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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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>UNITED
      STATES</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>SECURITIES
      AND EXCHANGE COMMISSION </strong></font></div>
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      D.C. 20549 </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</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="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><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
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      Exchange Act of 1934</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></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="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Date
      of report (Date of earliest event reported): August 11, 2006 (August
      7,</strong>&#160;<strong> 2006)</strong></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="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ADERA
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                or other jurisdiction of</strong></font></div>
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                or organization)</strong></font></div>
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                File No.)</strong></font></div>
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                Employee Identification No.)</strong></font></div>
            </td>
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            <td valign="top" width="23%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="top" width="21%">&#160;</td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td valign="top" width="24%">&#160;</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">20710
      Lassen Street</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Chatsworth,
      California 91311</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>(Address
      of Principal Executive Offices) </strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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      341-9200</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>(Issuer
      Telephone number) </strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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">Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):</font></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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      Written communications
      pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><font style="FONT-FAMILY: Wingdings">o</font>&#160;Soliciting
      material pursuant to
      Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))</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"><font style="FONT-FAMILY: Wingdings">o</font>
      Pre-commencement communications pursuant
      to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</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"><font style="FONT-FAMILY: Wingdings">o</font>
      Pre-commencement communications pursuant
      to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Forward
      Looking Statements</strong></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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      Form
      8-K and other reports filed by Registrant from time to time with the Securities
      and Exchange Commission (collectively the &#8220;Filings&#8221;) contain or may contain
      forward looking statements and information that are based upon beliefs of,
      and
      information currently available to, Registrant&#8217;s management as well as estimates
      and assumptions made by Registrant&#8217;s management. When used in the filings the
      words &#8220;anticipate&#8221;, &#8220;believe&#8221;, &#8220;estimate&#8221;, &#8220;expect&#8221;, &#8220;future&#8221;, &#8220;intend&#8221;, &#8220;plan&#8221;
or the negative of these terms and similar expressions as they relate to
      Registrant or Registrant&#8217;s management identify forward looking statements. Such
      statements reflect the current view of Registrant with respect to future events
      and are subject to risks, uncertainties, assumptions and other factors
      (including the risks contained in the section of this report entitled &#8220;Risk
      Factors&#8221;) relating to Registrant&#8217;s industry, Registrant&#8217;s operations and results
      of operations and any businesses that may be acquired by Registrant. Should
      one
      or more of these risks or uncertainties materialize, or should the underlying
      assumptions prove incorrect, actual results may differ significantly from those
      anticipated, believed, estimated, expected, intended or planned. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      Registrant believes that the expectations reflected in the forward looking
      statements are reasonable, Registrant cannot guarantee future results, levels
      of
      activity, performance or achievements. Except as required by applicable law,
      including the securities laws of the United States, Registrant does not intend
      to update any of the forward-looking statements to conform these statements
      to
      actual results. The following discussion should be read in conjunction with
      Registrant&#8217;s pro forma financial statements and the related notes that will be
      filed herein.</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      1.01 Entry into a Material Definitive Agreement.</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      July
      31, 2006, Adera Mines Limited (the &#8220;Registrant&#8221;) executed a Securities Purchase
      Agreement (&#8220;SPA&#8221;) by and among the Registrant on the one hand, and a group of
      accredited investors (collectively the &#8220;Investors&#8221;) on the other hand. Under the
      SPA, on the Closing Date, the Registrant issued 17,420,000 shares of its common
      stock and 8,710,000 warrants to purchase shares of its common stock at an
      exercise price of $0.30 per share for total consideration of $4,355,000 (the
      &#8220;Purchase&#8221;). The investors paid $0.25 for one share of common stock and one half
      of a warrant. The closing of this transaction (the &#8220;SPA Closing&#8221;) occurred on
      August 7,&#160;2006 (the &#8220;Closing Date&#8221;). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      more
      fully described in Item 2.01 below, concurrent with the SPA Closing, the
      Registrant purchased all of outstanding stock of Chatsworth Data Corporation
      (&#8220;CDC&#8221; or &#8220;Target&#8221;) pursuant to a Purchase Agreement (the &#8220;Purchase Agreement&#8221;)
      by and between Registrant on one hand and Target&#8217;s shareholders on the other
      hand for approximately Four Million Dollars ($4,000,000) cash, the issuance
      of
      Two Hundred Fifty Thousand (250,000) shares valued at approximately $60,000
      and
      issuance of a note in the face amount of Two Million Dollars ($2,000,000).
      The
      funds used by Registrant to close the Purchase Agreement were received from
      the
      Investors upon the SPA Closing. The SPA Closing and the closing of the Purchase
      Agreement shall be referred to collectively as the &#8220;Purchase.&#8221;</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">&#160;&#160;</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"><strong>Item
      2.01 Acquisition or Disposition of Assets-</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      the transaction, the Registrant was an exploration stage corporation searching
      for mineral reserves. Since inception, this business has generated no revenue.
      From and after the Closing Date, the Registrant&#8217;s operations will now consist of
      the operations of Target. The mineral reserve ownership was transferred to
      shareholders of Registrant prior to the SPA Closing.</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      this
      report, when we use phrases such as "we," "our," "company," "us," we are
      referring to Registrant and Target as a combined entity.</font></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="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>DESCRIPTION
      OF BUSINESS</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Company
      Overview</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Registrant</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">-Registrant
      was incorporated in the State of Nevada on December 30, 2003 and until the
      Purchase was an exploration stage corporation. An exploration stage corporation
      is one engaged in the search for mineral deposits (reserves) which are not
      in
      either the development or production stage.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Target-</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      the Closing, Chatsworth Data Corporation was privately owned. It was acquired
      from Republic Corporation in 1971 by five Republic managers, four of whom
      managed the Company until the Closing. CDC corporate headquarters are in
      Chatsworth, California, thirty miles northwest of downtown Los Angeles. Its
      primary business has been the development and manufacture of optical mark
      readers. Over one hundred thousand readers and one hundred ten thousand optic
      head assemblies have been sold worldwide by CDC. The optical mark readers have
      been traditionally sold into four vertical market sectors: education, gaming
      and
      lottery, health care, and vote tabulation. The corporation also manufactures
      impact recording devices and cable testers. CDC prides itself on customer
      service; its engineering and design staff is able to understand client&#8217;s
      technical problems and offer ready solutions to those problems. A customer
      hotline was installed over fifteen years ago to enable field problems to be
      handled quickly, efficiently and effectively. New products are designed and
      brought to market quickly in response to customer demand. </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"><strong>Industry
      Overview</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Today's
      information technology systems have made&#160;incredible computing power
      available. This capability,&#160;combined with our&#160;voracious appetite for
      feedback and current business intelligence, has led to increased demand for
      data
      capture systems. Optical readers are the cost effective technology of choice
      to
      capture&#160;massive amounts of original data where network access is not
      readily available. Demand for data capture is found in the classroom, in the
      polling booth, in lotteries and gaming, and&#160;in&#160;businesses which
      solicit&#160;survey information to help guide their day to day decisions, such
      as healthcare, trade shows,&#160;market research, shipping, office visit intake
      questionnaires, or anywhere you may find a kiosk. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Rapid
      capture and delivery of economical data is essential to today&#8217;s business world.
      The industry is expanding both in the more mature U.S. market and in the third
      world where the demand is just beginning. As the number of formats of data
      to be
      captured increases, we expect that the market for high throughput capture
      devices will also expand. CDC&#8217;s existing and planned products are designed to
      meet current and future data capture demand.</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"><strong>Product
      Offerings and Applications</strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      provide economical and reliable products that deliver top quality data capture
      solutions, i.e., &#8220;Smaller, Faster, Better.&#8221; Reader technology costs less and
      delivers superior results to other data technologies.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Optical
      Mark Readers (&#8220;OMR&#8221;)</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      primary business has been the development and manufacturing of optical mark
      readers We have been developing and manufacturing optical mark readers since
      1971. Over one hundred thousand readers and one hundred ten thousand optic
      head
      assemblies have been sold, primarily in the educational and gaming markets.
      In
      the gaming markets the readers have been used as an input device to read bet
      slips and receipts for lotteries, races, and sports betting throughout the
      world. The company supplies diverse markets such as: </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Education,
      Government, Surveys, Dating Services, Manufacturing, Lottery and Vote
      Tabulations. Our readers are known for being </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">small
      and
      compact yet they still feature the advance design associated with units priced
      higher than our products. Our models include the OMR 1102, OMR 2000, OMR 9002,
      ACP 100, ACP 2100, ACP 2116, ACP 2200, ACP 2600 and custom OMR&#8217;s.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Impact
      Recorders</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Impact
      recorders and readers are sold by our Impact-O-Graph division and are used
      to
      detect movement during the shipment of sensitive equipment such as jet aircraft
      engines, Space shuttle engines and pumps, power transformers and turbines,
      electronic systems, nuclear fuel cells, and military missiles. In many cases,
      CDC&#8217;s impact recorders and readers are mandated by insurance companies to
      monitor shipments to determine fault and liability when necessary. CDC&#8217;s impact
      recorders and readers are also used in damage prevention programs incorporating
      impact, attitude and temperature sensors and data recorders for the material
      handling, packaging and transportation industries. Markets for products are
      expanding with increased economic development in China, India and other areas
      of
      Asia and the Far East.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Cable
      Testing</em></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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Cablemaster division manufactures cable and harness test systems for military
      and aerospace applications. Our instruments measures continuity, insulation
      resistance and dielectric strength in cables and harnesses quickly, accurately
      and economically. Applications include testing cable harnesses, connectors
      and
      bulk cable for aerospace vehicles including the space shuttle and international
      space station. Our testers are also used to test long harness for torpedoes,
      guided missiles, automotive high voltage harnesses, and communication bulk
      multi-conductor cable reels up to 26,000 feet in length.</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"><strong><u>Commercial
      Markets</u></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: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Optical
      Mark Readers (&#8220;OMR&#8221;)</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      optical mark reader market is a multi-billion dollar market. In the education
      field alone, according to the U.S. Department of Education National Center
      for
      Education Statistics, there are currently </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>123,385</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      K-12
      public, private and Catholic schools in the United States that contain
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>3,642,795
      </em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">classrooms.
      NCS Pearson projects that demand will result in one OMR being purchased for
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>each
      classroom</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      in the
      U.S. market. The U.S. Census Bureau estimates 57,000,000 students currently
      attend K-12 with an average classroom size of roughly 16 students. CDC estimates
      that the international market is at least as large as the U.S. market. The
      estimated size of the annual domestic K-12 education market available to CDC
      is
      approximately $1.1 billion based on CDC wholesale pricing of its products.
      A
      cumulative market penetration rate of 1% over the next four years would generate
      $10,928,386 in revenues to CDC. It is anticipated that the &#8220;No Child Left
      Behind&#8221; initiative will help NCS Pearson expand its sales efforts at the
      classroom level. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      gaming market consists of lotteries, pari-mutuel, and off-track betting. The
      lottery market is controlled by six &#8220;on line vendors&#8221; who provide total
      solutions. CDC has a good relationship with all of these vendors, especially
      GTECH, which is the dominant player in the market. In addition, Scientific
      Games
      has recently placed orders for CDC products. State or provincial governments
      operating lotteries must use one of these vendors for lottery equipment. CDC&#8217;s
      products are sold and distributed by these resellers. The greatest opportunity
      for direct sales of CDC&#8217;s products, however, is in the international market
      which has not yet been exploited. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      voting sector, according to Election Data Services there were 185,944 precincts
      in the U.S. alone that conducted elections in 2004. This does not include other
      elections in the U.S. that require monitoring and tabulation, i.e., tribal
      elections, etc. The international market for OMR voting equipment is estimated
      to be larger than the U.S. market. The Help America Vote Act of 2002 (HAVA)
      mandates that $3.9 billion be spent to upgrade voting equipment within a short
      time frame. In 1998, 40% of voting machines were OMR. In 2004, that number
      jumped to 60%. There is a pending award by Los Angeles County to ES&amp;S for
      voting machines which if granted, result in $2,500,000 in revenues to CDC in
      2006. ES&amp;S was awarded a contract in Mississippi on January 13, 2006 voting
      machines that resulted in a $250,000 order for CDC.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CDC
      has
      initiated efforts to expand the application of its OMR to the medical field.
      CDC
      achieved record sales in this market in 2005 and steady growth is expected
      over
      the next few years with five solid companies reselling CDC products. Many
      organizations across the United States are moving from paper forms to electronic
      data capture. Organizations such as JCAHO and federal and state agencies are
      requiring greater detail in health care recordkeeping</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Th</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">e
      current
      administr</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">a</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">tion
      has
      instructed</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      h</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">ealthcare
      organization to get into compliance with NHIN (National Health Information
      Network) and convert to EHR (Electronic Health Records) standards.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Manual
      paper processing is very costly. The American Association of Information and
      Image Management reports that more than 80% of medical business documents are
      forms and that more than $360B is spent processing these records annually.
      Optical data capture offers several advantages; higher accuracy, reduction
      in
      data turnaround times, less time spent in data entry, and significant cost
      reduction. CDC has a growing number of solutions providers who are delivering
      their applications&#160;based on&#160;CDC's ACP 2200 unit.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Impact
      Recorders</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Impact
      recorders and readers are used to detect movement during the shipment of
      sensitive equipment such as jet aircraft engines, power transformers and
      turbines, electronic systems, etc. In many cases, CDC&#8217;s impact recorders and
      readers are mandated by insurance companies to monitor shipments to determine
      fault and liability when necessary. CDC&#8217;s impact recorders and readers are also
      used in damage prevention programs incorporating impact, attitude and
      temperature sensors and data recorders for the material handling, packaging
      and
      transportation industries. Because of ever increasing security and liability
      considerations and the expansion of economies in India, China and the Far East,
      the market for impact recorders and readers is on the upswing. CDC estimates
      that the current market for impact recorders and readers worldwide is
      approximately $5.0 million per year. CDC and its competitor, Impact Register,
      Inc. currently control 90% of this market (60% CDC and 40% Impact Register).
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 36pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Cable
      Testers</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">CDC
      manufactures a tester that is the only tester reliable up to 30,000 feet which
      has been primarily marketed to the aerospace industry. The increased and high
      cost of manufacturing had caused us to de-emphasize these testers. We intend
      to
      seek a lower cost manufacturer in China and renew marketing efforts in aerospace
      and other user applications. Cable testers are high-end, high-margin products
      that are generally produced pursuant to custom orders and specifications.
</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Competition</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em><u>Optical
      Mark Readers </u></em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Education
      Customers. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      several competitors to our ACP-100 product, several of which used to sell our
      product. Scantron, a much larger company manufactures large sheet readers that
      are sold to schools as part of a broader package of education services. Scantron
      does not have a classroom reader like the ACP-100. Renaissance Learning sells
      a
      math and reading program. The company originally sold our readers but has now
      developed a competitive product which is designed solely for their program.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 9pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">NCS
      Pearson is a printing company that has a stand-alone test-scoring machine
      designed as a vehicle to use its own forms and promote sales. The test-scoring
      machine is sold at a very low price but requires many different forms to extract
      the data teachers require. NCS Pearson is a subsidiary of Pearson Corporation,
      which is primarily a publishing company. The NCS Division is the largest
      manufacturer of sheet readers in the world. They sell other readers as well
      as
      our CDC&#8217;s ACP-100 (under NCS brand name). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Gaming
      Customers. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      major
      competition in the lottery field is Peripheral Dynamics (PDI). They are now
      selling several CIS scanners that read OCR, bar code and mark sense data. These
      scanners are used in a high volume application that may require signature
      capture or OCR as well as mark sense. They have no product to compete with
      CDC&#8217;s
      ACP-100 or ACP-2100 in a low volume lottery that requires reading only mark
      sense data. We believe third world countries are looking for low cost devices.
      There are several lottery companies that manufacture their own scanners such
      as
      Wincor-Nixdorf, Kebo and Intracom. Both Wincor-Nixdorf and Intracom purchase
      CDC
      readers when they require a lower price reader.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">5</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      the
      racetrack market there are three major players: United Tote, Amtote and
      Autotote/Scientific Games. Many customers have switched from competitors to
      CDC
      products. CDC has manufactured readers for all three companies. Each has used
      alternative products, but is discussing orders from us as well.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Voting.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      many jurisdictions have elected to upgrade their voting systems by going to
      touch screen displays there is still a need for a paper ballot system which
      we
      produce. There are three major companies that supply electronic voting machines:
      Diebold Election Products, Sequoia Voting Systems, and Election Systems &amp;
Software (&#8220;ES&amp;S&#8221;). In the paper ballot arena, ES&amp;S sells several systems
      that use mark sense readers. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Medical.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">This
      is a
      large but highly fragmented market.&#160; Many organizations across the United
      States are moving from paper forms to electronic data capture. Organizations
      such as JCAHO and federal and state agencies are requiring greater detail in
      health care recordkeeping. Healthcare organizations are now attempting
      compliance with NHIN (National Health Information Network) and convert to EHR
      (Electronic Health Records) standards.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Manual
      paper processing is very costly. The American Association of Information and
      Image Management reports that more than 80% of medical business documents are
      forms and that more than $360B is spent processing these records annually.
