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      Form 8K Item 7.01
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      SECURITIES AND EXCHANGE COMMISSION</strong></font></div>
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      D.C. 20549</strong></font></div>
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      8-K</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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"><strong>________________________________________________________________________</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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"><strong>CURRENT
      REPORT</strong></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"><strong>Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of
      1934</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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">Date
      of
      Report (Date of Earliest Event Reported): February 14, 2007</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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; 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"><strong>AMERICAN
      SECURITY RESOURCES CORPORATION</strong></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">(Formerly
      Kahuna Network Security 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-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Formerly
      Computer Automation Systems, 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-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Exact
      Name of Registrant as Specified in Charter)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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"><strong>Nevada</strong></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">(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>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
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      <table cellpadding="0" cellspacing="0" width="80%">

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            <td valign="top" width="37%">
              <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"><strong>000-27419</strong></font></div>
            </td>
            <td valign="top" width="37%">
              <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"><strong>75-2749166</strong></font></div>
            </td>
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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-SIZE: 10pt; FONT-FAMILY: Times New Roman">(Commission
                File Number)</font></div>
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            <td valign="top" width="37%">
              <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 Identification No.)</font></div>
            </td>
          </tr>

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    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>9601
      Katy Freeway, Suite 220</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Houston,
      Texas, 77024</strong></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
      of principal executive offices including zip code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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"><strong><u>713-465-1001</u></strong></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">(Registrant&#8217;s
      telephone number, including area code)</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
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    <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"><strong>ITEM
      7.01 - Regulation FD Disclosure</strong></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-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following is a transcript of a the verbal presentation with a Power Point given
      by ARSC CEO Frank Neukomm to the Wall Street Analyst Alternative Energy Forum
      February 14, 2007.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Good
      morning. Thank you for the introduction. Just to reiterate, we are a holding
      company. We're a fully reporting public company. This company became public
      back
      in the '90s. It was an OEM manufacturer for telecom process control equipment.
      It was called Computer Automation Systems.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">When
      the
      telecom industry turned down back in the late '90s and early 2000s, this company
      basically had its business dry up. I put together a group of investors that
      kept
      the accounting and the filings current, while we looked for new opportunities.
      At the beginning of 2004, we recapitalized and changed the name of the company
      to American Security Resources Corporation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      went
      into the market looking for businesses that were in homeland security or
      national defense. We came across a company in the Portland, Oregon area that
      was
      created by some technology people at Intel Corporation that had advanced the
      technology and science of hydrogen fuel cells. We examined it, thought this
      was
      a good opportunity, and we thought, &#8220;What is more central to the security of the
      United States than energy security?&#8221;. So we purchased this company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">It
      was
      called eGO Design at that time, and their intellectual property was protected
      by
      the filing of three provisional patents that advanced the science of fuel cells.
      The hydrogen fuel cell that is protected by those patents has an extended
      lifetime, lower cost of manufacturing and a much higher efficiency in the use
      of
      hydrogen than any existing hydrogen fuel cell.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      made
      that company our Hydra Fuel Cell Corporation. It is committed to developing
      clean, quiet, green energy. We think we're doing that fairly well. A year ago,
      when we bought the company -- it was acquired at the end of October of 2005
      --
      we created a proof of concept prototype in the first three months that we had
      the company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Today
      we
      have finished products that are in the process of final testing for submission
      to the Underwriters Laboratory and the CSA for certification. Then we will
      go to
      the market, if not by the end of this month, certainly in March, selling
      hydrogen powered fuel cells that generate electricity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now
      the
      items that you see there are standard computer industry cases. What we currently
      use is off the shelf. So we don't have any problem at all ramping production.
      It's all available in quantity and very good quality. Because our founding
      scientists all came out of the computer industry, they tell us specifically
      where to get these things at low price and ready availability for
      us.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      product that we have the intellectual property on, you can&#8217;t see. It's inside
      there and those are our advanced stacks. We have taken the technology and
      advanced it into these designs that you see today. The fuel cell that's on
      the
      upper right corner there is a conventional fuel cell.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">If
      you
      look at it, it has a serpentine channel. That's the channel through which the
      hydrogen flows to address the membrane. The membrane is where the transaction
      takes place that converts hydrogen and oxygen into water and releases an
      electron. And that released electron becomes electrical flow. That is the
      electricity generated by the fuel cell.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now,
      the
      lower unit the schematic there shows the difference of our design. We use flat
      plates and those are printed circuit board type plates. We drill literally
      thousands of holes in the plates and we flood the membrane with hydrogen so
      that
      effectively 98% of the membrane that is available for that hydrogen oxygen
      transaction is actually used.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">So
      you
      have instant-on, you have a vastly more productive fuel cell in that 98% of
      the
      surface is being used, so a very high percentage of the hydrogen is actually
      turned into the water vapor and electricity, the electric flow.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now
      one
      of the problems with the top design is because the only place that the hydrogen
      touches the membrane is on that channel that part of the membrane wears out
      very
      quickly. It becomes embedded with impurities and gets very hot because there
      is
      heat released in the chemical transaction. And so they wear out, they become
      brittle and they become less efficient the longer you operate them and they
      become blocked with impurities from the hydrogen stream.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">So
      those
      fuel cells, while they cost a lot of money, don&#8217;t last very long and they are
      not very efficient. We have solutions for all of those items.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      bullet points down there are basically the items that we have patented in seven
      additional patent applications that we filed in 2006 that protect the
      differences in our fuel cells from those in the marketplace.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">A
      little
      better view of it here, we call it the HydraStax. It is now a registered
      trademark. </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">We
      have
      plates that we flow hydrogen and oxygen through. We build these in kilowatt
      stacks. You can stack as many of them as you need. </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">This
      is a
      fixed power application not a mobile application.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      benefits, of course, very readily you can put together anywhere from half a
      kilowatt to five kilowatts in one of those cases that we showed in the earlier
      picture, very high electrical efficiency, of course, because of the design.
      The
      cost for making a kilowatt of this generating capacity is much, much lower
      because we have designed these to use the manufacturing efficiencies that are
      currently used in the computer industry. And you know when they are making
      a
      computer that basically all of it is commodity except the memory, we are using
      the benefits of all that commodity manufacturing, so we have lowered the cost
      of
      making a kilowatt of our clean green power electrical generators using
      hydrogen.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Again,
      our product is called HydraStax. </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">The
      power
      is one to five kilowatts. </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">It&#8217;s
      instant on. </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">It&#8217;s
      normal output is 12 volt 400 amps. </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">You,
      as a
      customer, can specify how you want the power, plus or minus 12 volt direct
      current, 24 or 48 direct current or 120 volts alternating current, all optional,
      we just use converters to change that.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      mean
      time before failure, we have it on here stated that it&#8217;s rated for continuous
      uptime. Our design parameters suggest that these will operate for 40,000 hours
      that is to be proven with additional testing but that&#8217;s what the designs call
      for.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Again,
      our scientists are pretty good. They said that the original Stax would generate
      250 kilowatts to 350 kilowatts. They are currently operating over 500 kilowatts.
