken together, constitute a prospectus that meets the
requirements of Section 10(a) of the Securities Act.
Item
      2.
Registrant
      Information, the 2003 Stock Incentive
Plan
Upon written or oral request, any of
the documents incorporated by reference in Item 3 of Part II of this
Registration Statement (which documents are incorporated by reference in this
Section 10(a) prospectus), other documents required to be delivered to eligible
employees, non-employee directors and consultants, pursuant to Rule 428(b) or
additional information about the 2003 Stock Incentive Plan are available without
charge by contacting:
John D.
Pougnet, Chief Executive Officer
480 South
Holly Street
Denver,
Colorado 80246
PART
II.  Information Required in the Registration Statement
Item
      3.
Incorporation
      of Documents by Reference
The Registrant hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the SEC. In addition, all documents subsequently filed pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents:
(a)
The
      Registrant's Annual Report on Form 10-KSB for the year ended December 31,
      2007.
(b)
The
      Registrant's Quarterly Reports on Form 10-Q for the quarters ended June
      30, 2007; September 30, 2007; and March 31,
  2008.
(c)
Any
      Current Reports filed by the Registrant on Form 8-K filed with the SEC
      subsequent to March 31, 2008.
Item
      4.
Description
      of Securities
Not Applicable
Item
      5.
Interests
      of Named Experts and Counsel
None.
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Item
      6.
Indemnification
      of Directors and Officers
The
Registrant's Articles of Incorporation, as amended (the "Articles"), provide
that the liability of the Registrant's directors for monetary damages for breach
of fiduciary duty is eliminated to the fullest extent permitted by Colorado law
and that the Registrant's officers and directors shall be indemnified by the
Registrant against any liability to the fullest extent permitted by Nevada law.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
The
Registrant's Bylaws, as amended, provide that the Registrant shall indemnify the
currently acting and former directors, officers, employees and agents of the
Registrant or another corporation, partnership, joint venture, trust,
association or other enterprise against reasonably incurred expenses, judgments,
penalties, fines and amounts paid in settlement reasonably incurred by him in
connection with such action, suit or proceeding if it is determined that such
person reasonably believed (i) in the case of conduct in his official capacity
with the Registrant, that his conduct was in the Registrant's best interests, or
(ii) in all other cases (except criminal cases), that his conduct was at least
not opposed to the Registrant's best interests, or (iii) in the case of any
criminal proceeding, that he had no reasonable cause to believe his conduct was
unlawful.
Item
      7.
Exemption
      from Registration Claimed
None
Item
      8.
Exhibits
Number
Exhibit
4.01
2003
      Stock Incentive Plan (1)
5.1
Opinion
      of Gary A. Agron
23.1
Consent
      of Gordon, Hughes and Banks, LLP, an independent registered public
      accounting firm
23.2
Consent
      of Gary A. Agron is contained in Exhibit
5.1
____________________
(1)
Incorporated
      by reference to the Registrant's Definitive Proxy Statement dated
      September 4, 2007.
Item
      9.
Undertakings
(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:
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.
(2)           That,
for the purpose of determining any liability under the Securities Act of 1933,
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.
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(3)           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)           The
undersigned registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the Registration
Statement shall be deemed to be a new Registration Statement relating to the
securities offered herein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c)           Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the 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 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.
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SIGNATURES
Pursuant to 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 an amendment to a filing on
Form S-8 and authorized this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized, in Denver, Colorado on June 11,
2008.
XELR8
      Holdings, Inc.
By:
/s/
      John D. Pougnet
John
      D. Pougnet
Chief
      Executive Officer
Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed
below by the following persons in the capacities indicated on June 11,
2008.
Signature
Title
/s/
John
      D. Pougnet
Chief
      Executive Officer and Director
John
      D. Pougnet
/s/
John
      D. Pougnet
Chief
      Financial Officer
John
      D. Pougnet
(Principal
      Accounting Officer)
/s/
Douglas
      Ridley
President
      and Director
Douglas
      Ridley
EXHIBIT
INDEX
Number
Exhibit
4.01
2003
      Stock Incentive Plan (1)
5.1
Opinion
      of Gary A. Agron
23.1
Consent
      of Gordon, Hughes and Banks, LLP, an independent registered public
      accounting firm
23.2
Consent
      of Gary A. Agron is contained in Exhibit
5.1
____________________
(1)
Incorporated
      by reference to the Registrant's Definitive Proxy Statement dated
      September 4, 2007.