      Optical data capture offers several advantages: greater accuracy, reduction
      in
      data turnaround times, less time spent in data entry, and significant cost
      reduction. CDC has a growing number of solutions providers who are delivering
      their applications&#160;based on&#160;CDC's ACP 2200 unit.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Impact
      Recorders</em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      roughly eight companies other than CDC that manufacture some form of impact
      recorders and indicators. Of those companies, some only provide consulting
      services or software, manufacture calibration and scaling equipment, cater
      to
      specific industries such as agriculture, or offer design services. CDC&#8217;s direct
      competitors are Shockwatch and Impact Register, Inc.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Cable
      Testers </em></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 72pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">There
      are
      approximately 124 companies that manufacture some sort of cable tester. This
      sector is highly fractionalized and testers vary greatly in capability and
      effectiveness. </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"><strong>Sales
      and Marketing Plan</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      our purchase of CDC, sales were limited to the United States market. There
      was a
      small sales department that fulfills customer orders for products. The in-house
      sales team consisted of a sales administrator and two others fulfilling orders.
      In addition to our in-house sales, we have a distribution arrangement with
      Pearson NCS, who is one of the major suppliers of data collection hardware,
      testing software, survey software, and services for education. Pearson NCS
      is
      Chatsworth Data Corporation's provider of choice for testing and survey
      solutions in the education marketplace. Pearson NCS works with many K-12 and
      post-secondary institutions to provide efficient and accurate data capture
      solutions. Our classroom OMR&#8217;s and applications, test scoring and survey
      software and data capture solutions are sold by Pearson NCS.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      strategy will be first to maximize revenues from the current products in the
      existing markets. Our goal is to expand marketing and sales efforts while we
      introduce two new products (CIS 8511 and ACF 100) to the market. We intend
      to
      educate our existing customer base on the uses of the new products and solicit
      product modifications that they would like us to provide for them. Our customer
      product needs often become the basis for our product release plans and the
      R&amp;D priorities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">6</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">To
      increase revenues we intend to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Hire
                account reps for each
                industry&#160;targeted</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Expand
                re-seller network to add new strategic
                markets;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Target&#160;prospective
                business partners in existing
                markets;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Get
                ACF and CIS products ready for market and develop materials to educate
                existing customers about he uses and advantages of these
                products;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Upgrade
                web site to articulate the uses and value of all
                products;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Develop&#160;product
                release plans to support key re-sellers
                needs;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Increase
                marketing exposure by identifying industry web and catalog listing
                services; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Develop
                materials to assist Pearson sales staff market our
                products;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Aggressively
                advertise and promote Impact-o-graph product
                line;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Improve
                customer ability to place orders via our
                website;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Identify
                business partners in new industries where products can be, but are
                not
                currently used such as homeland security or
                manufacturing;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Incentives
                existing large customers to convert to new
                products;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Add
                specialized order desk to streamline customer phone
                orders;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Improve
                speed and quality of technical
                support;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Locate
                potential business partners for international
                markets.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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"><strong>Marketing</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Since
      prior marketing efforts have been very limited, we intend to conduct market
      research to confirm CDC&#8217;s reputation, strengths, weaknesses, and positioning.
      This will allow us to develop and articulate a sales and marketing strategy.
      Our
      marketing will certainly include obtaining&#160;any relevant mailing lists,
      contacting industry organizations to identify additional opportunities for
      use
      of our technology, preparing written materials which differentiate our products
      from the competition and prepare various written materials to show the value
      proposition of using our products. In addition, we will certainly maximize
      product exposure through trade shows, advertising, trade listings, and direct
      mail.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Product
      Development</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      constantly reviewing current products to determine new uses to be developed.
      We
      have a particular interest in determining the feasibility of a &#8220;self-scoring&#8221;
unit to replace NCS&#8217; model 2050, a forms construction/printing application, an
      OMR/CIS/OCR integration product and a product update for firmware and program
      macros. In addition, we are constantly reviewing applications offered by
      competitors of key re-sellers. We intend to formalize product development in
      the
      form of a release plan&#160;which will define next two releases per</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      product
      line.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>&#160;</em></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      also
      believe there is opportunity in implementing a warranty program that creates
      recurring revenues. We believe our maintenance contracts can become a greater
      source of revenue to existing customers as can incentives for existing customers
      to upgrade to our new products.</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"><strong>Patents,
      Trademarks and Intellectual Property</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      developed proprietary processes to produce our products and do not rely on
      licensed rights. We do not rely on patent protection, but instead rely on common
      law trade secret protection. From time to time, we may encounter disputes over
      rights and obligations concerning intellectual property. Also, the efforts
      we
      have taken to protect our proprietary rights may not be sufficient or effective.
      Any significant impairment of our intellectual property rights could harm our
      business, our reputation, or our ability to compete. Also, protecting our
      intellectual property rights could be costly and time consuming. </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"><strong>Manufacturing</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      utilize generally available materials and a small number of customized
      components to manufacture our products. This enables us to maintain high quality
      products and enable rapid development and deployment of new products and
      technologies. We design and produce many of our own components and
      sub-assemblies in order to retain quality control. All of our manufacturing
      is
      conducted at our Chatsworth, California headquarters. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Raw
      materials or sub-components required in the manufacturing process are generally
      available from several sources. An unanticipated interruption or delay in the
      supply of any of these components or materials, or the inability to obtain
      these
      components and materials from alternate sources at acceptable prices and within
      a reasonable amount of time, would impair our ability to meet scheduled product
      deliveries to our customers and could cause customers to cancel
      orders.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      rely
      exclusively on our own production capability to manufacture certain strategic
      components. Because we manufacture, package and test these components, products
      and systems at our own facilities and such items may not be readily available
      from other sources, any interruption in our manufacturing would adversely affect
      our business. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.4pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Customers</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 72pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      years ended December 31, 2005 and 2004, we had one and two major customers,
      whose revenue volume comprised approximately 14% and 21%, respectively, of
      our
      total revenue. As of December 31, 2005 and 2004 the amounts due from these
      customers were $97,030 and $148,240, respectively. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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"><strong>Governmental
      Regulations </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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      operations are subject to various federal, state and local environmental
      protection regulations governing the use, storage, handling and disposal of
      hazardous materials, chemicals, various radioactive materials and certain waste
      products. In the United States, we are subject to the federal regulation and
      control of the Environmental Protection Agency. We are further subject to
      regulation by the Los Angeles Fire Department and the South Coast Air Quality
      Management Department. Comparable authorities are involved in other countries
      and jurisdictions. We believe that compliance with federal, state and local
      environmental protection regulations will not have a material adverse effect
      on
      our capital expenditures, earnings and competitive and financial
      position.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      we believe that our safety procedures for using, handling, storing and disposing
      of such materials comply with the standards required by federal and state laws
      and regulations, we cannot completely eliminate the risk of accidental
      contamination or injury from these materials. In the event of such an accident
      involving such materials, we could be liable for damages and such liability
      could exceed the amount of our liability insurance coverage and the resources
      of
      our business.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Legal
      Proceedings</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      not a party to any pending legal proceedings that, if decided adversely to
      us,
      would have a material adverse effect upon our business, results of operations
      or
      financial condition and are not aware of any threatened or contemplated
      proceeding by any governmental authority against our company. To our knowledge,
      we are not a party to any pending civil or criminal action or investigation.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Facilities</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      principal executive offices and manufacturing facilities are currently located
      in an 18,000 square foot property located at 20710 Lassen Street, Chatsworth,
      California 91311. We owned the facility until 2005 when it was sold to a third
      party. We now have lease with a term expiring in August 2008 at approximately
      $9,996 per month. </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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Employees</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      43 full-time employees and 30 temporary, but full time employees. We have six
      employees in R&amp;D/Engineering, three in sales &amp; marketing, and three in
      general and administration. No employee is represented by a labor union, and
      we
      have never suffered an interruption of business caused by labor disputes.
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><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>MANAGEMENT&#8217;S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION </u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #00ff00"><strong><u>&#160;</u></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>Overview</strong></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
      management&#8217;s discussion and analysis relates specifically to the financial
      statements of Chatsworth Data Corporation (the &#8220;Company&#8221;) for the years ended
      December 31, 2004 and December 31, 2005 and the first quarter of March 31,
      2005
      and March 31, 2006. After the Closing, Adera Mines Limited, the registrant
      will
      report the operations of CDC as its subsidiary but will only report on the
      effective date of the Closing. These historical financial statements of CDC
      will
      not be included in the body of future filings. </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
      Company is a leading designer and manufacturer of optical mark readers and
      scanners and impact recording devices that are used to capture data at its
      source and transfer the captured data to the user&#8217;s data base. The optical mark
      readers and scanners are sold to original equipment manufacturers (&#8220;OEM&#8217;s&#8221;) and
      value added resellers (&#8220;VAR&#8217;s&#8221;) in four vertical markets: education, gaming and
      lottery, vote tabulation, and health care. Our impact recording devices are
      sold
      to &#8220;end users.&#8221; Our optical mark reader and scanner sales to OEM&#8217;s and VAR&#8217;S are
      generated through direct orders to the Company and our sole sales representative
      in Minneapolis, Minnesota. Our impact recording device sales are primarily
      direct orders to the Company. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      sales
      are derived primarily from the sale of optical mark readers and scanners and
      impact recording devices. Revenues are recorded when products are shipped and
      are net of an allowance for estimated returns. Allowances for bad debts are
      also
      recorded at the time of sale. Because we ship product as orders are received,
      generally no more than 90 days after order, we do not maintain a significant
      ongoing backlog. However, the size of our backlog does fluctuate greatly
      depending on the size and mix of product orders and what can be considered
      pre-orders of newly released products not yet ready for shipment. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost
      of
      sales consists of expenses associated with sales of our products. These costs
      include: (i) personnel related costs, (ii) costs of purchased materials, (iii)
      shipping and freight costs, and (iv) other overhead costs. We realize higher
      gross margins on our impact recording devices than on our optical mark readers
      and scanners. We expense all research and development costs.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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>Result
      of Operations</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 style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Quarter
      Ended March 31, 2006 compared with quarter ended March 31, 2005</u></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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Net
      Sales.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Our net
      sales decreased from $1,594,387 for the quarter ended March 31, 2005 to
      $1,515,896 for the quarter ended March 31, 2006, a decrease of $78,491 or
      4.9%.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Cost
      of Sales.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Our cost
      of sales increased from $1,137,277 for the quarter ended March 31, 2005 to
      $1,185,525 for the quarter ended March 31, 2006, an increase of $48,248 or
      4.2%.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Gross
      Profit</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Our
      overall gross profit margin percentage decreased from 28.7% for the quarter
      ended March 31, 2005 to 21.8% for the quarter ended March 31, 2006.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Selling
      and General and Administrative Expenses</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Selling
      and general and administrative expenses decreased from $455,269 for the quarter
      ended March 31, 2005 to $271,366, a decrease of $183,903, for the quarter ended
      March 31, 2006, a decrease of 40.4%. The decrease is principally due to a
      decrease in executive officers compensation of $278,690 offset by an increase
      in
      legal and accounting, outside consulting costs and rent.</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Operating
      Income.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating
      income increased from $1,841 for the quarter ended March 31, 2005 to $59,005
      for
      the quarter ended March 31, 2006, an increase of $57,164. The percentage change
      is not meaningful. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Other
      Income.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Other
      income decreased from $26,229 for the quarter ended March 31, 2005 to $4,366
      for
      he quarter ended March 31, 2006, a decrease of $21,863 or 83.35%. Rental income
      decreased from $23,801 for the quarter ended March 31, 2005 to $0 for the
      quarter ended March 31, 2006 due to sale of the building which generated rent
      from third parties in 2005 prior to sale later in 2005. There will be no further
      rental income. </font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.4pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Income
      Tax Expense.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Income
      tax expense was not recorded for the quarter ended March 31, 2005 or for the
      quarter ended March 31, 2006 because CDC was operated as a Subchapter S
      corporation prior to the Purchase which means that taxes are paid at the
      shareholder level and not at the corporate level. After the Purchase, CDC will
      file a consolidated return with Registrant and will directly pay federal and
      California state income taxes at the corporate level at an estimated combined
      rate of 39.8%</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.4pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0.4pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Fiscal
      Year Ended December 31, 2005 compared with fiscal year ended December 31,
      2004</u></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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      net
      income and results of operations were affected by the nonrecurring sale of
      our
      office and manufacturing facility in 2005. We received $2,934,331 of income
      on
      the sale. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">
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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Comparative
        Statements of Operations</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">
              <div>&#160;</div>
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            <td width="2%" style="border-bottom: #ffffff thin solid;">
              <div>&#160;</div>
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            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;<font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2005</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">
              <div>&#160;</div>
            </td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div><font size="2">%</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="12%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2004</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td colspan="2" valign="bottom" width="11%" style="border-bottom: black thin solid;"><font size="2">%</font></td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
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          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="12%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" colspan="2" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">
              <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">Sales</font></div>
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">$</font></div>
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            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">100.00</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Cost
                of Sales</font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,381,685
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">78.78</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">4,480,950
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">78.04</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">
              <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">Gross
                Profit</font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,179,898
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">21.22</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,261,185
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">21.96</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Selling
                General and Administrative</font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">619,266
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">11.13</font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1,165,149
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">20.29</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Income
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            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">560,632
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">10.08
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">96,036
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1.67</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
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            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Other
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            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
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            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">
              <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">Rental
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">29,432
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.53</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">77,983
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1.36</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">
              <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">Deposit&#160;Forfeiture
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            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">62,256</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">1.08</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">
              <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">Gain
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            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,934,331
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">52.76</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">&#8212;</font></div>
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            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">
              <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">Miscellaneous
                Income</font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">366
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.01</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3,503
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.06</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Interest
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            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">15,199
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.27</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,630
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">0.05</font></div>
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            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Total
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            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2,979,328
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">53.57</font></div>
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">146,372
                </font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2.55</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">
              <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">Income
                Before Taxes</font></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">3,539,960
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            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
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            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
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          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
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            <td align="left" valign="bottom" width="43%" style="border-bottom: #ffffff solid;">
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                Income</font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
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            <td align="left" valign="bottom" width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
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            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>
          <tr>
            <td align="left" valign="bottom" width="43%" style="border-bottom: medium none;">&#160;</td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">10</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
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      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Net
      Sales.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Our net
      sales decreased from $5,742,135 for our fiscal year ended December 31, 2004
      to
      $5,561,563 for our fiscal year ended December 31, 2005, a decrease of $180,552,
      or 3.1%</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Cost
      of Sales.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Our cost
      of sales decreased from $4,480,950 for our fiscal year ended December 31, 2004
      to $4,381,685 for our fiscal year ended December 31, 2005, a decrease of $99,265
      or 2.2%. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Gross
      Profit</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Our
      overall gross profit margin percentage remained relatively the same at 21%
      of
      sales. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Selling
      and Marketing Expenses</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><em>.</em></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Selling
      and general and administrative expenses decreased from $1,165,149 for our fiscal
      year ended December 31, 2004 to $619,266 for our fiscal year ended December
      31,
      2005, a decrease of $545,883 or 46.85% principally due to a decrease in
      executive officers compensation of $566,900. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Operating
      Income.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Operating
      income increased from $96,036 for our fiscal year ended December 31, 2004 to
      $560,632 for our fiscal year ended December 31, 2005, an increase of $464,596
      or
      483.7%. As described above, the increase is due principally to a reduction
      in
      compensation of $566,900. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Other
      Income.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Other
      income increased from $146,372 for our fiscal year ended December 31, 2004
      to
      $2,979,328 for our fiscal year ended December 31, 2005, an increase of
      $2,832,596 principally due to the sale of our office building and manufacturing
      facility in 2005. The gain from the sale of the office and manufacturing
      facility was $2,934,331. Rental income decreased from $77,983 to $29,432 since
      in 2005 we only collected rental income from the building for a partial year.
      Interest income increased from $2,630 to $15,199. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Income
      Tax Expense.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Income
      tax expense of $54,561 was recorded for the fiscal year ended December 31,
      2005
      compared to $2,904 for the fiscal year ended December 31, 2004. These numbers
      reflect only a minimal California tax because CDC was operated as a Subchapter
      S
      corporation prior to the Purchase which in general means that taxes are paid
      at
      the shareholder level and not at the corporate level. After the purchase, CDC
      will be a C corporation and will directly pay federal and California state
      income taxes at the corporate level at an estimated combined rate of
      39.8%</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Liquidity
      and Capital Resources</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of
      December&#160;31, 2005, our cash and cash equivalents were $859,460. This was an
      increase of $297,816 from $561,644 at December 31, 2004. During 2005, we
      generated operating cash flow of $367,644.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of
      March 31, 2006 our cash and cash equivalents were $552,424. This was a decrease
      of $307,036 from $859,460 at December 31, 2005. This decrease was a result
      of an
      increase in accounts receivable, inventory, prepaid expenses and a decrease
      in
      accounts payable and income taxes payable.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      expect
      to fund our operations and capital expenditures from internally generated funds.