      So they seem to know what they are doing.</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">So
      we
      think that with a 40,000 hour capability of operation that these will become
      not
      only backup power, which is the primary market today, but they will also be
      utilized as primary power in other words instead of using grid power you would
      use these fuel cells for your basic power and you would use the grid as a
      backup, or some other backup.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now,
      the
      main certifications that we are going after, straight away, are the
      Underwriter&#8217;s Laboratory and CSA, FCC certification, the NEB certification and
      then the common market or the EU certification which is CE. The current design
      is for the needs of installation in remote locations. Our principle market
      right
      out of this chute will be the telecom and back-up power market. There are a
      lot
      of remote facilities at which people are not in attendance. So we&#8217;ve design
      these to be accessible from the web, each one of would have a URL basically,
      a
      web address and the outputs can be monitored and they can be changed
      remotely.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Any
      high-end system would have similar qualities. </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">The
      fuel
      is of course, hydrogen, standard industrial grade hydrogen, which comes from
      primarily the [synthesis of natural gas. It is 99.95% pure and that 0.05% of
      impurity is the big problem with fuel cells today, it&#8217;s that those impurities
      clog up the proton exchange membrane, which is where the transaction takes
      place. It releases the electron. Because of the way we designed our fuel cell
      where we have 1000s of holes and we flood immediately with hydrogen for instant
      on, and we also can reverse that flow and back wash the proton exchange membrane
      to remove the impurities from it.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">In
      the
      process of reversing the flow, we actually generate hydrogen. You know it works
      in reverse and that is a bonus that can be used. Ultimately to reverse them
      and
      make the basic fuel that you&#8217;re going to run through it to make electricity
      again. </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">The
      fuel
      is expected to flow with continuous feed. There are a number of different
      methods of creating hydrogen, which we&#8217;ll address in a minute. </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">It
      operates at very low pressure and is very efficient. -</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">Thefuel
      cell market is divided into numerous segments.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      two
      big segments that we are operating in, where there is a micro cell or a micro
      fuel cell market that is -- less then half a kilowatt and actually way less
      then
      half a kilowatt. That would be for electric devices like phones and computers.
      We are in the half a kilowatt to 10 kilowatt range. We can certainly put
      multiple units together and make more than 10 kilowatts.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">But
      the
      big units today that are 10 kilowatts and above up to megawatt are very high
      temperature molten carbonate fuel cell systems. We are in the half of a kilowatt
      to 10 kilowatt range. </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">Last
      year
      -- excuse me -- in 2005 which is the last year we have statistics. Over 10,500
      fuel cells were sold in that range that we've targeted.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      "Sweet spot" that we're going at, are markets that already understand the value
      of hydrogen fuel cells and bought 10,000 plus of them. And our number one
      markets are and we have rated down here, as Telco is number one and then Back-up
      for Data-Centers and then -- educational facilities and military uses.
</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">There
      are
      a number of interested parties in the military establishment for these portable,
      highly efficient light weight fuel cells.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">But
      there's a much longer sales cycle to that group. And so we're going right at
      the
      market that's already buying fuel cells with more efficient, less expensive
      fuel
      cells. Now the prices are in there, I'll tell you what the cost of an installed
      kilowatt of generating capacity is. And that ranges from and these are list
      prices that we've got from other fuel cell manufacturers. It ranges from $3,000
      per kilowatt to over $20,000 per kilowatt of installed capacity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Well
      today we have the ability to manufacture a kilowatt of generating capacity
      for
      about $600 but we won&#8217;t sell it for anywhere near that. We will come in under
      that $3000, 15% 20% maybe under that $3000 to sell a kilowatt of installed
      power. And we'll go right at these markets that are in the lighter block there
      on the bottom.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">This
      is a
      schematic that, is a compellation of Department of Energy and the fuel cell
      industry association, that shows where the growth in installed fuel cell
      capacity will be. And again we're going at the back-up power for telecom and
      data-centers first, educational campuses and small enterprises
      second.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      expect
      that by the end of 2008 we will have the certifications and the testing results
      to prove that it has the lifetime sufficient to be used as a primary power
      system for a residence or small business. And we expect to sell into that
      market. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      economics of course are driven by the cost of hydrogen, but more importantly
      we&#8217;ll be using it as a primary power instead of as the power that has been run
      through a boiler somewhere and distributed over the grid where you&#8217;re basically
      getting about 30% of that primary power if you&#8217;re buying it from the grid. So we
      think it would be competitive with today&#8217;s cost of hydrogen that by the end of
      2008 with the high efficiency of our system it could be installed as a backup
      power system or as a primary power system at residences.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">You
      know
      the significance of that when an electric utility announces that they&#8217;re going
      to build a new multi megawatt power plant that is put in terms of, &#8220;it&#8217;s enough
      power for 25,000 homes. Or it&#8217;s enough power for 40,000 homes.&#8221; Well, if we
      install 25,000 fuel cells at 25,000 homes, we&#8217;ve eliminated the need for that
      multibillion dollar power plant. So if we go to Con Ed or Key Span or whomever
      it is. In whatever part of the country it is and say look, here are fuel cells,
      you go to builders and developers in your area and you put in 25,000 fuel cells,
      you don&#8217;t have to build this multi billion dollar complex anymore.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">You
      put
      them in, they run all day, provide all the power that the house needs, and
      you
      take the rest of it back into the grid and you distribute it around. Well,
      there
      they may have a compelling argument. It&#8217;s also a compelling argument to the guy
      that owns the house who buys it for himself and generates all the power he
      needs, all he spends is to buy the hydrogen, and then he&#8217;s selling the
      difference back into the grid and he gets a check at the end of the month from
      the utility instead of a bill.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      think
      there is a great future in the residential market and we&#8217;re headed right at
      that. Today the source of the fuel which is hydrogen is primarily from natural
      gas. We&#8217;d like to get out of the hydrocarbon stream, so that we really are clean
      and green. But clearly, we want to sell fuel cells, so we&#8217;ll take the hydrogen
      from the natural gas and we&#8217;ll use it for electric generation.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      can