      We believe that our existing cash balances will be sufficient to meet our
      working capital, capital expenditure and investment requirements for at least
      the next 12 months. We may require additional funds for other purposes, such
      as
      acquisitions of complementary businesses, and may seek to raise such additional
      funds through public and private equity financings or from other sources.
      However, we cannot assure you that additional financing will be available at
      all
      or that, if available, such financing will be obtainable on terms favorable
      to
      us or that any additional financing will not be dilutive. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">11</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">At
      the
      Purchase, we will have a note in the amount of $2.0 million which is payable
      $1.0 million one year from the Closing Date and $1.0 million two years after
      the
      Closing Date. Interest is payable quarterly. We believe cash flow from
      operations will be sufficient to repay the note.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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>Off-Balance
      Sheet Arrangements and Aggregate Contractual Obligations</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      do not
      have any off-balance sheet transactions, arrangements, or obligations (including
      contingent obligations) that would have a material effect on our financial
      results.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Operating
      Lease. </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">On
      August
      17, 2005, the Company sold its land and building, a 29,000 square foot structure
      located on 1.3 acres of land in Chatsworth, California (the Property) to an
      unrelated third party for $3,292,800. The book value of the Property at August
      17, 2005 was $168,111 and costs of sale were $190,358, resulting in a gain
      of
      $2,934,331. Also on the same date the Company entered into a sublease agreement
      to lease approximately 14,500 square feet of the Property from an unrelated
      third party who leased the entire Property from the new owner. The sublease
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">calls
      for
      minimum lease payments of $9,996 per month, or </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">$119,952
      per year, and </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">expires
      in August 2008.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company determined it </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">relinquished
      substantially all of the use of the Property and retained only a minor portion
      of such use because the present value of rental for the leaseback represented
      less than 10 percent of the fair value of the Property when sold. Accordingly,
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
      gain
      on the sale portion of the transaction was recognized in its entirety.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      lease
      portion of the transaction was classified as an operating lease. </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      sublease is personally guaranteed by the Company&#8217;s stockholders. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Purchase
      Obligations.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We enter
      into commitments with certain suppliers to purchase components for our products.
      We typically commit to purchases of components in quantities to cover specific
      orders and therefore expect these obligations to be satisfied within six
      months.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      of
      December 31, 2005, our approximate contractual obligations for operating leases
      and purchase obligations (by period due) were as follows:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div align="center">
      <table bgcolor="white" cellpadding="0" cellspacing="0" id="ftable" width="100%">

          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">
              <div style="MARGIN-LEFT: 9pt" align="left">&#160;<em><font size="2">December
                31, 2006</font></em></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><em><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">$</font></em></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><em><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">119,952</font></em></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: medium none;">
              <div style="MARGIN-LEFT: 9pt" align="left">&#160;<em><font size="2">December
                31, 2007</font></em></div>
            </td>
            <td width="2%" style="border-bottom: medium none;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><em><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">$</font></em></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: medium none;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><em><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">119,952</font></em></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: medium none;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ffffff solid;">
              <div style="MARGIN-LEFT: 9pt" align="left">&#160;<font size="2">December
                31,
                2008</font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black thin solid;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black thin solid;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">79,968</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff thin solid;">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td align="left" valign="bottom" width="85%" style="border-bottom: #ffffff solid;">
              <div style="MARGIN-LEFT: 9pt" align="left">&#160;<font size="2">Total</font></div>
            </td>
            <td width="2%" style="border-bottom: #ffffff thin solid;">&#160;</td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: black double;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">$</font></div>
            </td>
            <td align="right" valign="bottom" width="11%" style="border-bottom: black double;">
              <div style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px"><font style="MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px" size="2">319,872</font></div>
            </td>
            <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Retirement
      Plan. </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      currently have a 401(k) plan for employees of Chatsworth Data Corporation.
      We
      match 50%</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>&#160;</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">of
      employee contributions up to 3% of employee compensation, but have no obligation
      to pay fixed benefits to our employees.</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>&#160;</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Employee
      contributions vest immediately and Company matching contributions vest over
      7
      years.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Other
      Obligations.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      At the
      Purchase, we will have a note in the amount of $2.0 million payable to the
      former shareholders of Chatsworth Data Corporation. This note is payable $1.0
      million one year from the Purchase date and $1.0 million 2 years from the
      Purchase date. Interest accrues at the rate of LIBOR plus 1% per annum is
      payable quarterly. As of December 31, 2005, we had no long-term purchase
      obligations or material capital lease obligations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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>Critical
      Accounting Policies and Estimates</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      foregoing discussion is based on our consolidated financial statements, which
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America. The preparation of these financial statements
      requires management to make judgments, estimates and assumptions that affect
      the
      amounts reported in the financial statements and accompanying notes. Actual
      results could differ from those estimates. The following is a list of our
      critical accounting policies defined as those policies that we believe are
      the
      most important to the portrayal of our financial condition and results of
      operations and/or require management&#8217;s significant judgments and estimates. This
      is not intended to be a comprehensive list of all of our accounting policies.
      Our significant accounting policies are more fully described in Note&#160;5 of
      our Notes to Consolidated Financial Statements. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">12</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Revenue
      Recognition.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company recognizes revenue when there is persuasive evidence that an arrangement
      exists, delivery of the product has occurred and title has passed, the selling
      price is both fixed and determinable, and collectibility is reasonably assured,
      all of which generally occurs upon shipment of the Company&#8217;s product or delivery
      of the product to the destination specified by the customer.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Impairment
      of Long-Lived Assets.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We
      evaluate the recoverability of the carrying amount of long-lived assets whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset
      may not be fully recoverable. We evaluate the recoverability of goodwill and
      other intangible assets with indefinite useful lives annually or more frequently
      if events or circumstances indicate that an asset may be impaired. Management
      uses judgment when applying impairment rules to determine when an impairment
      test is necessary. Examples of factors which could trigger an impairment review
      include a significant decrease in the market value of an asset, a significant
      change in the extent or manner in which an asset is used, and significant
      adverse changes in legal factors or the business climate that impact the value
      of an asset. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Impairment
      losses are measured as the amount by which the carrying value of an asset
      exceeds its estimated fair value. Estimating fair value requires that we
      forecast future cash flows related to the asset subject to review. These
      forecasts require assumptions about demand for our products and services, future
      market conditions and technological developments. Other assumptions include
      determining the discount rate and future growth rates. Changes to these
      assumptions could result in an impairment charge in future periods.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>&#160;</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Income
      Taxes</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company, with the consent of its shareholders, has elected under the Internal
      Revenue Code to be an S corporation. In lieu of corporation income taxes, the
      shareholders of an S corporation are taxed on their proportionate share of
      the
      Company&#8217;s taxable income. Therefore, no provision or liability for federal
      income tax has been included in these financial statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      State
      of California has adopted the S Corporation election. However, a 1&#189;% tax is
      required to be paid by the Company. This provision for tax is based on the
      income reported in the financial statements.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Recent
      Accounting Pronouncements and Developments</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2004, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standard ("SFAS") No. 123 (R), "Share-Based
      Payment" ("SFAS 123(R)"). SFAS No. 123 (R) revises SFAS 123, "Accounting for
      Stock-Based Compensation" and supersedes Accounting Principles Board ("APB")
      Opinion No. 25, "Accounting for Stock Issued to Employees." In general, the
      accounting required by SFAS 123R is similar to that of SFAS No. 123. However,
      SFAS No.&#160;123 gave companies a choice to either recognize the fair value of
      stock options in their income statements or disclose the pro forma income
      statement effect of the fair value of stock options in the notes to the
      financial statements. SFAS 123R eliminates that choice and requires the fair
      value of all share-based payments to employees, including the fair value of
      grants of employee stock options, be recognized in the income statement,
      generally over the option vesting period. During the first quarter of 2006,
      the
      Company will adopt SFAS No. 123R. The adoption of SFAS No. 123R will not have
      any impact on the Company&#8217;s financial statement presentation or
      disclosures.</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      November 2004, the Financial Accounting Standards Board (&#8220;FASB&#8221;) issued
      SFAS&#160;No.&#160;151, &#8220;Inventory Costs&#160;&#8212; An Amendment of ARB No.&#160;43,
      Chapter&#160;4&#8221; (SFAS&#160;No. 151). SFAS&#160;No. 151 clarifies that abnormal
      amounts of idle facility expense, freight, handling costs and spoilage should
      be
      expensed as incurred and not included in overhead. Further, SFAS&#160;No. 151
      requires that allocation of fixed and production facilities overhead to
      conversion costs should be based on normal capacity of the production
      facilities. The provisions in SFAS&#160;No. 151 are effective for inventory
      costs incurred during fiscal years beginning after June&#160;15, 2005.
      Accordingly, the Company will adopt SFAS No. 151 effective January 1, 2006.
      The
      adoption of SFAS No. 151 is not expected to have any impact on the Company&#8217;s
      financial statement presentation or disclosures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">13</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      December 2004, the FASB issued SFAS No.&#160;153, &#8220;Exchanges of Nonmonetary
      Assets, an amendment to APB Opinion No. 29&#8221; (&#8220;SFAS&#160;No. 153&#8221;). SFAS&#160;No.
      153 amends Accounting Principles Board Opinion No.&#160;29, &#8220;Accounting for
      Nonmonetary Transactions&#8221;, to require that exchanges of nonmonetary assets be
      measured and accounted for at fair value, rather than at carryover basis, of
      the
      assets exchanged. Nonmonetary exchanges that lack commercial substance are
      exempt from this requirement. SFAS&#160;No. 153 is effective for nonmonetary
      exchanges entered into in fiscal periods beginning after June&#160;15, 2005.
      Accordingly, the Company will adopt SFAS No. 153 effective January 1, 2006.
      The
      adoption of SFAS No. 153 is not expected to have any impact on the Company&#8217;s
      financial statement presentation or disclosures. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      May&#160;2005, the FASB issued SFAS No.&#160;154, &#8220;Accounting Changes and Error
      Corrections&#8221; (&#8220;SFAS No.&#160;154&#8221;). SFAS No.&#160;154 is a replacement of APB
      Opinion No.&#160;20, &#8220;Accounting Changes&#8221; and SFAS No.&#160;3, &#8220;Reporting
      Accounting Changes in Interim Financial Statements - (an Amendment of APB
      Opinion No.&#160;28)&#8221; and provides guidance on the accounting for and reporting
      of accounting changes and error corrections. SFAS No.&#160;154 establishes
      retrospective application as the required method for reporting a change in
      accounting principle, and provides guidance for determining whether
      retrospective application of a change in accounting principle is impracticable
      and for reporting a change when retrospective application is impracticable.
      Retrospective application is the application of a different accounting principle
      to a prior accounting period as if that principle had always been used or as
      the
      adjustment of previously issued financial statements to reflect a change in
      the
      reporting entity. SFAS No.&#160;154 also addresses the reporting of the
      correction of an error by restating previously issued financial statements.
      SFAS
      No.&#160;154 is effective for accounting changes and error corrections occurring
      in fiscal years beginning after December&#160;15, 2005. Accordingly, the Company
      will adopt the provisions of SFAS No.&#160;154 effective January 1, 2006. The
      adoption of SFAS No. 154 is not expected to have any impact on the Company&#8217;s
      financial statement presentation or disclosures.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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>Subsequent
      Event</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      former president and chief executive officer, chief financial officer and all
      but one member of our board of directors resigned effective on the date of
      the
      Purchase.&#160; New management has been appointed and began to serve on the same
      day.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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"><strong>OFF-BALANCE
      SHEET ARRANGEMENTS</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      not entered into any financial guarantees or other commitments to guarantee
      the
      payment obligations of any third parties. We have not entered into any
      derivative contracts that are indexed to our shares and classified as
      shareholder&#8217;s equity or that are not reflected in our consolidated financial
      statements. Furthermore, we do not have any retained or contingent interest
      in
      assets transferred to an unconsolidated entity that serves as credit, liquidity
      or market risk support to such entity. We do not have any variable interest
      in
      any unconsolidated entity that provides financing, liquidity, market risk or
      credit support to us or engages in leasing, hedging or research and development
      services with 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"><strong>INFLATION</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      believe that inflation has not had a material effect on our operations to
      date.</font></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="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
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      </div>
    </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="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>RISK
      FACTORS</u></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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Before
      investing in our common stock you should carefully consider the following risk
      factors, the other information included herein and the information included
      in
      our other reports and filings.&#160; Our business, financial condition, and the
      trading price of our common stock could be adversely affected by these and
      other
      risks.</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="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>RISKS
      OF THE BUSINESS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      markets for our products are subject to continuing change that may impair our
      ability to successfully sell our products</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      The
      market&#8217;s for our products is volatile and subject to continuing change. We must
      continuously adjust our marketing strategy to address the changing state of
      the
      markets for our products, we may not be able to anticipate changes in the market
      and, as a result, our product strategies may be unsuccessful.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      products may become obsolete if we are unable to stay abreast of technological
      developments</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Our
      data capture industry is characterized by continuous technological development.
      If we are unable to stay abreast of such developments, our products may become
      obsolete. We lack the substantial research and development resources of some
      of
      our competitors. This may limit our ability to remain technologically
      competitive.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      are dependent for our success on a few key executive officers. Our inability
      to
      retain those officers would impede our business plan and growth strategies,
      which would have a negative impact on our business and the value of your
      investment. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success depends on the skills, experience and performance of key members of
      our
      management team. We are heavily dependent on the continued services of J.
      Stewart Asbury, our Chief Executive Officer, Clayton Woodrum our Chief Financial
      Officer and Sid L. Anderson our Executive Director. We do have an employment
      agreement with Mr. Asbury and consulting agreements with Mr. Woodrum and Mr.