      crack it from methanol, ethanol, biomass and ammonia. And this is extremely
      important, because our Chief Technology Officer [Bean Shafer] is a nuclear
      physicist. He spends a lot of time in research, searching for technologies
      that
      will advance what we&#8217;re doing. And he has discovered a method for making
      hydrogen from ammonia that is the equivalent of what Spindletop represented
      for
      turning oil into the major low cost energy fuel that fueled the industrial
      development of the United States.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      had
      been producing oil for 50 years when Spindletop in Texas blew in. When it blew
      in, it lowered the price of oil and created a sufficient supply of it so as
      to
      fuel the industrial development of the western world. That is what we think
      we
      have discovered in university research on hydrogen production and have now
      up-scaled to prove that the technology is up-scalable and the economic research
      indicates that our hydrogen formulator could actually bring the cost of hydrogen
      down to a range where it will actually enable the hydrogen economy.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now
      the
      first step, of course, we'll use it for our fuel cells, but the second step
      will
      be moving up to major industrial production levels and to start producing
      hydrogen that will be sold to everybody that needs hydrogen from other cell
      manufacturers, fuel cell users, to automobile industry and everybody else that
      needs and wants hydrogen to free themselves from hydrocarbons.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      hydrogen formulator works by basically putting a patented catalyst on the anode
      and cracking ammonia into nitrogen gas and hydrogen gas. It does it at basically
      standard temperature and pressure. And it does it with a very low external
      electrical energy input.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now
      that's the formula right down there, and it makes us all regret that we didn't
      pay more attention in high school chemistry, but that is basically the formula
      we have operated, we discovered this in the university's research and we
      designed an experiment and have a university performing experiments to upscale
      it from milliwatt to 1 to 5 watts.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">And
      we're
      now going to take it on up from there. </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">Now
      the
      Department of Energy has set a target of $2 per kilogram as a commercial price
      for hydrogen to be competitive with other boiler fuels from other fuel sources
      that will make the hydrogen economy economically competitive with other energy
      sources and other forms of generating electricity today.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Using
      the
      best commercial electrolyzer, and that's what we're doing is, we're
      electrolyzing ammonia. Using the best commercial electrolyzer and using the
      best
      commercial electrical rate, which is basically the hydro power rate, that's
      $0.07 per kilowatt for the electricity.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      amount of electricity that it takes today, to hydrolyze hydrogen is over $3.70
      per kilogram of hydrogen. We're using the ammonia electrolysis method that
      we
      discovered and that we're upgrading, I say we discovered, we discovered in
      the
      research in the university, discovered by the university and it uses about
      $0.30
      of electricity, so less than a tenth of the inputted energy cost to crack the
      hydrogen out.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Well,
      this gives you the schematic of the cost of hydrogen and compares it to a gallon
      of gasoline equivalent, so that we have an apple-to-apple comparison of what
      this means. In 2004 and 2005, the cost of the hydrogen was approximately $10
      per
      kilogram. And you know the price of gasoline was going up quite a bit during
      that period of time.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">In
      2006,
      there have been some advances in the technology and it's brought the price
      down
      to $7 to $8 per kilogram using the traditional methods of hydrolyzing, or of
      making hydrogen in the refining industry, they use high pressure and high
      temperature steam and high pressure to crack hydrogen. But steam cracking is
      still around $7 to $8 per kilogram of hydrogen.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Using
      our
      method, in 2007, it drops it to $0.89 per kilogram. Now that's the cost of
      the
      ammonia and the electricity. It doesn't have any infrastructure cost in there.
      So we still believe it can be delivered for way under the $2 that the Department
      of Energy has as the tipping point for hydrogen to become universally usable
      and
      competitive with other types of energy sources in the United States. And it
      will, for that matter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now
      our
      view, of course, is that we, first and foremost, will use this as a hydrogen
      generator for our fuel cells. When a customer orders a fuel cell from us they'll
      get a complete system. They'll have the source of the hydrogen, they'll have
      the
      fuel cell, and they'll have the -- all the transfer capabilities to put it
      into
      whatever application they're using, whether it's a electrical -- whether it's
      a
      telecom facility at a remote location or whether it's in a data center or
      hospital or at a house, it will be a complete system.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Second
      item is that we design our systems based on what the customer says his needs
      are. We don't say, look get 1 kilowatt, 2 kilowatts or 5 kilowatts. You're
      going
      to have to buy one of these and make it work for you. They say we have a 1.5
      kilowatt application or we have a 7.5 kilowatt application, we stack units
      together and give them exactly what they are looking for.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">First
      application of the electrolyzer, of course, will be for our fuel cells, the
      second one would be to scale it up to industrial production levels. We are
      working with the university. We have designed the experiments. We were paying
      for the experiments to upscale all of this and they will participate in the
      revenue to be generated from that.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now
      this
      is a schematic to show you where we're going with the fuel cells only -- there
      are two errors on this. First of all take the Qs on the top and advance them
      back this way because Q1 is this first column, and where we have the Q4, that's
      actually the full year. And then in Q3, which is now our Q4, that number is
      not
      500,000, it's 300,000 on the materials and equipment. We will be probably
      selling fuel cells by the end of this quarter. We won't receive the revenue
      for
      them until the second quarter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      expect
      -- these prices are based on a $2,000 per kilowatt of installed capacity selling
      price. So essentially you're looking at in Q2. For those who came in late,
      the Q
      just needs to come back this way. The final column is the yearend and the first
      column is Q1, showing zero dollars in sales. Actually, not receiving any revenue
      in Q1 but we'll be selling fuel cells by the end of this quarter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">This
      is
      so because that pricing remains the same across there,$2,000 per kilowatt of
      installed base capacity. </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">Basically,
      reaching breakeven by the fourth quarter. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">All
      the
      funding of the short fall is through two methods.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      have
      in place already a funding mechanism that will generate $600,000 or $700,000
      over the next six months. Our run-rate as you can see is about a $150,000 a
      month, plus the cost of the materials. And then we a have private placement
      memorandum on the street right now, that are 10 million units at a nickel.