      Anderson. We do not have long-term employment agreements with other members
      of
      our senior management team. Each of those individuals without long-term
      employment agreements may voluntarily terminate his employment with the Company
      at any time upon short notice. Were we to lose one or more of these key
      executive officers, we would be forced to expend significant time and money
      in
      the pursuit of a replacement, which would result in both a delay in the
      implementation of our business plan and the diversion of limited working
      capital. We can give you no assurance that we can find satisfactory replacements
      for these key executive officers at all, or on terms that are not unduly
      expensive or burdensome to our company. Although we intend to issue stock
      options or other equity-based compensation to attract and retain employees,
      such
      incentives may not be sufficient to attract and retain key personnel.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      are also dependent for our success on our ability to attract and retain
      technical personnel, sales and marketing personnel and other skilled management.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      success depends to a significant degree upon our ability to attract, retain
      and
      motivate highly skilled and qualified personnel. Failure to attract and retain
      necessary </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">technical
      personnel, sales and marketing personnel and skilled management could
</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">adversely
      affect our business. If we fail to attract, train and retain sufficient numbers
      of these highly qualified people, our prospects, business, financial condition
      and results of operations will be materially and adversely affected.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      experience seasonal and quarterly fluctuations in demand for our products.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      quarterly results may fluctuate quarter to quarter as a result of market
      acceptance of our products, the mix, pricing and presentation of the products
      offered and sold, the hiring and training of additional personnel, the timing
      of
      inventory write downs, the cost of materials, the incurrence of other operating
      costs and factors beyond our control, such as general economic conditions and
      actions of competitors. Accordingly, the results of operations in any quarter
      will not necessarily be indicative of the results that may be achieved for
      a
      full fiscal year or any future quarter.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      business is dependent upon proprietary intellectual property
      rights</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      We have
      employed proprietary information to design our products. We seek to protect
      our
      intellectual property rights through confidentiality agreements and inventions
      agreements. However, no assurance can be given that such measures will be
      sufficient to protect our intellectual property rights. If we cannot protect
      our
      rights, we may lose our competitive advantage. Moreover, if it is determined
      that our products infringe on the intellectual property rights of third parties,
      we may be prevented from marketing our products. </font></div>
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      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      have no committed source of additional capital.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      For the
      foreseeable future, we intend to fund our operations and capital expenditures
      from operations and our cash on hand. If our capital resources are insufficient,
      we may need additional funds to continue our operations, pursue business
      opportunities (such as expansion, acquisitions of complementary businesses
      or
      the development of new products or services), to react to unforeseen
      difficulties or to respond to competitive pressures. We cannot assure you that
      at such time as we need funds that alternative financing arrangements will
      be
      available in amounts or on terms acceptable to us, if at all. If additional
      financing is not available when required or is not available on acceptable
      terms, we may be unable to fund our expansion, successfully promote our current
      products, license new products or enhance our products and services, take
      advantage of business opportunities, or respond to competitive pressures, any
      of
      which could have a material adverse effect on our business and the value of
      our
      common stock. If we choose to raise additional funds through the issuance of
      equity securities, this may cause significant dilution of our common stock,
      and
      holders of the additional equity securities may have rights senior to those
      of
      the holders of our common stock. If we obtain additional financing by issuing
      debt securities, the terms of these securities could restrict or prevent us
      from
      paying dividends and could limit our flexibility in making business decisions.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may incur debt or issue preferred stock in the future</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      In
      order to fund operations, we may issue debt instruments or preferred stock
      which
      will have a senior claim on our assets in the event of a sale of assets. Future
      debt service may cause strain on cash flow and impair business
      operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      business could be harmed if we fail to maintain proper inventory
      levels.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We
      manufacturer our products prior to the time we receive customers&#8217; orders. We do
      this to minimize purchasing costs, the time necessary to fill customer orders
      and the risk of non-delivery. However, we may be unable to sell the products
      we
      have manufactured in advance. Inventory levels in excess of customer demand
      may
      result in inventory write-downs, and the sale of excess inventory at discounted
      prices could significantly impair our brand image and have a material adverse
      effect on our operating results and financial condition. Conversely, if we
      underestimate demand for our products or if we fail to produce the quality
      products that we require at the time we need them, we may experience inventory
      shortages. Inventory shortages might delay shipments to customers, negatively
      impact distributor relationships, and diminish brand loyalty.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      face intense competition, including competition from companies with
      significantly greater resources than ours, and if we are unable to compete
      effectively with these companies, our market share may decline and our business
      could be harmed. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      industry is highly competitive with numerous competitors, most of whom are
      well-established manufacturers. A number of our competitors have significantly
      greater financial, technological, manufacturing, marketing and distribution
      resources than we do. Their greater capabilities in these areas may enable
      them
      to compete more effectively on the basis of price and production and more
      quickly develop new products and technologies. In addition, new companies may
      enter the markets in which we compete, further increasing competition in the
      laser industry. We may not be able to compete successfully in the future, and
      increased competition may result in price reductions, reduced profit margins,
      loss of market share and an inability to generate cash flows that are sufficient
      to maintain or expand our development and marketing of new products, which
      would
      adversely impact the trading price of our common shares.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
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      </div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      may not be able to effectively manage our growth.</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      We
      intend to grow our business by expanding our technology, sales, administrative
      and marketing organizations. Any growth in or expansion of our business is
      likely to continue to place a strain on our management and administrative
      resources, infrastructure and systems. As with other growing businesses, we
      expect that we will need to refine and expand our business development
      capabilities, our systems and processes and our access to financing sources.
      We
      also will need to hire, train, supervise and manage new employees. These
      processes are time consuming and expensive, will increase management
      responsibilities and will divert management attention. We cannot assure you
      that
      we will be able to:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">expand
                our systems effectively or efficiently or in a timely
                manner;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">allocate
                our human resources optimally;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">meet
                our capital needs;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">identify
                and hire qualified employees or retain valued employees;
                or</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">incorporate
                effectively the components of any business or product line that we
                may
                acquire in our effort to achieve
                growth.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      inability or failure to manage our growth and expansion effectively could harm
      our business and materially and adversely affect our operating results and
      financial condition.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      planned international operations and the operations of our manufacturers and
      suppliers in China are subject to additional risks that are beyond our control
      and that could harm our business. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Although
      our products are currently manufactured and sold in the United States, we intend
      to market our products internationally in the future. International sales,
      would
      subject us to additional risks associated with doing business abroad,
      including:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">political
                unrest, terrorism and economic instability resulting in the disruption
                of
                trade from foreign countries in which our products are
                manufactured;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">difficulties
                in managing foreign operations, including difficulties associated
                with
                inventory management and collection on foreign accounts
                receivable;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">dependence
                on foreign distributors and distribution
                networks;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                imposition of new laws and regulations, including those relating
                to labor
                conditions, quality and safety standards as well as restrictions
                on the
                transfer of funds;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">disruptions
                or delays in shipments;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">changes
                in local economic and non-economic conditions and standards in which
                our
                manufacturers, suppliers or customers are located;
                and</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 36pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">reduced
                protection for intellectual property rights in jurisdictions outside
                the
                United States.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">These
      and
      other factors beyond our control could interrupt our manufacturers' production
      in offshore facilities, influence the ability of our manufacturers to export
      our
      products cost-effectively or at all, inhibit our and our unaffiliated
      manufacturer's ability to produce certain materials and</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">influence
      our ability to sell our products in international markets, any of which could
      have an adverse effect on our business, financial condition and
      operations.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      our competitors misappropriate our proprietary know-how and trade
      secrets,</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>it
      could have a material adverse affect on our business. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      depend
      heavily on the expertise of our production team. If any of our competitors
      copies or otherwise gains access to similar products independently, we might
      not
      be able to compete as effectively. The measures we take to protect our designs
      may not be adequate to prevent their unauthorized use. Further, the laws of
      foreign countries may provide inadequate protection of such intellectual
      property rights. We may need to bring legal claims to enforce or protect such
      intellectual property rights. Any litigation, whether successful or
      unsuccessful, could result in substantial costs and diversions of resources.
      In
      addition, notwithstanding the rights we have secured in our intellectual
      property, other persons may bring claims against us that we have infringed
      on
      their intellectual property rights or claims that our intellectual property
      right interests are not valid. Any claims against us, with or without merit,
      could be time consuming and costly to defend or litigate and therefore could
      have an adverse affect on our business.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>If
      our facilities were to experience catastrophic loss, our operations would be
      seriously harmed. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      facilities could be subject to a catastrophic loss from fire, flood, earthquake
      or terrorist activity. All of our research and development activities,
      manufacturing, our corporate headquarters and other critical business operations
      are located near major earthquake faults in Chatsworth, California, an area
      with
      a history of seismic events. Any such loss at this facility could disrupt our
      operations, delay production, and revenue and result in large expenses to repair
      or replace the facility. While we have obtained insurance to cover most
      potential losses, we cannot assure you that our existing insurance coverage
      will
      be adequate against all other possible losses.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">17</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>New
      rules, including those contained in and issued under the Sarbanes-Oxley Act
      of
      2002, may make it difficult for us to retain or attract qualified officers
      and
      directors, which could adversely affect the management of our business and
      our
      ability to obtain or retain listing of our common stock. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      may be
      unable to attract and retain qualified officers, directors and members of board
      committees required to provide for our effective management as a result of
      the
      recent and currently proposed changes in the rules and regulations which govern
      publicly-held companies, including, but not limited to, certifications from
      executive officers and requirements for financial experts on the board of
      directors. The perceived increased personal risk associated with these recent
      changes may deter qualified individuals from accepting these roles. The
      enactment of the Sarbanes-Oxley Act of 2002 has resulted in the issuance of
      a
      series of new rules and regulations and the strengthening of existing rules
      and
      regulations by the SEC. Further, certain of these recent and proposed changes
      heighten the requirements for board or committee membership, particularly with
      respect to an individual&#8217;s independence from the corporation and level of
      experience in finance and accounting matters. We may have difficulty attracting
      and retaining directors with the requisite qualifications. If we are unable
      to
      attract and retain qualified officers and directors, the management of our
      business could be adversely affected. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      internal controls over financial reporting may not be effective, and our
      independent auditors may not be able to certify as to their effectiveness,
      which
      could have a significant and adverse effect on our business.
</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      are
      subject to various regulatory requirements, including the Sarbanes-Oxley Act
      of
      2002. We, like all other public companies, must incur additional expenses and,
      to a lesser extent, diversion of our management&#8217;s time in our efforts to comply
      with Section&#160;404 of the Sarbanes-Oxley Act of 2002 regarding internal
      controls over financial reporting. We have not evaluated our internal controls
      over financial reporting in order to allow management to report on, and our
      independent auditors to attest to, our internal controls over financial
      reporting, as required by Section&#160;404 of the Sarbanes-Oxley Act of 2002 and
      the rules and regulations of the SEC, which we collectively refer to as
      Section&#160;404. We have never performed the system and process evaluation and
      testing required in an effort to comply with the management assessment and
      auditor certification requirements of Section&#160;404, which will initially
      apply to us as of December&#160;31, 2006. Our lack of familiarity with Section
      404 may unduly divert management&#8217;s time and resources in executing the business
      plan. If, in the future, management identifies one or more material weaknesses,
      or our external auditors are unable to attest that our management&#8217;s report is
      fairly stated or to express an opinion on the effectiveness of our internal
      controls, this could result in a loss of investor confidence in our financial
      reports, have an adverse effect on our stock price and/or subject us to
      sanctions or investigation by regulatory authorities. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Economic,
      political, military or other events in the United States could interfere with
      our success or operations and harm our business. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      market
      and sell our products and services in the United States and abroad. The
      September&#160;11, 2001 terrorist attacks disrupted commerce throughout the
      United States and other parts of the world. The continued threat of similar
      attacks throughout the world and the military action, or possible military
      action, taken by the United States and other nations, in Iraq or other countries
      may cause significant disruption to commerce throughout the world. To the extent
      that such disruptions further slow the global economy or, more particularly,
      result in delays or cancellations of purchase orders for our products or extends
      the sales cycles with potential customers, our business and results of
      operations could be materially adversely affected. We are unable to predict
      whether the threat of new attacks or the responses thereto will result in any
      long-term commercial disruptions or if such activities or responses will have
      a
      long-term material adverse effect on our business, results of operations or
      financial condition. </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: 0.4pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>MARKET
      RISKS</strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Our
      common stock may be thinly traded, so you may be unable to sell at or near
      ask
      prices or at all if you need to sell your shares to raise money or otherwise
      desire to liquidate your shares. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Prior
      to
      the Acquisition, our predecessor had no trading volume on the OTC Bulletin
      Board. Through this the Acquisition, CDC has essentially become public without
      the typical initial public offering procedures which usually include a large
      selling group of broker-dealers who may provide market support after going
      public. Thus, we will be required to undertake efforts to develop market
      recognition for us and support for our shares of common stock in the public
      market. The price and volume for our common stock that will develop cannot
      be
      assured.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">18</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      number of persons interested in purchasing our common stock at or near ask
      prices at any given time may be relatively small or non-existent. This situation
      may be attributable to a number of factors, including the fact that we are
      a
      small company which is relatively unknown to stock analysts, stock brokers,
      institutional investors and others in the investment community that generate
      or
      influence sales volume, and that even if we came to the attention of such
      persons, they tend to be risk-averse and would be reluctant to follow an
      unproven company such as ours or purchase or recommend the purchase of our
      shares until such time as we became more seasoned and viable. As a consequence,
      there may be periods of several days, weeks, months, or more when trading
      activity in our shares is minimal or non-existent, as compared to a seasoned
      issuer which has a large and steady volume of trading activity that will
      generally support continuous sales without an adverse effect on share price.
      We
      cannot give you any assurance that a broader or more active public trading
      market for our common stock will develop or be sustained. While we are trading
      on the OTC Bulletin Board, the trading volume we will develop may be limited
      by
      the fact that many major institutional investment funds, including mutual funds,
      as well as individual investors follow a policy of not investing in Bulletin
      Board stocks and certain major brokerage firms restrict their brokers from
      recommending Bulletin Board stocks because they are considered speculative,
      volatile and thinly traded.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      application of the &#8220;penny stock&#8221; rules to our common stock could limit the
      trading and liquidity of the Common Stock, adversely affect the market price
      of
      our common stock and increase your transaction costs to sell those shares.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">As
      long
      as the trading price of our common stock is below $5 per share, the open-market
      trading of our common stock will be subject to the &#8220;penny stock&#8221; rules, unless
      we otherwise qualify for an exemption from the &#8220;penny stock&#8221; definition. The
&#8220;penny stock&#8221; rules impose additional sales practice requirements on certain
      broker-dealers who sell securities to persons other than established customers
      and accredited investors (generally those with assets in excess of $1,000,000
      or
      annual income exceeding $200,000 or $300,000 together with their spouse). These
      regulations, if they apply, require the delivery, prior to any transaction
      involving a penny stock, of a disclosure schedule explaining the penny stock
      market and the associated risks. Under these regulations, certain brokers who
      recommend such securities to persons other than established customers or certain
      accredited investors must make a special written suitability determination
      regarding such a purchaser and receive such purchaser&#8217;s written agreement to a
      transaction prior to sale. These regulations may have the effect of limiting
      the
      trading activity of our common stock, reducing the liquidity of an investment
      in
      our common stock and increasing the transaction costs for sales and purchases
      of
      our common stock as compared to other securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>The
      market price for our common stock may be particularly volatile given our status
      as a relatively unknown company with a small and thinly traded public float
      and
      lack of history as a public company which could lead to wide fluctuations in
      our
      share price. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      market for our common stock may be characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price could
      continue to be more volatile than a seasoned issuer for the indefinite future.
      The potential volatility in our share price is attributable to a number of
      factors. First, as noted above, our shares of common stock may be sporadically
      and thinly traded. As a consequence of this lack of liquidity, the trading
      of
      relatively small quantities of shares by our stockholders may disproportionately
      influence the price of those shares in either direction. The price for our
      shares could, for example, decline precipitously in the event that a large
      number of our shares of common stock are sold on the market without commensurate
      demand, as compared to a seasoned issuer which could better absorb those sales
      without adverse impact on its share price. Many of these factors will be beyond
      our control and may decrease the market price of our common shares, regardless
      of our operating performance. We cannot make any predictions or projections
      as
      to what the prevailing market price for our common stock will be at any time.
      </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      addition, the market price of our common stock could be subject to wide
      fluctuations in response to: </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">quarterly
                variations in our revenues and operating expenses;
                </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">announcements
                of new products or services by us; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">fluctuations
                in interest rates; </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">significant
                sales of our common stock, including &#8220;short&#8221;
                sales;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">the
                operating and stock price performance of other companies that investors
                may deem comparable to us; and </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 54pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">o&#160;&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">news
                reports relating to trends in our markets or general economic
                conditions.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">19</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
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        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      stock
      market, in general, and the market prices for penny stock companies in
      particular, have experienced volatility that often has been unrelated to the
      operating performance of such companies. These broad market and industry
      fluctuations may adversely affect the price of our stock, regardless of our
      operating performance.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stockholders
      should be aware that, according to SEC Release No. 34-29093, the market for
      penny stocks has suffered in recent years from patterns of fraud and abuse.
      Such
      patterns include (1) control of the market for the security by one or a few
      broker-dealers that are often related to the promoter or issuer; (2)
      manipulation of prices through prearranged matching of purchases and sales
      and
      false and misleading press releases; (3) boiler room practices involving
      high-pressure sales tactics and unrealistic price projections by inexperienced
      sales persons; (4) excessive and undisclosed bid-ask differential and markups
      by
      selling broker-dealers; and (5) the wholesale dumping of the same securities
      by
      promoters and broker-dealers after prices have been manipulated to a desired
      level, along with the resulting inevitable collapse of those prices and with
      consequent investor losses. Our management is aware of the abuses that have
      occurred historically in the penny stock market. Although we do not expect
      to be
      in a position to dictate the behavior of the market or of broker-dealers who
      participate in the market, management will strive within the confines of
      practical limitations to prevent the described patterns from being established
      with respect to our securities. The occurrence of these patterns or practices
      could increase the volatility of our share price.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Limitations
      on director and officer liability and indemnification of our officers and
      directors by us may discourage stockholders from bringing suit against a
      director. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      articles of incorporation and bylaws provide, with certain exceptions as
      permitted by governing state law, that a director or officer shall not be
      personally liable to us or our stockholders for breach of fiduciary duty as
      a
      director, except for acts or omissions which involve intentional misconduct,
      fraud or knowing violation of law, or unlawful payments of dividends. These
      provisions may discourage stockholders from bringing suit against a director
      for
      breach of fiduciary duty and may reduce the likelihood of derivative litigation
      brought by stockholders on our behalf against a director. In addition, our
      articles of incorporation and bylaws may provide for mandatory indemnification
      of directors and officers to the fullest extent permitted by governing state
      law. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>We
      do not expect to pay dividends for the foreseeable future, and we may never
      pay
      dividends</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      We
      currently intend to retain any future earnings to support the development and
      expansion of our business and do not anticipate paying cash dividends in the
      foreseeable future. Our payment of any future dividends will be at the
      discretion of our board of directors after taking into account various factors,
      including but not limited to our financial condition, operating results, cash
      needs, growth plans and the terms of any credit agreements that we may be a
      party to at the time. In addition, our ability to pay dividends on our common
      stock may be limited by state law. Accordingly, investors must rely on sales
      of
      their Common Stock after price appreciation, which may never occur, as the
      only
      way to realize their investment. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>A
      single investor own or control at least 48% of our outstanding common stock,
      which may limit your ability and the ability of our other stockholders, whether
      acting alone or together, to propose or direct the management or overall
      direction of our Company. Additionally, this concentration of ownership could
      discourage or prevent a potential takeover of our Company that might otherwise
      result in shareholders receiving a premium over the market price for our shares.
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      estimate that approximately 48% of our outstanding shares of common stock is
      owned and controlled by a single investro stockholder. Such concentrated control
      of the Company may adversely affect the price of our common stock. Our principal
      stockholders may be able to control matters requiring approval by our
      stockholders, including the election of directors, mergers or other business
      combinations. Such concentrated control may also make it difficult for our
      stockholders to receive a premium for their shares of our common stock in the
      event we merge with a third party or enter into different transactions which
      require stockholder approval. These provisions could also limit the price that
      investors might be willing to pay in the future for shares of our common stock.
      </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Accordingly,
      the existing principal stockholders together with </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">our
      directors and executive officers</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      will
      have the power to control the election of our directors and the approval of
      actions for which the approval of our stockholders is required. If you acquire
      shares, you may have no effective voice in the management of the
      Company.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">20</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Future
      sales of our equity securities could put downward selling pressure on our
      securities, and adversely affect the stock price. There is a risk that this
      downward pressure may make it impossible for an investor to sell his securities
      at any reasonable price, if at all. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Future
      sales of substantial amounts of our equity securities in the public market,
      or
      the perception that such sales could occur, could put downward selling pressure
      on our securities, and adversely affect the market price of our common
      stock.</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="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>DESCRIPTION
      OF PROPERTY</u></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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company&#8217;s headquarters is currently located at 20710 Lassen Street, Chatsworth,
      CA 91311. Our operations are located in an 14,500 square foot building which
      allows us to conduct our operations on site, including research and development,
      fabrication, processing and packaging. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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>SECURITY
      OWNERSHIP OF CERTAIN</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"><strong><u>BENEFICIAL
      OWNERS AND MANAGEMENT</u></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 style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECURITY
      OWNERSHIP OF BENEFICIAL OWNERSHIP AND MANAGEMENT PRIOR TO THE SECURITIES
      AGREEMENT</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth, as of July 31, 2006, certain information regarding
      the ownership of the Company&#8217;s capital stock by the following persons on such
      date: each of the directors and executive officers, each person who is known
      to
      be a beneficial owner of more than 5% of any class of our voting stock, and
      all
      of our officers and directors as a group. Unless otherwise indicated below,
      to
      our knowledge, all persons listed below had sole voting and investing power
      with
      respect to their shares of capital stock, except to the extent authority was
      shared by spouses under applicable community property laws.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities. Shares of our common stock subject to options, warrants
      or convertible securities exercisable or convertible within 60 days of July
      31,
      2006 were deemed outstanding for computing the percentage of the person or
      entity holding such options, warrants or convertible securities but are not
      deemed outstanding for computing the percentage of any other person, and was
      based upon the number of shares of the Common Stock issued and outstanding,
      as
      of July 31, 2006 which was 26,750,000 shares. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr bgcolor="white">
              <td valign="bottom" width="15%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title
                  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">Class</font></div>
              </td>
              <td width="2%" style="border-bottom: white solid;">&#160;</td>
              <td valign="bottom" width="31%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Name
                  and Address</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">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">Beneficial
                  Owners (1)</font></div>
              </td>
              <td width="2%" style="border-bottom: white solid;">&#160;</td>
              <td valign="bottom" width="15%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amount
                  and Nature</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">Of
                  Beneficial Ownership</font></div>
              </td>
              <td width="2%" style="border-bottom: white solid;">&#160;</td>
              <td valign="bottom" width="11%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Percent</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">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">Class
                  </font></div>
              </td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="15%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="31%">
                <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">Slavko
                  Bebek</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="15%">
                <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">2,500,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="11%">
                <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">42.87%</font></div>
              </td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="15%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="31%">
                <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">Maryna
                  Bilynaska</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="15%">
                <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">2,500,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="11%">
                <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">42.87%</font></div>
              </td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="15%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="31%">
                <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
                  officers and directors as a group (2 persons)&#160;</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="15%">&#160;</td>
              <td width="2%">&#160;</td>
              <td valign="top" width="11%">
                <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">85.7%</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="6%">
              <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">(1)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;&#160;</font></div>
            </td>
            <td align="justify" valign="top" width="66%">
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                otherwise noted, the address for each of the named beneficial owners
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                V6E4R1.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">21</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>SECURITY
      OWNERSHIP OF BENEFICIAL OWNERSHIP AND MANAGEMENT&#160;AFTER THE CLOSING OF THE
      PURCHASE AGREEMENT</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following table sets forth information with respect to the beneficial ownership
      of the outstanding shares of Company&#8217;s capital stock immediately following the
      Purchase by (i) each person known by Registrant who will beneficially own five
      percent (5%) or more of the outstanding shares; (ii) the officers who will
      take
      office as of the effective date of the Purchase; (iii) directors as of the
      effective date of the Purchase and director nominees who will take office as
      soon as the appropriate information statement can be mailed to the stockholders
      of registrant and the accompanying waiting period passes and (iv) all the
      aforementioned officers and directors as a group. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td valign="bottom" width="13%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Title
                  of </font></div>
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              <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td valign="bottom" width="25%" style="border-bottom: black thin solid;">
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                  and Address</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">Of
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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">Beneficial
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              <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td valign="bottom" width="16%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Amount
                  and Nature</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">Of
                  Beneficial Ownership</font></div>
              </td>
              <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td valign="bottom" width="17%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Percent</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">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">Class
                  (3)</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Sidney
                  L. Anderson(4)</font></div>
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,000,000</font></div>
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              <td width="2%">&#160;</td>
              <td valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">17,39%</font></div>
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            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">William
                  H. Moothart(2)</font></div>
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">76,923</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Gregory
                  A. Nihon(2) </font></div>
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Kerry
                  Stirton(2)</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">J.
                  Stewart Asbury(7)</font></div>
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">150,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Clayton
                  E. Woodrum(5)</font></div>
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">680,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">2.49%</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Iain
                  Drummond (2)</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">0</font></div>
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Francis
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,690,000</font></div>
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.1%</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Cypress
                  Advisors</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,500,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.6%</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Caramat
                  Ltd. (8)</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3,000,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">10.81%</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
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              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Vision
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              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">15,360,000</font></div>
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              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">48.3%</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">McCorkell
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              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,500,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5.5%</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Ashcrete
                  Research &amp; Development, LLC (11)</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,800,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.58%</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <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">Common
                  Stock</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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">Nite
                  Capital (11)</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">1,800,000</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 8.1pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">6.58%</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="13%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="25%">
                <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
                  officers,&#160;directors and director nominees as a group (7
                  persons)</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="16%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">5,906,923</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="right" valign="top" width="17%">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 9pt" align="right"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">20.12%</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">
      <hr style="COLOR: black" align="left" noshade size="1" width="15%">
    </div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unless
                otherwise noted, the address for each of the named beneficial owners
                is:
                20710 Lassen Street, Chatsworth, CA 91311. Unless otherwise indicated,
                beneficial ownership is determined in accordance with Rule 13d-3
                promulgated under the Exchange Act and generally includes voting
                and/or
                investment power with respect to securities. Shares of common stock
                subject to options or warrants that are currently exercisable or
                exercisable within sixty days of August 7,&#160;2006 are deemed to be
                beneficially owned by the person holding such options or warrants
                for the
                purpose of computing the percentage of ownership set forth in the
                above
                table, unless otherwise indicated. </font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)</font></td>
            <td align="left">
              <div align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Such
                persons are director nominees that the directors of Registrant have
                elected to the Board of Directors which appointment shall be effective
                upon compliance with Rule 14f1 of the Securities and Exchange Act
                of
                1934.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table align="center" border="0" cellpadding="0" cellspacing="0" id="hangingindent" width="100%">

          <tr valign="top" style="line-height: 1.25;">
            <td align="left" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(3)</font></td>
            <td align="left">
              <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
                calculations of percentage of beneficial ownership are based on 26,675,000
                shares of common stock outstanding as of July 31,
                2006.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">22</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(4)&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                2,000,000 shares underlying options exercisable at $0.30 per
                share.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffff00">(5)&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                500,000 shares underlying options exercisable at $0.30 per share;
                and a
                warrant to purchase 60,000 shares at $.30 per
                share.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BACKGROUND-COLOR: #ffff00">(6)&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                900,000 shares underlying options exercisable at $0.30 per
                share.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(7)&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                50,000 shares underlying options exercisable at $0.30 per
                share.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(8)&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                1,000,000 shares underlying options exercisable at $0.30 per
                share.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(9)&#160;</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                5,120,000 shares underlying options exercisable at $0.30 per
                share.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(10)</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                500,000 shares underlying options exercisable at $0.30 per
                share.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div>
      <table cellpadding="0" cellspacing="0" id="list" width="100%" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">

          <tr valign="top" style="line-height: 1.25;">
            <td align="right" style="width: 9pt;"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(11)</font></td>
            <td>
              <div style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Includes
                600,000 shares underlying options exercisable at $0.30 per
                share.</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">*
      less
      than one percent</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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>DIRECTORS
      AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS-</u></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 style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>APPOINTMENT
      OF NEW OFFICERS AND DIRECTORS</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Purchase Agreement, effective August 7,&#160;2006, Slavko
      Bebek resigned as Chief Executive Officer, Chief Financial Officer but remained
      a Director of the Company subject to a resignation to take effect on the tenth
      day following the mailing of the 14f1 to shareholders of Registrant and Maryna
      Bilynska resigned as Secretary and Director. On August 7,&#160;2006, the Mr.
      Bebek as sole director appointed J. Stewart Asbury III as Chief Executive
      Officer, Clayton E. Woodrum as Chief Financial Officer and appointed Sidney
      L.
      Anderson to serve as Chairman of the Board of Directors. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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">Our
      existing board of directors has the authority to appoint new directors of the
      Company, subject to Section 14f1 of the Securities Act of 1934 which requires
      that if a change in control of the board occurs, such change of control is
      not
      effective until 10 days after mailing a written notice of such change in control
      to all shareholders. The Company intends to prepare and mail such notice
      promptly after filing this Form 8-K. The persons so appointed to the Board
      of
      Directors are: William H. Moothart, Gregory A. Nihon, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Iain
      Drummond</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      Kerry Stirton. Information regarding these Director nominees are included in
      this Form 8-K.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      following tables summarize the Company's current executive officers and
      directors and the proposed executive officers and directors of the Company:
      </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="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div>
        <table cellpadding="0" cellspacing="0" width="100%">

            <tr>
              <td align="left" valign="bottom" width="21%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name</strong></font></div>
              </td>
              <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td valign="bottom" width="4%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Age</strong></font></div>
              </td>
              <td width="2%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="bottom" width="46%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Position</strong></font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <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">Sidney
                  L. Anderson</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="4%">
                <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">59</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="46%">
                <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">Chairman
                  of the Board and Executive Director&#160;</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <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">William
                  H. Moothart</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="4%">
                <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">71</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="46%">
                <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">Director
                  Nominee</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <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">Gregory
                  A. Nihon</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="4%">
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              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="46%">
                <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">Director
                  Nominee</font></div>
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            <tr>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Kerry
                  Stirton</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="4%">
                <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">42</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="46%">
                <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">Director&#160;Nominee</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <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">J.
                  Stewart Asbury III</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="4%">
                <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">58</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="46%">
                <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">Chief
                  Executive Officer</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <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">Clayton
                  Woodrum</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="4%">
                <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">66</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="46%">
                <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">Chief
                  Financial Officer&#160;</font></div>
              </td>
            </tr>
            <tr>
              <td align="left" valign="top" width="21%">
                <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">Iain
                  Drummond</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td valign="top" width="4%">
                <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">36</font></div>
              </td>
              <td width="2%">&#160;</td>
              <td align="left" valign="top" width="46%">
                <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">Director
                  Nominee</font></div>
              </td>
            </tr>

        </table>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Sidney
      L. Anderson. </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Anderson was appointed Chairman of our Board of Directors upon closing of the
      Purchase. Mr. Anderson began his professional career with Peat, Marwick,
      Mitchell &amp; Co., (currently KPMG) in Tulsa, OK where he was employed for over
      five years in the firm&#8217;s tax department leaving in December 1977 as a Tax
      Manager. After leaving public accounting, Mr. Anderson practiced law for five
      years and was a Partner with the law firm of Pray, Walker, Jackman, Williamson
      &amp; Marlar in Tulsa, OK. In 1981, Mr. Anderson founded Pan Western Energy
      Corporation, a small publicly traded oil and gas exploration and production
      company, where he served as the company&#8217;s President and Chief Executive Officer
      and Chairman of its Board of Directors for nineteen years until the company
      was
      sold October 1, 2000. Since that time, Mr. Anderson has consulted with a number
      of companies on financial and business matters. Mr. Anderson received his
      undergraduate degree in Business Administration from the University of Oklahoma
      in 1969 and his Juris Doctorate degree from the University of Oklahoma in 1972.
      He was admitted to practice law in Oklahoma in 1972 and received his Certified
      Public Accountant certificate in 1975. Mr. Anderson has served on the board
      of
      numerous civic and academic organizations as well as public trust authorities
      including the board of trustees of Oklahoma State University - Tulsa and the
      University of Tulsa College of Business Administration Executive Advisory Board.
      Mr. Anderson has also served as a trustee of the Tulsa Industrial Authority
      and
      the University Center at Tulsa Trust Authority. Mr. Anderson currently serves
      on
      the Economic Development Commission for the City of Tulsa. Mr. Anderson is
      also
      a director of Health Science Group, Inc. (OTC:BB &#8220;HESG&#8221;) and is chairman of the
      board&#8217;s audit committee. In addition, Mr. Anderson served in the United States
      Army Reserve (Captain) from 1971 through 1986 and is a member of the National
      Eagle Scout Association.</font></div>
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    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>William
      H. Moothart.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Although
      Mr. Moothart has been nominated to our board, and will begin service upon our
      compliance with Rule 14f1, Mr. Moothart has been Chairman, President, Treasurer
      and principal shareholder of our operating subsidiary, CDC since its inception
      in 1971. Prior to that time, Mr. Moothart was Director of Engineering for
      Whittaker Corporation from 1967 to 1971, Director of Litton Data Systems
      Division from 1962 to 1967, and a First Lieutenant in the United States Air
      Force assigned to the Air Research &amp; Development Command. Mr. Moothart
      received his Bachelor of Science Mechanical Engineering degree from Loyola
      University in 1956 and did graduate work in Electrical Engineering at both
      Ohio
      State University and UCLA.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Gregory
      A Nihon. </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Nihon
      was appointed to our Board as of the closing of the Purchase and the appointment
      will be effective upon our compliance with Rule 14f1. Mr. Nihon began his
      professional career with Banc of America Securities in New York where he was
      employed in the firm's Corporate and Investment Banking Division. Mr. Nihon
      later joined Morgan Stanley's London office, where he worked on pan-European
      investment banking and private equity transactions in the real estate sector.
      His transaction and product experience includes public equity, private equity
      fund placements, high yield, securitization, convertible debt offerings,
      M&amp;A, and principal investments. Mr. Nihon later left the financial services
      industry to work as director of business development for NYSE-traded Lionsgate
      Entertainment, an independent film studio based in Santa Monica, CA. At
      Lionsgate Mr. Nihon handled an array of capital markets and financial reporting
      and controls responsibilities; he also ran "greenlight" models for individual
      film investments and sourced third-party production finance. In 2005, Mr. Nihon
      joined Nihon Global Partners, a family-office style investment firm and merchant
      bank, where he serves as a Managing Director. Mr. Nihon received his Bachelor
      of
      Arts degree from Columbia University and his Masters in Business Administration
      degree from the Harvard Business School.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Kerry
      Stirton</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">.
      Mr.
      Stirton was appointed to our Board as of the closing of the Purchase and the
      appointment will be effective upon our compliance with Rule 14f1. Mr. Stirton
      is
      currently Managing Director of Stellation Asset Management, a public equity
      investment management firm with a global fund of fund product. Kerry Stirton
      has
      been in the investment management sector for nearly ten years; including
      extensive hedge fund and direct investment experience. Most recently he was
      with
      Goldman Sachs, in the Global Equities Proprietary Trading Group. This experience
      provided a unique vantage point from which to observe the dynamics of different
      trading strategies across a wide set of styles and asset classes. His particular
      trading group used a combined global macro and fundamental equity research
      approach. Prior to Goldman, he was the Senior Research Analyst for the U.S.