      Our
      stock was at .072 yesterday.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">So
      they&#8217;re selling for a little bit less than what the market is. Of course these
      are 144 shares. There's a half a warrent at a dime and a half a warrent at
      $0.20
      cents. And to the extent that you&#8217;re interested in that, we have a private
      placement memorandum here.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Here
      are
      some milestones to expect from us this year. We will have a certification of
      the
      HydraStax units. So that they will be available for sale at any place it
      requires certification. We expect certification, we've already started the
      process on that.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      have
      all the equipment that the testing organizations use in our shop, with which
      we
      are emulating the testing regimen. We are running a variety of tests, on the
      cells using that equipment, when we are confident that the outputs are
      consistent, we will have the certifying agencies come in and run it so that
      we&#8217;re prepared so that it works through the certification process the first
      time.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Again,
      we'll begin selling the units this year. We expect to have a small commercial
      application of the formulator sometime this year. Now the development path
      with
      the University and we are working with the University on -- has a two year
      development process to take it to full commercial level. We expect we will
      be
      taking some steps to that and turning them into small formulators to provide
      with our fuel cell sometime this year.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      also
      have a letter of intent to acquire a wind turbine company that has patented
      wind
      turbine technology. We are negotiating the exchange agreement with them now.
      We're basically exchanging our shares for their shares and we're working out
      a
      funding arrangement to take them to the market. They have a patented design
      that
      spins on a vertical axis horizontal to the ground. The prototype operated in
      a
      hurricane force wind on the Texas coast which we have so much of that
      environment for them to test in.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">In
      the
      standard wind turbine environment which is a propeller type environment. They
      have to shut down when the wind speed gets 35 or 40 miles an hour I believe.
      And
      so they don't operate very long or very efficiently and to get a megawatt of
      installed base of that type of wind turbine requires basically the installation
      of three megawatts of generating capacity because of the amount of time that
      they don't operate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      believe that these will operate from about five meters per second of wind speed
      up to as we know they will operate at 105 miles per hour now. The more torque
      you put on, the more horsepower you generate and the more power that they&#8217;ll
      generate. Our idea is, that we'll install these wind turbines in wind farms
      that
      we will own or that we will jointly own and operate.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">During
      the peak time, we will send power from wind straight into the grid at peak
      prices and during off-peak, we will use the electricity generated by the wind
      turbines to hydrolyze hydrogen. And then we will store that hydrogen until
      peak
      and run it through our fuel cells and run that into the grid during peak times.
      So you basically can increase the return by several orders of magnitude by
      going
      from $0.02 or $0.03 per kilowatt to $0.16 per kilowatt by taking it from off
      peak to peak just by storing the energy as hydrogen.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">So
      those
      are the number of the business items that we will see from this year. We intend
      to file an SB-2 sometime after we close out the private placement memorandum
      to
      register both the shares under the PPM and the shares under the warrants, so
      that the people that exercise them will get free trading shares this year.
      We'll
      have free trading shares into which they would convert the
      warrants.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      do
      have -- in capital structure, we've got about 115 million shares outstanding.
      We
      have 200 million authorized. We have additional sets of warrants that are $0.10
      a part from $0.30 to $0.90. We can call those warrants any time the stock trades
      at 200% of the strike price. We have told the people that we won&#8217;t call them
      until the underlying shares are registered.&#8230;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">How
      many
      warrants do you have?</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">That
      is
      17,500,000 worth -- fully diluted. So it&#8217;s 2,500,000 at each level, I think, how
      it works out. Any way, we have the structure in place to fund what we're doing,
      we're just about to come to market.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">With
      the
      fuel cell we have some very exciting developments ahead of us and the
      development of the formulator. The acquisition of the Wind Turbine Company
      will
      further extend our clean energy footprint. And there is a lot of synergy between
      our various technologies. And the one item that is most important to all public
      companies. We expect that we will generate profits this year. And we know that,
      that really makes it hard to value the Company at that point.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">We
      are
      now open for questions.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Question-and-Answer-Session&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Yes
      sir.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Which
      University is it and do you give them a royalty or some kind of on going
      payment?</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      University has not allowed us to announce their name. We'll be very happy to
      do
      that when they tell us, we can do that. There are two reasons for that. The
      main
      one is that they have some military connections and they don't want to attract
      attention.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">The
      second item is yes, we have agreed to an out line -- we have agreed to a formula
      that pays them a guarantee to a minimum royalty. And pays them a percentage
      and
      the percentage is less then 5% of the fees or profits that we generate
      commercializing the technology.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Of
      the
      profits?</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">No,
      of
      the gross, give back the profit. The gross that we generate from the sales
      using
      the technology.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">And
      as
      they - I assume they are still working in the engineering department on these
      kinds of problems, have they come up with better ways of doing things or next
      generation or whatever present it will that belong to you?</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">What
      we
      have, they own the patents and the structure that we've set up is that we have
      the exclusive right, to use the patents and to the extent that we develop items
      ourselves advancing that patent available or that are strictly developed by
      the
      University jointly with us. We have again the exclusivity of those developments.
      Now&#8230;.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">No
      extra
      insurance?</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">It's
      all
      covered by the royalty.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Okay.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Now
      more
      importantly is that we're involved in designing the experiments. So we're
      designing and improving with the market, you know, with the market imperative
      as
      we know where we want to handle this technology and designing experiments and
      the commercialization efforts that they are performing. It works extremely
      well
      for them, because we by saving staff it funds graduate level programs for
      them.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Sure</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">And
      you
      know it's a win-win deal. We don't have to put people on our staff we just
      fund.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">What
      is
      the amount of the minimum royalty you can guarantee?</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">5%
      or
      less. The minimum is $25,000 a year -- $25,000 a year -- excuse me minimum.
      The
      guarantee is $25,000 a year. We think that will - I mean that would be quite
      big
      in it self. But the 25 will be the minimum.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Unidentified
      Audience Member&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Thank
      you.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Any
      other
      question. All right. Well thank you very much. And we've enjoyed being here.
      If
      you have any questions we're available on the internet. And everything that
      we
      have is on file with EDGAR. You can look it all up and then call us and drill
      us
      on it.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Rachael&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Thank
      you.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">&lt;B&gt;Frank
      Neukomm&lt;/B&gt;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Thank
      you.</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: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&lt;END
      OF TRANSMISSION&gt;<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"><strong>SIGNATURES</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB1" style="MARGIN-LEFT: 36pt"></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div>&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 144pt; TEXT-INDENT: 9pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AMERICAN
      SECURITY RESOURCES CORPORATION</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 180pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><img src="arscfranksig.jpg" alt=""></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 180pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">DATE:
      February 14, 2007</font></div>
  </body>
</html>
[{"type": "8-K", "sequence": "1", "filename": "asrc8kfeb2207.htm", "description": "FORM 8K ITEM 7.01", "secsgml_size_bytes": 84288}]
{"company-data": {"conformed-name": "American Security Resources Corp.", "cik": "0001085069", "assigned-sic": "3621", "irs-number": "752749166", "state-of-incorporation": "NV", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-27419", "film-number": "07645248"}, "business-address": {"street1": "9601 KATY FREEWAY, SUITE 220", "city": "HOUSTON", "state": "TX", "zip": "77027", "phone": "713-465-1001"}, "mail-address": {"street1": "9601 KATY FREEWAY, SUITE 220", "city": "HOUSTON", "state": "TX", "zip": "77024"}, "former-company": [{"former-conformed-name": "Kahuna Network Security, Inc.", "date-changed": "20040823"}, {"former-conformed-name": "COMPUTER AUTOMATION SYSTEMS INC", "date-changed": "19990922"}]}
Form 8K Item 7.01
U.S.
      SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
      D.C. 20549
FORM
      8-K
________________________________________________________________________
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the Securities Exchange Act of
      1934
Date
      of
      Report (Date of Earliest Event Reported): February 14, 2007
AMERICAN
      SECURITY RESOURCES CORPORATION
(Formerly
      Kahuna Network Security Inc.)
(Formerly
      Computer Automation Systems, Inc.)
(Exact
      Name of Registrant as Specified in Charter)
Nevada
(State
      or
      Other Jurisdiction of
Incorporation
      or Organization)
000-27419
75-2749166
(Commission
                File Number)
(I.R.S.
                Employer Identification No.)
9601
      Katy Freeway, Suite 220
Houston,
      Texas, 77024
(Address
      of principal executive offices including zip code)
713-465-1001
(Registrant's
      telephone number, including area code)
ITEM
      7.01 - Regulation FD Disclosure
The
      following is a transcript of a the verbal presentation with a Power Point given
      by ARSC CEO Frank Neukomm to the Wall Street Analyst Alternative Energy Forum
      February 14, 2007.
Good
      morning. Thank you for the introduction. Just to reiterate, we are a holding
      company. We're a fully reporting public company. This company became public
      back
      in the '90s. It was an OEM manufacturer for telecom process control equipment.
      It was called Computer Automation Systems.
When
      the
      telecom industry turned down back in the late '90s and early 2000s, this company
      basically had its business dry up. I put together a group of investors that
      kept
      the accounting and the filings current, while we looked for new opportunities.
      At the beginning of 2004, we recapitalized and changed the name of the company
      to American Security Resources Corporation.
We
      went
      into the market looking for businesses that were in homeland security or
      national defense. We came across a company in the Portland, Oregon area that
      was
      created by some technology people at Intel Corporation that had advanced the
      technology and science of hydrogen fuel cells. We examined it, thought this
      was
      a good opportunity, and we thought, "What is more central to the security of the
      United States than energy security?". So we purchased this company.
It
      was
      called eGO Design at that time, and their intellectual property was protected
      by
      the filing of three provisional patents that advanced the science of fuel cells.
      The hydrogen fuel cell that is protected by those patents has an extended
      lifetime, lower cost of manufacturing and a much higher efficiency in the use
      of
      hydrogen than any existing hydrogen fuel cell.
We
      made
      that company our Hydra Fuel Cell Corporation. It is committed to developing
      clean, quiet, green energy. We think we're doing that fairly well. A year ago,
      when we bought the company -- it was acquired at the end of October of 2005
      --
      we created a proof of concept prototype in the first three months that we had
      the company.
Today
      we
      have finished products that are in the process of final testing for submission
      to the Underwriters Laboratory and the CSA for certification. Then we will
      go to
      the market, if not by the end of this month, certainly in March, selling
      hydrogen powered fuel cells that generate electricity.
Now
      the
      items that you see there are standard computer industry cases. What we currently
      use is off the shelf. So we don't have any problem at all ramping production.
      It's all available in quantity and very good quality. Because our founding
      scientists all came out of the computer industry, they tell us specifically
      where to get these things at low price and ready availability for
      us.
The
      product that we have the intellectual property on, you can't see. It's inside
      there and those are our advanced stacks. We have taken the technology and
      advanced it into these designs that you see today. The fuel cell that's on
      the
      upper right corner there is a conventional fuel cell.
If
      you
      look at it, it has a serpentine channel. That's the channel through which the
      hydrogen flows to address the membrane. The membrane is where the transaction
      takes place that converts hydrogen and oxygen into water and releases an
      electron. And that released electron becomes electrical flow. That is the
      electricity generated by the fuel cell.
Now,
      the
      lower unit the schematic there shows the difference of our design. We use flat
      plates and those are printed circuit board type plates. We drill literally
      thousands of holes in the plates and we flood the membrane with hydrogen so
      that
      effectively 98% of the membrane that is available for that hydrogen oxygen
      transaction is actually used.
So
      you
      have instant-on, you have a vastly more productive fuel cell in that 98% of
      the
      surface is being used, so a very high percentage of the hydrogen is actually
      turned into the water vapor and electricity, the electric flow.
Now
      one
      of the problems with the top design is because the only place that the hydrogen
      touches the membrane is on that channel that part of the membrane wears out
      very
      quickly. It becomes embedded with impurities and gets very hot because there
      is
      heat released in the chemical transaction. And so they wear out, they become
      brittle and they become less efficient the longer you operate them and they
      become blocked with impurities from the hydrogen stream.
So
      those
      fuel cells, while they cost a lot of money, don't last very long and they are
      not very efficient. We have solutions for all of those items.
The
      bullet points down there are basically the items that we have patented in seven
      additional patent applications that we filed in 2006 that protect the
      differences in our fuel cells from those in the marketplace.
A
      little
      better view of it here, we call it the HydraStax. It is now a registered
      trademark.
We
      have
      plates that we flow hydrogen and oxygen through. We build these in kilowatt
      stacks. You can stack as many of them as you need.
This
      is a
      fixed power application not a mobile application.
The
      benefits, of course, very readily you can put together anywhere from half a
      kilowatt to five kilowatts in one of those cases that we showed in the earlier
      picture, very high electrical efficiency, of course, because of the design.
      The
      cost for making a kilowatt of this generating capacity is much, much lower
      because we have designed these to use the manufacturing efficiencies that are
      currently used in the computer industry. And you know when they are making
      a
      computer that basically all of it is commodity except the memory, we are using
      the benefits of all that commodity manufacturing, so we have lowered the cost
      of
      making a kilowatt of our clean green power electrical generators using
      hydrogen.
Again,
      our product is called HydraStax.
The
      power
      is one to five kilowatts.