      Multi-Industry Sector at Sanford C. Bernstein, the research subsidiary of
      Alliance Capital. His company research covered the most industry sectors of
      the
      analysts at Bernstein, and was ranked #1 by the Greenwich Survey of
      Institutional Investors. With over 100 hedge fund clients around the world,
      and
      more than 300 institutional investor clients, Mr. Stirton worked closely with
      a
      substantial array of different trading and investment styles. Again, the
      opportunity to assess various investment approaches, and to ascertain the
      psychological bents of various forms of investor at different points in a
      sector&#8217;s investment cycle, remains a valuable backdrop to his fund of fund
      responsibilities. Mr. Stirton&#8217;s earlier direct investment experience includes
      energy commodity trading at Louis Dreyfus Energy and US equity investing with
      CT
      Investment Management, where he ran a $300 million US trust portfolio and was
      investment analyst for the $1.6 billion US Equity portfolio - a top performer
      across the US mutual fund industry. Prior to his investment career, Mr. Stirton
      was a corporate strategy and valuation consultant, including 5 years at McKinsey
      &amp; Co., where he worked in the manufacturing and investment management
      sectors. He earned law degrees from Harvard Law School and Oxford University,
      and holds a degree in Politics and Economics from the University of Toronto.
      Mr.
      Stirton was a Teaching Fellow at Harvard College, and a Rhodes Scholar.
</font></div>
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      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>J.
      Stewart Asbury III.</em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      Mr.
      Asbury was appointed as our Chief Executive Officer at the closing of the
      Purchase. Mr. Asbury began his professional career with Arthur Andersen and
      company in Atlanta, Georgia. While with Arthur Andersen, Mr. Asbury was a Senior
      Consultant in the firm&#8217;s consulting division which is now Accenture. His
      responsibilities primarily consisted of designing and implementing management
      and process systems. In 1980, Mr. Asbury joined Byers Engineering in Atlanta,
      Georgia where he was employed as Division Manager and was responsible for the
      creation of Byers&#8217; Geographical Information Systems products and markets. During
      his tenure as Division Manager, the division grew from $900,000 in annual
      revenues to $18.0 million in annual revenues and employed over 500 people.
      In
      1990, Mr. Asbury became Vice President of Byers Engineering and was responsible
      for the implementation of the company&#8217;s Seibel sales tracking and management
      system. In 1998, Mr. Asbury became Senior Vice President of SpatialAge
      Solutions, a division of Byers Engineering focused on the GIS software products
      business. In 2001, he became President of SpatialAge Solutions and served in
      that capacity until 2005. Mr. Asbury received his BA in Psychology from the
      University of Georgia in 1969 and his MBA in Management Policy and Systems
      from
      the University of Georgia in 1978. He has served on the Board of Directors
      of
      the Geospatial Information and Technology Association and is a former President
      of that organization. From 1970 through 1974, Mr. Asbury served in the United
      States Air Force. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><em>Clayton
      E. Woodrum. </em></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Woodrum was appointed Chief Financial Officer at closing of the Purchase. After
      graduating from Kansas State University, Pittsburg, Kansas, with a BSBA in
      Accounting, Mr. Woodrum began his professional career with Peat, Marwick,
      Mitchell &amp; Co. (now KPMG) in the firm&#8217;s Tulsa, Oklahoma office where he was
      employed from 1965 to 1975 in the tax department. During his tenure at Peat
      Marwick, Mr. Woodrum became a partner and was Partner-in-Charge of the Tulsa
      Tax
      Department from 1973 through 1975. In 1975, Mr. Woodrum joined BancOklahoma
      Corporation and Bank of Oklahoma as Chief Financial Officer where he served
      in
      that capacity until 1980. In 1980, Mr. Woodrum returned to Peat Marwick Mitchell
      &amp; Co. as Partner-in-Charge of the Tulsa Tax Department and the firm&#8217;s
      Financial Institutions Tax Practice. In 1984, Mr. Woodrum became senior partner
      in the Tulsa, Oklahoma based accounting firm of Woodrum, Kemendo, Tate &amp;
Cuite, PLLC. Mr. Woodrum also has financial interests in Computer Data
      Litigation Services, LLC, which provides litigation support related to the
      analysis of electronically stored data, and, First Capital Management, LLC,
      which is a Registered Investment Advisor and provides investment advice to
      clients. In addition to his Certified Public Accountant&#8217;s license, Mr. Woodrum
      is also a Certified Valuation Analyst and Investment Advisor Representative.
      Mr.
      Woodrum has served on numerous boards and trust authorities including the Tulsa
      Industrial Authority, University Center at Tulsa Foundation and the Hillcrest
      Medical Center Foundation. Mr. Woodrum is currently a director of Arena
      Resources, Inc.&#160; ARD is listed on the American Stock Exchange.&#160; Mr.
      Woodrum is Chairman of the Audit Committee and Compensation Committee of
      ARD.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 36pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Iain
      Drummond. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr.
      Drummond was appointed to our Board as of the closing of the Purchase and the
      appointment will be effective upon our compliance with Rule 14f1. Mr. Drummond
      began his professional career with Novera Optics, a telecom component start
      up
      company, where he was employed in the company&#8217;s business development division.
      Mr. Drummond later joined Marketing Harmonic, Inc. as a group head in the
      broadband access networks division. During his tenure with Marketing Harmonic,
      Inc., Mr. Drummond became the Interim President of the company&#8217;s broadband
      access networks division. Mr. Drummond received his Bachelor of Science in
      Optics from the University of Rochester in 1992, his Masters in Applied Physics
      from Yale in 1998, and his Masters in Business Administration from Chicago
      School of Business in 2001.</font></div>
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    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
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        </div>
      </div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">25</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
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        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>EXECUTIVE
      COMPENSATION</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">None
      of
      our executive officers of Registrant prior to the Purchase received compensation
      in excess of $100,000 for the fiscal years ended December 31, 2005, 2004 or
      2003, respectively. Slavka Bebek and Maryna Bilvnaska did not receive
      compensation for their positions as officers of the Company from the
      Registrant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CDC
      SUMMARY COMPENSATION TABLE</strong></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">
      <div>
        <table cellpadding="0" cellspacing="0" id="ftable" width="100%">

            <tr>
              <td align="left" valign="bottom" width="27%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="6%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td colspan="8" valign="bottom" width="20%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td colspan="11" valign="bottom" width="27%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LONG
                  TERM COMPENSATION</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
            </tr>
            <tr>
              <td align="left" valign="bottom" width="27%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="6%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td colspan="8" valign="bottom" width="20%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>ANNUAL
                  COMPENSATION</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td colspan="5" valign="bottom" width="13%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AWARDS</strong></font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
              <td colspan="5" valign="bottom" width="13%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>PAYOUTS</strong></font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ffffff solid;">&#160;</td>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Name
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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"><strong>Year</strong></font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Salary</strong></font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="6%" style="border-bottom: black thin solid;">
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="6%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Restricted</strong></font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>($)</strong></font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="6%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Securities
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="6%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>LTIP
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                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>($)</strong></font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
              <td align="left" colspan="2" valign="bottom" width="6%" style="border-bottom: black thin solid;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>All
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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"><strong>($)</strong></font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white solid;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="27%" style="border-bottom: #ccffcc;">
                <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">William
                  Moothart</font></div>
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              <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2003
                  <br>2004 <br>2005</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">189,228</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">189,228</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">336,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">157,484</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">92,309</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="top" width="5%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">903,384</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">&#160;</div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="27%" style="border-bottom: white;">
                <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">Hannes
                  G. Boehm</font></div>
              </td>
              <td width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2003
                  <br>2004</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2005</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">134,004</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">134,004</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">134,004</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">140,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">66,680</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">19,231</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="top" width="5%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">188,205</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="top" width="27%" style="border-bottom: #ccffcc;">
                <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">Frank
                  Leftkowitz</font></div>
              </td>
              <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2003
                  <br>2004 <br>2005</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">157,404</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">157,404</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">157,404</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">308,000</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">144,053</font></div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">84,615</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="top" width="5%" style="border-bottom: #ccffcc;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">828,103</font></div>
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">
              </td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
            </tr>
            <tr bgcolor="white">
              <td align="left" valign="top" width="27%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">C.
                  Bohman</font></div>
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                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">2003
                  <br>2004 <br>2005</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="top" width="5%" style="border-bottom: white;">
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px">
                </div>
                <div style="DISPLAY: block; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0px"><font style="DISPLAY: inline; FONT-SIZE: 10pt; MARGIN-LEFT: 0px; TEXT-INDENT: 0px; MARGIN-RIGHT: 0px; FONT-FAMILY: Times New Roman">828,103</font></div>
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              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: white;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: white;">&#160;</td>
            </tr>
            <tr bgcolor="#ccffcc">
              <td align="left" valign="bottom" width="27%" style="border-bottom: #ccffcc;">&#160;</td>
              <td width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="right" valign="bottom" width="5%" style="border-bottom: #ccffcc;">&#160;</td>
              <td align="left" valign="bottom" width="1%" style="border-bottom: #ccffcc;">&#160;</td>
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        </table>
      </div>
      <div>
        <hr style="COLOR: black" align="left" noshade size="1" width="15%">
      </div>
      <div><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)
        CDC
        was a Subchapter S corporation prior to the Purchase. All bonuses were paid
        to
        cover income taxes of these employee shareholders.</font></div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(2)
      CDC
      owned its building; the building was sold in 2005 and this compensation
      represents bonus payment to employee shareholders from proceeds on the
      sale.</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"><strong>STOCK
      OPTION GRANTS AND EXERCISES</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">For
      the
      fiscal year ended December 31, 2005, neither the Company nor CDC issued any
      options to any officers, employees or directors.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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"><strong>EMPLOYMENT
      AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS FOR
      CDC</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Neither
      the Company nor CDC had any such arrangement in the past three years. At the
      closing of the Purchase, the Company entered into the following compensation
      arrangements:</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Asbury
      Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">:
      Mr.
      Asbury has been retained as the Chief Executive Officer of CDC for a three
      year
      term at a salary of $215,000 per year. In addition, he will be paid a $3,000
      monthly housing allowance for his first six months of employment and a $1,000
      per month auto allowance for the term. In addition, he was granted an option
      to
      purchase 1,000,000 shares of our common stock at $0.30 per share which vest
      equally over the 36 month term. If Mr. Asbury is terminated without cause,
      he
      will receive the greater of $60,000 or the balance of his salary for the
      remainder of the term and all unvested options will vest immediately.
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">26</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Woodrum
      Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">:
      Mr.
      Woodrum has been engaged as a consultant to serve as the Chief Financial Officer
      of CDC for a term of one year at a salary of $8,000 per month. In addition,
      he
      was granted an option to purchase 500,000 shares of our common stock at $0.30
      per share which are fully vested on grant. This agreement is terminable upon
      30
      days notice by either party.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><u>Anderson
      Agreement</u></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">:
      Mr.
      Anderson has been engaged as our Chairman of the Board of Directors, Executive
      Director, and consultant for compensation of $8,000 per month. Mr. Anderson
      will
      be reimbursed for expenses in connection with his work in connection with the
      Purchase which expenses are estimated to be $205,000. In consideration for
      executing this consulting agreement, Mr. Anderson was granted 2,000,000 shares
      of our common stock. Mr. Anderson shall not receive other compensation for
      such
      services as a director of the Company. In addition, the consulting agreement
      includes an option to purchase 2,000,000 shares of our common stock at $0.30
      per
      share which were fully vested upon grant. If Mr. Anderson participates in
      locating future acquisitions which are completed by the Company, he will receive
      2.5% of the total consideration paid by the Company in such transaction, payable
      in stock or cash at the Company&#8217;s election. The agreement provides that even if
      Mr. Anderson is no longer serving as a Director, he will remain as a consultant
      at the foregoing rate of pay until July 2008. </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"><strong>COMPENSATION
      OF DIRECTORS </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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">During
      the year ended December 31, 2005, the directors of Registrant did not receive
      any compensation for services as directors. The directors of CDC did not receive
      any separate compensation for their duties as directors during the year ended
      December 31, 2005.</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      intend
      to adopt a director compensation policy for directors which will include
      compensation on a per meeting basis on upon appointment which will likely be
      a
      combination of cash compensation and stock options. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS</u></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 style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Sidney
      Anderson. </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>&#160;</u></strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Mr..Anderson
      has requested reimbursement of approximately $205,000 of expenses for his
      activities prior to Closing; these funds will be reimbursed when the Company
      has
      the funds to do so. He also received 2,000,000 shares of our common stock for
      his execution of the Consulting Agreement under which he will provide services
      as the Chairman of our Board of Directors. He also received 1,000,000 shares
      of
      our common stock as part of compensation provided to a group which provided
      services, Chatsworth Acquisition Group.</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="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>DESCRIPTION
      OF SECURITIES</u></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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>GENERAL</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      Company&#8217;s Articles of Incorporation provide for authority to issue 100,000,000
      shares of Common Stock with a par value of $0.00001 per Share. Immediately
      after
      the Purchase, the capitalization of our Company consisted of 100,000,000 shares
      of authorized Common Stock with 26,750,000 shares of Common Stock
      issued.</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"><strong>COMMON
      STOCK </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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      holders of the Common Stock are entitled to receive dividends when and as
      declared by the Board of Directors, out of funds legally available therefore.
      The Company has not paid cash dividends in the past and does not expect to
      pay
      any within the foreseeable future since any earnings are expected to be
      reinvested in the Company. In the event of liquidation, dissolution or winding
      up of the Company, either voluntarily or involuntarily, each outstanding share
      of the Common Stock is entitled to share equally in the Company's assets. Each
      outstanding share of the Common Stock is entitled to equal voting rights,
      consisting of one vote per share.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">27</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>WARRANTS</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Each
      Investor in the SPA received warrants to purchase one-half of the shares
      purchased at an exercise price of $0.30 per share for a total of 8,710,000
      warrants. In addition, the Company issued 1,000,000 warrants at the same
      exercise price to a consultant who provided services in the Purchase. The
      Company also issued a warrant to purchase 103,000 shares at $.01 per share
      to a
      service provider at Closing. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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"><strong>OPTIONS</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company intends to adopt an equity incentive plan for its officers, directors
      and consultants. The Company&#8217;s employment and consulting agreements include
      option grants to come from the Company&#8217;s future plan. If no plan is adopted by
      October 1, 2006, then the options will be issued as individual option
      agreements. A total of 3,500,000 options to purchase common stock at $.30 a
      share will be issued pursuant to these agreements.</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: 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>MARKET
      PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS</u></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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      common stock is not listed on any stock exchange. The common stock is traded
      over-the-counter on the Over-the-Counter Electronic Bulletin Board under the
      symbol "AAML". However, the business of the Registrant was not the business
      we
      will pursue after the Purchase and we do not believe the prior stock price
      information is relevant. Prior to the Closing, as of July 31, 2006, there were
      approximately 30 stockholders of record of our common stock. </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"><strong>DIVIDENDS
      </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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">We
      have
      never paid any dividends on the Common Stock. We currently anticipate that
      any
      future earnings will be retained for the development of our business and do
      not
      anticipate paying any dividends on the Common Stock in the foreseeable
      future.</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>TRANSFER
      AGENT</strong></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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Our
      transfer agent is Pacific Stock Transfer Company.</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><u>LEGAL
      PROCEEDINGS</u></strong></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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">From
      time
      to time, we may be involved in litigation or other business disputes including
      patent infringement, defamation and unfair competition. The Company&#8217;s management
      is not aware of any material legal proceedings pending against the Company.
      </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"><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>RECENT
      SALES OF UNREGISTERED SECURITIES</u></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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to the SPA entered into by the Company on one hand, and a group of investors
      on
      the other hand, the Company issued 17,600,000 shares of the Company&#8217;s Common
      Stock and 8,800,000 warrants to purchase shares of common stock at $.030 per
      share. The issuance of securities to the investors pursuant to the SPA was
      exempt from registration under the Securities Act pursuant to Section 4(2)
      and/or Regulation D thereof. We made this determination based on the
      representations of the investors which included, in pertinent part, that such
      shareholders were "accredited investors" within the meaning of Rule 501 of
      Regulation D promulgated under the Securities Act and that such shareholders
      were acquiring our common stock, for investment purposes for their own
      respective accounts and not as nominees or agents, and not with a view to the
      resale or distribution thereof, and that each person understood that the shares
      of our common stock may not be sold or otherwise disposed of without
      registration under the Securities Act or an applicable exemption
      therefrom.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">28</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to our purchase of all of the outstanding stock of CDC, we issued a total of
      250,000 shares to the former shareholders of CDC valued at $60,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to a Consulting Agreement, we issued 2,000,000 shares and 2,000,000 options
      to
      purchase common stock at $0.30 per share to our Chairman of the Board of
      Directors for services valued at $500,000 ($480,000 for shares and $20,000
      for
      options). </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to a services agreement, we issued a warrant to purchase 1,000,000 shares at
      $0.30 per share valued at $10,000. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to a service agreement we issued 300,000 shares and a warrant to purchase
      103,000 shares at $0.01 per share valued at $3,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to a service agreement we issued 1,500,000 shares valued at
      $360,000.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Pursuant
      to a services agreement, we issued 1,700,000 shares valued at
      $408,000.</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="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong><u>INDEMNIFICATION
      OF DIRECTORS AND OFFICERS</u></strong></font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Registrant&#8217;s By-Laws and Nevada Revised Statutes, Chapter 78 provide for
      limitation of liability and/or indemnification of the Registrant&#8217;s directors and
      officers in a variety of circumstances, which may include liabilities under
      the
      Securities Act. </font><a name="008"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company may purchase or maintain insurance or make other financial arrangements
      on behalf of any person who is or was a Director, officer, employee, or agent
      of
      the Company, or is or was serving at the request of the Company as a Director,
      officer, employee or agent of another corporation, partnership, joint venture,
      trust or other enterprise asserted against him in his capacity as Director,
      officer, employee or agent, or arising of his status as such, whether or not
      the
      Company has the authority to indemnify him against such liability or
      expense.</font></a></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      Company shall indemnify all of its officers and Directors, past, present, and
      future against any and all expenses incurred by them, and each of them,
      including but not limited to, legal fees, judgments and penalties which may
      be
      incurred, rendered or levied in any legal action or administrative proceeding
      brought against them for any act or omission alleged to have been committed
      while acting within the scope of their duties as officers or Directors of the
      Company. The expenses of officers and Directors incurred and in advance of
      final
      disposition of the action or proceeding upon receipt of an undertaking by or
      on
      behalf of the officer or Director to repay the amount if it is ultimately
      determined by a court of competent jurisdiction that he/she is not entitled
      to
      be indemnified by the Company. Such right of indemnification shall not be
      exclusive of any other rights of indemnification, which the officers and
      Directors may have or hereafter acquire. Without limitation of the foregoing,
      the Board of Directors may adopt by-laws from time to time to provide the
      fullest indemnification permitted.</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"><strong>Item
      3.02</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>UNREGISTERED
      SALES OF EQUITY SECURITIES</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">See
      Recent Sales of Unregistered Securities.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.01</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CHANGES
      IN CONTROL OF REGISTRANT</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      SPA, the Registrant issued 17,420,000 shares of its common stock and 8,710,000
      warrants to issue shares of its common stock. The shares issued equaled at
      least
      73.9% of the outstanding shares of the Registrant&#8217;s common stock. The closing of
      this transaction occurred on August 7,&#160;2006 (the &#8220;Closing Date&#8221;).
</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">29</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      directors of the Registrant have approved the SPA Agreement and the transactions
      contemplated thereunder. As a result of this transaction, the Investors acquired
      control of the Company because the purchased securities entitle the Investors
      to
      hold approximately 75% or the majority number of voting shares of the Company.
      As a result of this change in change in control, Slavko Bebek resigned as the
      Company&#8217;s Chief Executive Officer and Chief Financial Officer. Maryna Bilynaska
      resigned all offices held and her position as director. Mr. Bebek, as the
      Company&#8217;s sole remaining member of the Board, appointed J. Stewart Asbury as the
      Company&#8217;s Chief Executive Officer, and Clayton E. Woodrum as the Company&#8217;s Chief
      Financial Officer and appointed Sidney L. Anderson as Chairman of the Board.
      The
      Board consisting of Mr. Anderson and Bebek then nominated William H. Moothart,
      Gregory A Nihon, </font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Iain
      Drummond</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">
      and
      Kerry Stirton as Directors. Their appointment will be effective upon our
      compliance with Rule 14f1. Mr. Bebek has provided a resignation to be effective
      upon the effectiveness of the appointment of the new Board members</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr>
            <td align="left" valign="top" width="6%">
              <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"><strong>Item
                5.02</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
            <td align="left" valign="top" width="1%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="top" width="65%">
              <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"><strong>DEPARTURE
                OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT
                OF
                PRINCIPAL OFFICERS</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font></div>
            </td>
          </tr>

      </table>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><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"><strong>(a)</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Resignation
      of Director</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      August 7,&#160;2006, Ms Bilynska resigned from the board of directors of the
      Registrant. There were no disagreements between her and any officer or director
      of the Registrant. The Registrant provided a copy of the disclosures it is
      making in response to this Item 5.02 to her and informed her that she may
      furnish the Registrant as promptly as possible with a letter stating whether
      she
      agrees or disagrees with the disclosures made in response to this Item 5.02,
      and
      that if she disagrees, then the Registrant requests that she provide the
      respects in which she does not agree with the disclosures. The Registrant will
      file any letter received from her as an exhibit to an amendment to this current
      report on Form 8-K within two business days after receipt by the Registrant.
      </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"><strong>(b)</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Resignation
      of Officers</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      August 7,&#160;2006, Bebek resigned as the Chief Executive Officer and Chief
      Financial Officer of the Registrant</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>,
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">and
      Bilynska resigned as Secretary. </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"><strong>(c)</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Appointment
      of Directors</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      August 7,&#160;2006, Mr. Sidney L. Anderson was appointed to Registrant&#8217;s Board
      of Directors. The Board has nominated William H. Moothart, Gregory A Nihon,
      Kerry Stirton and Iain Drummond to the Registrant&#8217;s Board of Directors and they
      will begin their service as directors as soon as we comply with Rule
      14f1.</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Descriptions
      of the newly appointed directors and officers can be found in Item 2.01 above,
      in the section titled &#8220;DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS.&#8221;</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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"><strong>(d)</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Appointment
      of Chief Executive Officer and Chief Financial Officer</strong></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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      August 7,&#160; 2006, Mr. J. Stewart Asbury was appointed as Chief Executive
      Officer of the Registrant.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Effective
      August 7,&#160; 2006, Mr. Clayton E. Woodrum was appointed as the Chief
      Financial Officer of the Registrant. Mr. Asbury and Mr. Woodrum have no family
      relationships with any of the Company&#8217;s other executive officers or directors.
      Any related party transactions involving Mr. Asbury and Mr. Woodrum are
      described in Item 2.01 above.&#160;</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"><strong>Item
      5.03</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>AMENDMENTS
      TO ARTICLES OF INCORPORATION OR BYLAWS</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">In
      connection with the Purchase Agreement, the Company adopted amended and restated
      bylaws. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><br></div>
    <div id="PGBRK" style="MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; MARGIN-RIGHT: 0pt">
      <div id="FTR">
        <div id="GLFTR" style="WIDTH: 100%" align="left">
        </div>
      </div>
      <div id="PN" style="PAGE-BREAK-AFTER: always">
        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">30</font></div>
        <div style="WIDTH: 100%; TEXT-ALIGN: center">
          <hr style="COLOR: black" noshade size="2">
        </div>
      </div>
      <div id="HDR">
        <div id="GLHDR" style="WIDTH: 100%" align="right">
        </div>
      </div>
    </div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      5.06</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>CHANGE
      IN SHELL COMPANY STATUS</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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Under
      the
      Purchase Agreement by and between Registrant on one hand and Target and its
      shareholders on the other hand, on the Closing Date, the Registrant purchased
      substantially all of the stock of Target for approximately $4,000,000 in cash,
      notes payable totaling $2,000,000 and the issuance of 250,000 shares of common
      stock valued in total at $60,000. The funds used by Registrant to close the
      Purchase Agreement were received from the Investors upon Closing of the SPA
      described in Item 1.01 above. The closing of this transaction occurred on August
      7, 2006. Prior to the transaction, the Registrant was an exploration company.
      That business generated no revenue for the Registrant. From and after the
      closing, the Registrant&#8217;s operations will consist of the operations of
      Target.</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Item
      9.01&#160;&#160;&#160;&#160;FINANCIAL STATEMENT AND
      EXHIBITS</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>(a)
      </strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Financial
      Statements of Business Acquired </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="justify"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      financial statements of Chatsworth Data Corporation for the years ended December
      31, 2005 and December 31, 2004 and the unaudited financial statements for the
      quarter ended March 31, 2006 are incorporated herein by reference to Exhibit
      99.2 and Exhibit 99.3 to this Current Report. </font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 27pt; 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"><strong>(b)
      </strong></font><font id="TAB2" style="COLOR: black; LETTER-SPACING: 27pt">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Unaudited
      Pro Forma Financial Statements</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</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"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">The
      unaudited pro forma financial statements are incorporated herein by reference
      to
      Exhibit 99.4 to this Current Report.</font></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center">[Missing
      Graphic Reference]</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"><strong>(c)</strong></font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>INDEX
      TO EXHIBITS.</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>
      <table cellpadding="0" cellspacing="0" width="100%">

          <tr bgcolor="white">
            <td valign="bottom" width="6%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Exhibit
                Number</strong></font></div>
            </td>
            <td align="left" valign="bottom" width="2%" style="border-bottom: white solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="64%" style="border-bottom: black thin solid;">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman"><strong>Description</strong></font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="6%">&#160;</td>
            <td align="left" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="64%">&#160;</td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.1</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Articles
                of Incorporation of Registrant as filed with the State of Nevada
                (2)
                </font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="6%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">3.2</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Restated
                Bylaws of Registrant (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="6%">
              <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">4.1</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Investor Warrant (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="6%">
              <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">4.2</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Consultant Warrant (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="6%">
              <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">10.1</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Common Stock and Warrant Purchase Agreement by and between Registrant
                and investors dated July 31, 2006. (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="6%">
              <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">10.2</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Investor Rights Agreement by and between Registrant and investors
                dated
                July 31, 2006. (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="6%">
              <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">10.3</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Employment
                Agreement by and between Registrant and J. Stewart Asbury III dated
                July
                31, 2006. (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="6%">
              <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">10.4</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consulting
                Agreement by and between Registrant and Sidney Anderson dated July
                31,
                2006.(1)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="6%">
              <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">10.5</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Form
                of Promissory Note issued to CDC stockholders(1)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="6%">
              <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">10.6</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consulting
                Agreement by and between Registrant and Clayton
                Woodrum.(1)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="6%">
              <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">10.7</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Stock
                Acquisition Agreement for shares of CDC (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="6%">
              <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">10.8</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consulting
                Agreement with Eurocatylst (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="6%">
              <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">10.9</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">&#160;</td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Consulting
                Agreement with Cypress (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="#ccffcc">
            <td valign="top" width="6%">
              <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">99.1</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Director&#8217;s
                and Officer&#8217;s Letter of Resignation by Maryna Bilynska and Officer&#8217;s
                Letter of Resignation and Conditional Director&#8217;s Resignation from Slavko
                Bebek to the Board of Directors of Registrant (1)</font></div>
            </td>
          </tr>
          <tr bgcolor="white">
            <td valign="top" width="6%">
              <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">99.2</font></div>
            </td>
            <td align="left" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Financial
                statements of Chatsworth Data Corporation for the years ended December
                31,
                2005 and December 31, 2004(1)</font></div>
            </td>
          </tr>
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            <td align="left" valign="bottom" width="2%">&#160;</td>
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              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
                financial statements of Chatsworth Data Corporation for the quarter
                ended
                March 31, 2006(1)</font></div>
            </td>
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            </td>
            <td align="left" valign="bottom" width="2%">
              <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
            </td>
            <td align="left" valign="bottom" width="64%">
              <div style="DISPLAY: block; MARGIN-LEFT: 18pt; TEXT-INDENT: -18pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Unaudited
                pro forma balance sheet as of December 31, 2005 and March 31, 2006
                and
                unaudited pro forma Statement of Operations for the fiscal year ended
                December 31, 2005 and the quarter ended March 31, 2006.
                (1)</font></div>
            </td>
          </tr>

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      <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left"><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">(1)</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">&#160;</font><font style="DISPLAY: inline; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman">Filed
        herewith.</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">(2)
        Incorporated by reference to Registrant&#8217;s filing of a registration statement on
        Form SB-2 on March 12, 2004.</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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        <div style="WIDTH: 100%; TEXT-ALIGN: center"><font style="DISPLAY: inline; FONT-SIZE: 8pt; FONT-FAMILY: Times New Roman">31</font></div>
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    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="center"><font style="DISPLAY: inline; FONT-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="left">&#160;</div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="justify"><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></div>
    <div style="DISPLAY: block; MARGIN-LEFT: 0pt; TEXT-INDENT: 0pt; LINE-HEIGHT: 1.25; MARGIN-RIGHT: 0pt" align="left">&#160;</div>
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                August 10, 2006</font></div>
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                J. Stewart Asbury III</font></div>
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            </td>
            <td align="left" valign="top" width="34%"><font size="2">J. Stewart
              Asbury
              III</font>&#160;</td>
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{"company-data": {"conformed-name": "ADERA MINES LTD", "cik": "0001281629", "assigned-sic": "1040", "irs-number": "980427221", "fiscal-year-end": "0131"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-51308", "film-number": "061025152"}, "business-address": {"street1": "1020 HARWOOD STREET SUITE 1201", "street2": "VANCOUVER", "city": "BRITISH COLUMBIA CANADA", "state": "A1", "zip": "V5E 4R1", "phone": "6047161675"}, "mail-address": {"street1": "1020 HARWOOD STREET SUITE 1201", "street2": "VANCOUVER", "city": "BRITISH COLUMBIA CANADA", "state": "A1", "zip": "V5E 4R1"}}
UNITED
      STATES
SECURITIES
      AND EXCHANGE COMMISSION
WASHINGTON,
      D.C. 20549
FORM
      8-K
CURRENT
      REPORT
Pursuant
      to Section 13 or 15(d) of the
Securities
      Exchange Act of 1934
Date
      of report (Date of earliest event reported): August 11, 2006 (August
      7,
2006)
ADERA
      MINES LIMITED
(Exact
      name of registrant as specified in charter)
Nevada
333-121764
98-0427221
(State
                or other jurisdiction of
incorporation
                or organization)
(Commission
                File No.)
(IRS
                Employee Identification No.)
20710
      Lassen Street
Chatsworth,
      California 91311
(Address
      of Principal Executive Offices)
(818)
      341-9200
(Issuer
      Telephone number)
Check
      the
      appropriate box below if the Form 8-K filing is intended to simultaneously
      satisfy the filing obligation of the registrant under any of the following
      provisions (see General Instruction A.2. below):
o
Written communications
      pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting
      material pursuant to
      Rule 14a-12(b) under the Exchange Act (17 CFR 240.14a-12(b))
o
Pre-commencement communications pursuant
      to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
      to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Forward
      Looking Statements
This
      Form
      8-K and other reports filed by Registrant from time to time with the Securities
      and Exchange Commission (collectively the "Filings") contain or may contain
      forward looking statements and information that are based upon beliefs of,
      and
      information currently available to, Registrant's management as well as estimates
      and assumptions made by Registrant's management. When used in the filings the
      words "anticipate", "believe", "estimate", "expect", "future", "intend", "plan"
or the negative of these terms and similar expressions as they relate to
      Registrant or Registrant's management identify forward looking statements. Such
      statements reflect the current view of Registrant with respect to future events
      and are subject to risks, uncertainties, assumptions and other factors
      (including the risks contained in the section of this report entitled "Risk
      Factors") relating to Registrant's industry, Registrant's operations and results
      of operations and any businesses that may be acquired by Registrant. Should
      one
      or more of these risks or uncertainties materialize, or should the underlying
      assumptions prove incorrect, actual results may differ significantly from those
      anticipated, believed, estimated, expected, intended or planned.
Although
      Registrant believes that the expectations reflected in the forward looking
      statements are reasonable, Registrant cannot guarantee future results, levels
      of
      activity, performance or achievements. Except as required by applicable law,
      including the securities laws of the United States, Registrant does not intend
      to update any of the forward-looking statements to conform these statements
      to
      actual results. The following discussion should be read in conjunction with
      Registrant's pro forma financial statements and the related notes that will be
      filed herein.
Item
      1.01 Entry into a Material Definitive Agreement.
On
      July
      31, 2006, Adera Mines Limited (the "Registrant") executed a Securities Purchase
      Agreement ("SPA") by and among the Registrant on the one hand, and a group of
      accredited investors (collectively the "Investors") on the other hand. Under the
      SPA, on the Closing Date, the Registrant issued 17,420,000 shares of its common
      stock and 8,710,000 warrants to purchase shares of its common stock at an
      exercise price of $0.30 per share for total consideration of $4,355,000 (the
      "Purchase"). The investors paid $0.25 for one share of common stock and one half
      of a warrant. The closing of this transaction (the "SPA Closing") occurred on
      August 7, 2006 (the "Closing Date").