It's
      instant on.
It's
      normal output is 12 volt 400 amps.
You,
      as a
      customer, can specify how you want the power, plus or minus 12 volt direct
      current, 24 or 48 direct current or 120 volts alternating current, all optional,
      we just use converters to change that.
The
      mean
      time before failure, we have it on here stated that it's rated for continuous
      uptime. Our design parameters suggest that these will operate for 40,000 hours
      that is to be proven with additional testing but that's what the designs call
      for.
Again,
      our scientists are pretty good. They said that the original Stax would generate
      250 kilowatts to 350 kilowatts. They are currently operating over 500 kilowatts.
      So they seem to know what they are doing.
So
      we
      think that with a 40,000 hour capability of operation that these will become
      not
      only backup power, which is the primary market today, but they will also be
      utilized as primary power in other words instead of using grid power you would
      use these fuel cells for your basic power and you would use the grid as a
      backup, or some other backup.
Now,
      the
      main certifications that we are going after, straight away, are the
      Underwriter's Laboratory and CSA, FCC certification, the NEB certification and
      then the common market or the EU certification which is CE. The current design
      is for the needs of installation in remote locations. Our principle market
      right
      out of this chute will be the telecom and back-up power market. There are a
      lot
      of remote facilities at which people are not in attendance. So we've design
      these to be accessible from the web, each one of would have a URL basically,
      a
      web address and the outputs can be monitored and they can be changed
      remotely.
Any
      high-end system would have similar qualities.
The
      fuel
      is of course, hydrogen, standard industrial grade hydrogen, which comes from
      primarily the [synthesis of natural gas. It is 99.95% pure and that 0.05% of
      impurity is the big problem with fuel cells today, it's that those impurities
      clog up the proton exchange membrane, which is where the transaction takes
      place. It releases the electron. Because of the way we designed our fuel cell
      where we have 1000s of holes and we flood immediately with hydrogen for instant
      on, and we also can reverse that flow and back wash the proton exchange membrane
      to remove the impurities from it.
In
      the
      process of reversing the flow, we actually generate hydrogen. You know it works
      in reverse and that is a bonus that can be used. Ultimately to reverse them
      and
      make the basic fuel that you're going to run through it to make electricity
      again.
The
      fuel
      is expected to flow with continuous feed. There are a number of different
      methods of creating hydrogen, which we'll address in a minute.
It
      operates at very low pressure and is very efficient. -
Thefuel
      cell market is divided into numerous segments.
The
      two
      big segments that we are operating in, where there is a micro cell or a micro
      fuel cell market that is -- less then half a kilowatt and actually way less
      then
      half a kilowatt. That would be for electric devices like phones and computers.
      We are in the half a kilowatt to 10 kilowatt range. We can certainly put
      multiple units together and make more than 10 kilowatts.
But
      the
      big units today that are 10 kilowatts and above up to megawatt are very high
      temperature molten carbonate fuel cell systems. We are in the half of a kilowatt
      to 10 kilowatt range.
Last
      year
      -- excuse me -- in 2005 which is the last year we have statistics. Over 10,500
      fuel cells were sold in that range that we've targeted.
The
      "Sweet spot" that we're going at, are markets that already understand the value
      of hydrogen fuel cells and bought 10,000 plus of them. And our number one
      markets are and we have rated down here, as Telco is number one and then Back-up
      for Data-Centers and then -- educational facilities and military uses.
There
      are
      a number of interested parties in the military establishment for these portable,
      highly efficient light weight fuel cells.
But
      there's a much longer sales cycle to that group. And so we're going right at
      the
      market that's already buying fuel cells with more efficient, less expensive
      fuel
      cells. Now the prices are in there, I'll tell you what the cost of an installed
      kilowatt of generating capacity is. And that ranges from and these are list
      prices that we've got from other fuel cell manufacturers. It ranges from $3,000
      per kilowatt to over $20,000 per kilowatt of installed capacity.
Well
      today we have the ability to manufacture a kilowatt of generating capacity
      for
      about $600 but we won't sell it for anywhere near that. We will come in under
      that $3000, 15% 20% maybe under that $3000 to sell a kilowatt of installed
      power. And we'll go right at these markets that are in the lighter block there
      on the bottom.
This
      is a
      schematic that, is a compellation of Department of Energy and the fuel cell
      industry association, that shows where the growth in installed fuel cell
      capacity will be. And again we're going at the back-up power for telecom and
      data-centers first, educational campuses and small enterprises
      second.
We
      expect
      that by the end of 2008 we will have the certifications and the testing results
      to prove that it has the lifetime sufficient to be used as a primary power
      system for a residence or small business. And we expect to sell into that
      market.
The
      economics of course are driven by the cost of hydrogen, but more importantly
      we'll be using it as a primary power instead of as the power that has been run
      through a boiler somewhere and distributed over the grid where you're basically
      getting about 30% of that primary power if you're buying it from the grid. So we
      think it would be competitive with today's cost of hydrogen that by the end of
      2008 with the high efficiency of our system it could be installed as a backup
      power system or as a primary power system at residences.
You
      know
      the significance of that when an electric utility announces that they're going
      to build a new multi megawatt power plant that is put in terms of, "it's enough
      power for 25,000 homes. Or it's enough power for 40,000 homes." Well, if we
      install 25,000 fuel cells at 25,000 homes, we've eliminated the need for that
      multibillion dollar power plant. So if we go to Con Ed or Key Span or whomever
      it is. In whatever part of the country it is and say look, here are fuel cells,
      you go to builders and developers in your area and you put in 25,000 fuel cells,
      you don't have to build this multi billion dollar complex anymore.
You
      put
      them in, they run all day, provide all the power that the house needs, and
      you
      take the rest of it back into the grid and you distribute it around. Well,
      there
      they may have a compelling argument. It's also a compelling argument to the guy
      that owns the house who buys it for himself and generates all the power he
      needs, all he spends is to buy the hydrogen, and then he's selling the
      difference back into the grid and he gets a check at the end of the month from
      the utility instead of a bill.
We
      think
      there is a great future in the residential market and we're headed right at
      that. Today the source of the fuel which is hydrogen is primarily from natural
      gas. We'd like to get out of the hydrocarbon stream, so that we really are clean
      and green. But clearly, we want to sell fuel cells, so we'll take the hydrogen
      from the natural gas and we'll use it for electric generation.
We
      can
      crack it from methanol, ethanol, biomass and ammonia. And this is extremely
      important, because our Chief Technology Officer [Bean Shafer] is a nuclear
      physicist. He spends a lot of time in research, searching for technologies
      that
      will advance what we're doing. And he has discovered a method for making
      hydrogen from ammonia that is the equivalent of what Spindletop represented
      for
      turning oil into the major low cost energy fuel that fueled the industrial
      development of the United States.
We
      had
      been producing oil for 50 years when Spindletop in Texas blew in. When it blew
      in, it lowered the price of oil and created a sufficient supply of it so as
      to
      fuel the industrial development of the western world. That is what we think
      we
      have discovered in university research on hydrogen production and have now
      up-scaled to prove that the technology is up-scalable and the economic research
      indicates that our hydrogen formulator could actually bring the cost of hydrogen
      down to a range where it will actually enable the hydrogen economy.
Now
      the
      first step, of course, we'll use it for our fuel cells, but the second step
      will
      be moving up to major industrial production levels and to start producing
      hydrogen that will be sold to everybody that needs hydrogen from other cell
      manufacturers, fuel cell users, to automobile industry and everybody else that
      needs and wants hydrogen to free themselves from hydrocarbons.
The
      hydrogen formulator works by basically putting a patented catalyst on the anode
      and cracking ammonia into nitrogen gas and hydrogen gas. It does it at basically
      standard temperature and pressure. And it does it with a very low external
      electrical energy input.
Now
      that's the formula right down there, and it makes us all regret that we didn't
      pay more attention in high school chemistry, but that is basically the formula
      we have operated, we discovered this in the university's research and we
      designed an experiment and have a university performing experiments to upscale
      it from milliwatt to 1 to 5 watts.
And
      we're
      now going to take it on up from there.
Now
      the
      Department of Energy has set a target of $2 per kilogram as a commercial price
      for hydrogen to be competitive with other boiler fuels from other fuel sources
      that will make the hydrogen economy economically competitive with other energy
      sources and other forms of generating electricity today.
Using
      the
      best commercial electrolyzer, and that's what we're doing is, we're
      electrolyzing ammonia. Using the best commercial electrolyzer and using the
      best
      commercial electrical rate, which is basically the hydro power rate, that's
      $0.07 per kilowatt for the electricity.
The
      amount of electricity that it takes today, to hydrolyze hydrogen is over $3.70
      per kilogram of hydrogen. We're using the ammonia electrolysis method that
      we
      discovered and that we're upgrading, I say we discovered, we discovered in
      the
      research in the university, discovered by the university and it uses about
      $0.30
      of electricity, so less than a tenth of the inputted energy cost to crack the
      hydrogen out.
Well,
      this gives you the schematic of the cost of hydrogen and compares it to a gallon
      of gasoline equivalent, so that we have an apple-to-apple comparison of what
      this means. In 2004 and 2005, the cost of the hydrogen was approximately $10
      per
      kilogram. And you know the price of gasoline was going up quite a bit during
      that period of time.
In
      2006,
      there have been some advances in the technology and it's brought the price
      down
      to $7 to $8 per kilogram using the traditional methods of hydrolyzing, or of
      making hydrogen in the refining industry, they use high pressure and high
      temperature steam and high pressure to crack hydrogen. But steam cracking is
      still around $7 to $8 per kilogram of hydrogen.
Using
      our
      method, in 2007, it drops it to $0.89 per kilogram. Now that's the cost of
      the
      ammonia and the electricity. It doesn't have any infrastructure cost in there.
      So we still believe it can be delivered for way under the $2 that the Department
      of Energy has as the tipping point for hydrogen to become universally usable
      and
      competitive with other types of energy sources in the United States. And it
      will, for that matter.
Now
      our
      view, of course, is that we, first and foremost, will use this as a hydrogen
      generator for our fuel cells. When a customer orders a fuel cell from us they'll
      get a complete system. They'll have the source of the hydrogen, they'll have
      the
      fuel cell, and they'll have the -- all the transfer capabilities to put it
      into
      whatever application they're using, whether it's a electrical -- whether it's
      a
      telecom facility at a remote location or whether it's in a data center or
      hospital or at a house, it will be a complete system.
Second
      item is that we design our systems based on what the customer says his needs
      are. We don't say, look get 1 kilowatt, 2 kilowatts or 5 kilowatts. You're
      going
      to have to buy one of these and make it work for you. They say we have a 1.5
      kilowatt application or we have a 7.5 kilowatt application, we stack units
      together and give them exactly what they are looking for.
First
      application of the electrolyzer, of course, will be for our fuel cells, the
      second one would be to scale it up to industrial production levels. We are
      working with the university. We have designed the experiments. We were paying
      for the experiments to upscale all of this and they will participate in the
      revenue to be generated from that.
Now
      this
      is a schematic to show you where we're going with the fuel cells only -- there
      are two errors on this. First of all take the Qs on the top and advance them
      back this way because Q1 is this first column, and where we have the Q4, that's
      actually the full year. And then in Q3, which is now our Q4, that number is
      not
      500,000, it's 300,000 on the materials and equipment. We will be probably
      selling fuel cells by the end of this quarter. We won't receive the revenue
      for
      them until the second quarter.
We
      expect
      -- these prices are based on a $2,000 per kilowatt of installed capacity selling
      price. So essentially you're looking at in Q2. For those who came in late,
      the Q
      just needs to come back this way. The final column is the yearend and the first
      column is Q1, showing zero dollars in sales. Actually, not receiving any revenue
      in Q1 but we'll be selling fuel cells by the end of this quarter.
This
      is
      so because that pricing remains the same across there,$2,000 per kilowatt of
      installed base capacity.
Basically,
      reaching breakeven by the fourth quarter.
All
      the
      funding of the short fall is through two methods.
We
      have
      in place already a funding mechanism that will generate $600,000 or $700,000
      over the next six months. Our run-rate as you can see is about a $150,000 a
      month, plus the cost of the materials. And then we a have private placement
      memorandum on the street right now, that are 10 million units at a nickel.
      Our
      stock was at .072 yesterday.
So
      they're selling for a little bit less than what the market is. Of course these
      are 144 shares. There's a half a warrent at a dime and a half a warrent at
      $0.20
      cents. And to the extent that you're interested in that, we have a private
      placement memorandum here.
Here
      are
      some milestones to expect from us this year. We will have a certification of
      the
      HydraStax units. So that they will be available for sale at any place it
      requires certification. We expect certification, we've already started the
      process on that.
We
      have
      all the equipment that the testing organizations use in our shop, with which
      we
      are emulating the testing regimen. We are running a variety of tests, on the
      cells using that equipment, when we are confident that the outputs are
      consistent, we will have the certifying agencies come in and run it so that
      we're prepared so that it works through the certification process the first
      time.
Again,
      we'll begin selling the units this year. We expect to have a small commercial
      application of the formulator sometime this year. Now the development path
      with
      the University and we are working with the University on -- has a two year
      development process to take it to full commercial level. We expect we will
      be
      taking some steps to that and turning them into small formulators to provide
      with our fuel cell sometime this year.
We
      also
      have a letter of intent to acquire a wind turbine company that has patented
      wind
      turbine technology. We are negotiating the exchange agreement with them now.
      We're basically exchanging our shares for their shares and we're working out
      a
      funding arrangement to take them to the market. They have a patented design
      that
      spins on a vertical axis horizontal to the ground. The prototype operated in
      a
      hurricane force wind on the Texas coast which we have so much of that
      environment for them to test in.
In
      the
      standard wind turbine environment which is a propeller type environment. They
      have to shut down when the wind speed gets 35 or 40 miles an hour I believe.
      And
      so they don't operate very long or very efficiently and to get a megawatt of
      installed base of that type of wind turbine requires basically the installation
      of three megawatts of generating capacity because of the amount of time that
      they don't operate.
We
      believe that these will operate from about five meters per second of wind speed
      up to as we know they will operate at 105 miles per hour now. The more torque
      you put on, the more horsepower you generate and the more power that they'll
      generate. Our idea is, that we'll install these wind turbines in wind farms
      that
      we will own or that we will jointly own and operate.
During
      the peak time, we will send power from wind straight into the grid at peak
      prices and during off-peak, we will use the electricity generated by the wind
      turbines to hydrolyze hydrogen. And then we will store that hydrogen until
      peak
      and run it through our fuel cells and run that into the grid during peak times.
      So you basically can increase the return by several orders of magnitude by
      going
      from $0.02 or $0.03 per kilowatt to $0.16 per kilowatt by taking it from off
      peak to peak just by storing the energy as hydrogen.
So
      those
      are the number of the business items that we will see from this year. We intend
      to file an SB-2 sometime after we close out the private placement memorandum
      to
      register both the shares under the PPM and the shares under the warrants, so
      that the people that exercise them will get free trading shares this year.
      We'll
      have free trading shares into which they would convert the
      warrants.
We
      do
      have -- in capital structure, we've got about 115 million shares outstanding.
      We
      have 200 million authorized. We have additional sets of warrants that are $0.10
      a part from $0.30 to $0.90. We can call those warrants any time the stock trades
      at 200% of the strike price. We have told the people that we won't call them
      until the underlying shares are registered.…
<B>Unidentified
      Audience Member</B>
How
      many
      warrants do you have?
<B>Frank
      Neukomm</B>
That
      is
      17,500,000 worth -- fully diluted. So it's 2,500,000 at each level, I think, how
      it works out. Any way, we have the structure in place to fund what we're doing,
      we're just about to come to market.
With
      the
      fuel cell we have some very exciting developments ahead of us and the
      development of the formulator. The acquisition of the Wind Turbine Company
      will
      further extend our clean energy footprint. And there is a lot of synergy between
      our various technologies. And the one item that is most important to all public
      companies. We expect that we will generate profits this year. And we know that,
      that really makes it hard to value the Company at that point.
We
      are
      now open for questions.
<B>Question-and-Answer-Session</B>
<B>Frank
      Neukomm</B>
Yes
      sir.
<B>Unidentified
      Audience Member</B>
Which
      University is it and do you give them a royalty or some kind of on going
      payment?
<B>Frank
      Neukomm</B>
The
      University has not allowed us to announce their name. We'll be very happy to
      do
      that when they tell us, we can do that. There are two reasons for that. The
      main
      one is that they have some military connections and they don't want to attract
      attention.
The
      second item is yes, we have agreed to an out line -- we have agreed to a formula
      that pays them a guarantee to a minimum royalty. And pays them a percentage
      and
      the percentage is less then 5% of the fees or profits that we generate
      commercializing the technology.
<B>Unidentified
      Audience Member</B>
Of
      the
      profits?
<B>Frank
      Neukomm</B>
No,
      of
      the gross, give back the profit. The gross that we generate from the sales
      using
      the technology.
<B>Unidentified
      Audience Member</B>
And
      as
      they - I assume they are still working in the engineering department on these
      kinds of problems, have they come up with better ways of doing things or next
      generation or whatever present it will that belong to you?
<B>Frank
      Neukomm</B>
What
      we
      have, they own the patents and the structure that we've set up is that we have
      the exclusive right, to use the patents and to the extent that we develop items
      ourselves advancing that patent available or that are strictly developed by
      the
      University jointly with us. We have again the exclusivity of those developments.
      Now….
<B>Unidentified
      Audience Member</B>
No
      extra
      insurance?
<B>Frank
      Neukomm</B>
It's
      all
      covered by the royalty.
<B>Unidentified
      Audience Member</B>
Okay.
<B>Frank
      Neukomm</B>
Now
      more
      importantly is that we're involved in designing the experiments. So we're
      designing and improving with the market, you know, with the market imperative
      as
      we know where we want to handle this technology and designing experiments and
      the commercialization efforts that they are performing. It works extremely
      well
      for them, because we by saving staff it funds graduate level programs for
      them.
<B>Unidentified
      Audience Member</B>
Sure
<B>Frank
      Neukomm</B>
And
      you
      know it's a win-win deal. We don't have to put people on our staff we just
      fund.
<B>Unidentified
      Audience Member</B>
What
      is
      the amount of the minimum royalty you can guarantee?
<B>Frank
      Neukomm</B>
5%
      or
      less. The minimum is $25,000 a year -- $25,000 a year -- excuse me minimum.
      The
      guarantee is $25,000 a year. We think that will - I mean that would be quite
      big
      in it self. But the 25 will be the minimum.
<B>Unidentified
      Audience Member</B>
Thank
      you.
<B>Frank
      Neukomm</B>
Any
      other
      question. All right. Well thank you very much. And we've enjoyed being here.
      If
      you have any questions we're available on the internet. And everything that
      we
      have is on file with EDGAR. You can look it all up and then call us and drill
      us
      on it.
<B>Rachael</B>
Thank
      you.
<B>Frank
      Neukomm</B>
Thank
      you.
<END
      OF TRANSMISSION>
SIGNATURES
Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned hereunto
      duly authorized.
AMERICAN
      SECURITY RESOURCES CORPORATION
DATE:
      February 14, 2007