As
      more
      fully described in Item 2.01 below, concurrent with the SPA Closing, the
      Registrant purchased all of outstanding stock of Chatsworth Data Corporation
      ("CDC" or "Target") pursuant to a Purchase Agreement (the "Purchase Agreement")
      by and between Registrant on one hand and Target's shareholders on the other
      hand for approximately Four Million Dollars ($4,000,000) cash, the issuance
      of
      Two Hundred Fifty Thousand (250,000) shares valued at approximately $60,000
      and
      issuance of a note in the face amount of Two Million Dollars ($2,000,000).
      The
      funds used by Registrant to close the Purchase Agreement were received from
      the
      Investors upon the SPA Closing. The SPA Closing and the closing of the Purchase
      Agreement shall be referred to collectively as the "Purchase."
Item
      2.01 Acquisition or Disposition of Assets-
Prior
      to
      the transaction, the Registrant was an exploration stage corporation searching
      for mineral reserves. Since inception, this business has generated no revenue.
      From and after the Closing Date, the Registrant's operations will now consist of
      the operations of Target. The mineral reserve ownership was transferred to
      shareholders of Registrant prior to the SPA Closing.
In
      this
      report, when we use phrases such as "we," "our," "company," "us," we are
      referring to Registrant and Target as a combined entity.
2
DESCRIPTION
      OF BUSINESS
Company
      Overview
Registrant
-Registrant
      was incorporated in the State of Nevada on December 30, 2003 and until the
      Purchase was an exploration stage corporation. An exploration stage corporation
      is one engaged in the search for mineral deposits (reserves) which are not
      in
      either the development or production stage.
Target-
Prior
      to
      the Closing, Chatsworth Data Corporation was privately owned. It was acquired
      from Republic Corporation in 1971 by five Republic managers, four of whom
      managed the Company until the Closing. CDC corporate headquarters are in
      Chatsworth, California, thirty miles northwest of downtown Los Angeles. Its
      primary business has been the development and manufacture of optical mark
      readers. Over one hundred thousand readers and one hundred ten thousand optic
      head assemblies have been sold worldwide by CDC. The optical mark readers have
      been traditionally sold into four vertical market sectors: education, gaming
      and
      lottery, health care, and vote tabulation. The corporation also manufactures
      impact recording devices and cable testers. CDC prides itself on customer
      service; its engineering and design staff is able to understand client's
      technical problems and offer ready solutions to those problems. A customer
      hotline was installed over fifteen years ago to enable field problems to be
      handled quickly, efficiently and effectively. New products are designed and
      brought to market quickly in response to customer demand.
Industry
      Overview
Today's
      information technology systems have made incredible computing power
      available. This capability, combined with our voracious appetite for
      feedback and current business intelligence, has led to increased demand for
      data
      capture systems. Optical readers are the cost effective technology of choice
      to
      capture massive amounts of original data where network access is not
      readily available. Demand for data capture is found in the classroom, in the
      polling booth, in lotteries and gaming, and in businesses which
      solicit survey information to help guide their day to day decisions, such
      as healthcare, trade shows, market research, shipping, office visit intake
      questionnaires, or anywhere you may find a kiosk.
Rapid
      capture and delivery of economical data is essential to today's business world.
      The industry is expanding both in the more mature U.S. market and in the third
      world where the demand is just beginning. As the number of formats of data
      to be
      captured increases, we expect that the market for high throughput capture
      devices will also expand. CDC's existing and planned products are designed to
      meet current and future data capture demand.
Product
      Offerings and Applications
We
      provide economical and reliable products that deliver top quality data capture
      solutions, i.e., "Smaller, Faster, Better." Reader technology costs less and
      delivers superior results to other data technologies.
Optical
      Mark Readers ("OMR")
Our
      primary business has been the development and manufacturing of optical mark
      readers We have been developing and manufacturing optical mark readers since
      1971. Over one hundred thousand readers and one hundred ten thousand optic
      head
      assemblies have been sold, primarily in the educational and gaming markets.
      In
      the gaming markets the readers have been used as an input device to read bet
      slips and receipts for lotteries, races, and sports betting throughout the
      world. The company supplies diverse markets such as:
Education,
      Government, Surveys, Dating Services, Manufacturing, Lottery and Vote
      Tabulations. Our readers are known for being
small
      and
      compact yet they still feature the advance design associated with units priced
      higher than our products. Our models include the OMR 1102, OMR 2000, OMR 9002,
      ACP 100, ACP 2100, ACP 2116, ACP 2200, ACP 2600 and custom OMR's.
Impact
      Recorders
Impact
      recorders and readers are sold by our Impact-O-Graph division and are used
      to
      detect movement during the shipment of sensitive equipment such as jet aircraft
      engines, Space shuttle engines and pumps, power transformers and turbines,
      electronic systems, nuclear fuel cells, and military missiles. In many cases,
      CDC's impact recorders and readers are mandated by insurance companies to
      monitor shipments to determine fault and liability when necessary. CDC's impact
      recorders and readers are also used in damage prevention programs incorporating
      impact, attitude and temperature sensors and data recorders for the material
      handling, packaging and transportation industries. Markets for products are
      expanding with increased economic development in China, India and other areas
      of
      Asia and the Far East.
3
Cable
      Testing
Our
      Cablemaster division manufactures cable and harness test systems for military
      and aerospace applications. Our instruments measures continuity, insulation
      resistance and dielectric strength in cables and harnesses quickly, accurately
      and economically. Applications include testing cable harnesses, connectors
      and
      bulk cable for aerospace vehicles including the space shuttle and international
      space station. Our testers are also used to test long harness for torpedoes,
      guided missiles, automotive high voltage harnesses, and communication bulk
      multi-conductor cable reels up to 26,000 feet in length.
Commercial
      Markets
Optical
      Mark Readers ("OMR")
The
      optical mark reader market is a multi-billion dollar market. In the education
      field alone, according to the U.S. Department of Education National Center
      for
      Education Statistics, there are currently
123,385
K-12
      public, private and Catholic schools in the United States that contain
3,642,795
classrooms.
      NCS Pearson projects that demand will result in one OMR being purchased for
each
      classroom
in the
      U.S. market. The U.S. Census Bureau estimates 57,000,000 students currently
      attend K-12 with an average classroom size of roughly 16 students. CDC estimates
      that the international market is at least as large as the U.S. market. The
      estimated size of the annual domestic K-12 education market available to CDC
      is
      approximately $1.1 billion based on CDC wholesale pricing of its products.
      A
      cumulative market penetration rate of 1% over the next four years would generate
      $10,928,386 in revenues to CDC. It is anticipated that the "No Child Left
      Behind" initiative will help NCS Pearson expand its sales efforts at the
      classroom level.
The
      gaming market consists of lotteries, pari-mutuel, and off-track betting. The
      lottery market is controlled by six "on line vendors" who provide total
      solutions. CDC has a good relationship with all of these vendors, especially
      GTECH, which is the dominant player in the market. In addition, Scientific
      Games
      has recently placed orders for CDC products. State or provincial governments
      operating lotteries must use one of these vendors for lottery equipment. CDC's
      products are sold and distributed by these resellers. The greatest opportunity
      for direct sales of CDC's products, however, is in the international market
      which has not yet been exploited.
In
      the
      voting sector, according to Election Data Services there were 185,944 precincts
      in the U.S. alone that conducted elections in 2004. This does not include other
      elections in the U.S. that require monitoring and tabulation, i.e., tribal
      elections, etc. The international market for OMR voting equipment is estimated
      to be larger than the U.S. market. The Help America Vote Act of 2002 (HAVA)
      mandates that $3.9 billion be spent to upgrade voting equipment within a short
      time frame. In 1998, 40% of voting machines were OMR. In 2004, that number
      jumped to 60%. There is a pending award by Los Angeles County to ES&S for
      voting machines which if granted, result in $2,500,000 in revenues to CDC in
      2006. ES&S was awarded a contract in Mississippi on January 13, 2006 voting
      machines that resulted in a $250,000 order for CDC.
CDC
      has
      initiated efforts to expand the application of its OMR to the medical field.
      CDC
      achieved record sales in this market in 2005 and steady growth is expected
      over
      the next few years with five solid companies reselling CDC products. Many
      organizations across the United States are moving from paper forms to electronic
      data capture. Organizations such as JCAHO and federal and state agencies are
      requiring greater detail in health care recordkeeping
.
      Th
e
      current
      administr
a
tion
      has
      instructed
h
ealthcare
      organization to get into compliance with NHIN (National Health Information
      Network) and convert to EHR (Electronic Health Records) standards.
4
Manual
      paper processing is very costly. The American Association of Information and
      Image Management reports that more than 80% of medical business documents are
      forms and that more than $360B is spent processing these records annually.
      Optical data capture offers several advantages; higher accuracy, reduction
      in
      data turnaround times, less time spent in data entry, and significant cost
      reduction. CDC has a growing number of solutions providers who are delivering
      their applications based on CDC's ACP 2200 unit.
Impact
      Recorders
Impact
      recorders and readers are used to detect movement during the shipment of
      sensitive equipment such as jet aircraft engines, power transformers and
      turbines, electronic systems, etc. In many cases, CDC's impact recorders and
      readers are mandated by insurance companies to monitor shipments to determine
      fault and liability when necessary. CDC's impact recorders and readers are also
      used in damage prevention programs incorporating impact, attitude and
      temperature sensors and data recorders for the material handling, packaging
      and
      transportation industries. Because of ever increasing security and liability
      considerations and the expansion of economies in India, China and the Far East,
      the market for impact recorders and readers is on the upswing. CDC estimates
      that the current market for impact recorders and readers worldwide is
      approximately $5.0 million per year. CDC and its competitor, Impact Register,
      Inc. currently control 90% of this market (60% CDC and 40% Impact Register).
Cable
      Testers
CDC
      manufactures a tester that is the only tester reliable up to 30,000 feet which
      has been primarily marketed to the aerospace industry. The increased and high
      cost of manufacturing had caused us to de-emphasize these testers. We intend
      to
      seek a lower cost manufacturer in China and renew marketing efforts in aerospace
      and other user applications. Cable testers are high-end, high-margin products
      that are generally produced pursuant to custom orders and specifications.
Competition
Optical
      Mark Readers
Education
      Customers.
There
      are
      several competitors to our ACP-100 product, several of which used to sell our
      product. Scantron, a much larger company manufactures large sheet readers that
      are sold to schools as part of a broader package of education services. Scantron
      does not have a classroom reader like the ACP-100. Renaissance Learning sells
      a
      math and reading program. The company originally sold our readers but has now
      developed a competitive product which is designed solely for their program.
NCS
      Pearson is a printing company that has a stand-alone test-scoring machine
      designed as a vehicle to use its own forms and promote sales. The test-scoring
      machine is sold at a very low price but requires many different forms to extract
      the data teachers require. NCS Pearson is a subsidiary of Pearson Corporation,
      which is primarily a publishing company. The NCS Division is the largest
      manufacturer of sheet readers in the world. They sell other readers as well
      as
      our CDC's ACP-100 (under NCS brand name).
Gaming
      Customers.
The
      major
      competition in the lottery field is Peripheral Dynamics (PDI). They are now
      selling several CIS scanners that read OCR, bar code and mark sense data. These
      scanners are used in a high volume application that may require signature
      capture or OCR as well as mark sense. They have no product to compete with
      CDC's
      ACP-100 or ACP-2100 in a low volume lottery that requires reading only mark
      sense data. We believe third world countries are looking for low cost devices.
      There are several lottery companies that manufacture their own scanners such
      as
      Wincor-Nixdorf, Kebo and Intracom. Both Wincor-Nixdorf and Intracom purchase
      CDC
      readers when they require a lower price reader.
5
In
      the
      racetrack market there are three major players: United Tote, Amtote and
      Autotote/Scientific Games. Many customers have switched from competitors to
      CDC
      products. CDC has manufactured readers for all three companies. Each has used
      alternative products, but is discussing orders from us as well.
Voting.
Although
      many jurisdictions have elected to upgrade their voting systems by going to
      touch screen displays there is still a need for a paper ballot system which
      we
      produce. There are three major companies that supply electronic voting machines:
      Diebold Election Products, Sequoia Voting Systems, and Election Systems &
Software ("ES&S"). In the paper ballot arena, ES&S sells several systems
      that use mark sense readers.
Medical.
This
      is a
      large but highly fragmented market.  Many organizations across the United
      States are moving from paper forms to electronic data capture. Organizations
      such as JCAHO and federal and state agencies are requiring greater detail in
      health care recordkeeping. Healthcare organizations are now attempting
      compliance with NHIN (National Health Information Network) and convert to EHR
      (Electronic Health Records) standards.
Manual
      paper processing is very costly. The American Association of Information and
      Image Management reports that more than 80% of medical business documents are
      forms and that more than $360B is spent processing these records annually.
      Optical data capture offers several advantages: greater accuracy, reduction
      in
      data turnaround times, less time spent in data entry, and significant cost
      reduction. CDC has a growing number of solutions providers who are delivering
      their applications based on CDC's ACP 2200 unit.
Impact
      Recorders
There
      are
      roughly eight companies other than CDC that manufacture some form of impact
      recorders and indicators. Of those companies, some only provide consulting
      services or software, manufacture calibration and scaling equipment, cater
      to
      specific industries such as agriculture, or offer design services. CDC's direct
      competitors are Shockwatch and Impact Register, Inc.
Cable
      Testers
There
      are
      approximately 124 companies that manufacture some sort of cable tester. This
      sector is highly fractionalized and testers vary greatly in capability and
      effectiveness.
Sales
      and Marketing Plan
Prior
      to
      our purchase of CDC, sales were limited to the United States market. There
      was a
      small sales department that fulfills customer orders for products. The in-house
      sales team consisted of a sales administrator and two others fulfilling orders.
      In addition to our in-house sales, we have a distribution arrangement with
      Pearson NCS, who is one of the major suppliers of data collection hardware,
      testing software, survey software, and services for education. Pearson NCS
      is
      Chatsworth Data Corporation's provider of choice for testing and survey
      solutions in the education marketplace. Pearson NCS works with many K-12 and
      post-secondary institutions to provide efficient and accurate data capture
      solutions. Our classroom OMR's and applications, test scoring and survey
      software and data capture solutions are sold by Pearson NCS.
Our
      strategy will be first to maximize revenues from the current products in the
      existing markets. Our goal is to expand marketing and sales efforts while we
      introduce two new products (CIS 8511 and ACF 100) to the market. We intend
      to
      educate our existing customer base on the uses of the new products and solicit
      product modifications that they would like us to provide for them. Our customer
      product needs often become the basis for our product release plans and the
      R&D priorities.
6
To
      increase revenues we intend to:
o
Hire
                account reps for each
                industry targeted
o
Expand
                re-seller network to add new strategic
                markets;
o
Target prospective
                business partners in existing
                markets;
o
Get
                ACF and CIS products ready for market and develop materials to educate
                existing customers about he uses and advantages of these
                products;
o
Upgrade
                web site to articulate the uses and value of all
                products;
o
Develop product
                release plans to support key re-sellers
                needs;
o
Increase
                marketing exposure by identifying industry web and catalog listing
                services;
o
Develop
                materials to assist Pearson sales staff market our
                products;
o
Aggressively
                advertise and promote Impact-o-graph product
                line;
o
Improve
                customer ability to place orders via our
                website;
o
Identify
                business partners in new industries where products can be, but are
                not
                currently used such as homeland security or
                manufacturing;
o
Incentives
                existing large customers to convert to new
                products;
o
Add
                specialized order desk to streamline customer phone
                orders;
o
Improve
                speed and quality of technical
                support;
o
Locate
                potential business partners for international
                markets.
Marketing
Since
      prior marketing efforts have been very limited, we intend to conduct market
      research to confirm CDC's reputation, strengths, weaknesses, and positioning.
      This will allow us to develop and articulate a sales and marketing strategy.
      Our
      marketing will certainly include obtaining any relevant mailing lists,
      contacting industry organizations to identify additional opportunities for
      use
      of our technology, preparing written materials which differentiate our products
      from the competition and prepare various written materials to show the value
      proposition of using our products. In addition, we will certainly maximize
      product exposure through trade shows, advertising, trade listings, and direct
      mail.
Product
      Development
We
      are
      constantly reviewing current products to determine new uses to be developed.
      We
      have a particular interest in determining the feasibility of a "self-scoring"
unit to replace NCS' model 2050, a forms construction/printing application, an
      OMR/CIS/OCR integration product and a product update for firmware and program
      macros. In addition, we are constantly reviewing applications offered by
      competitors of key re-sellers. We intend to formalize product development in
      the
      form of a release plan which will define next two releases per
product
      line.
We
      also
      believe there is opportunity in implementing a warranty program that creates
      recurring revenues. We believe our maintenance contracts can become a greater
      source of revenue to existing customers as can incentives for existing customers
      to upgrade to our new products.
Patents,
      Trademarks and Intellectual Property
We
      have
      developed proprietary processes to produce our products and do not rely on
      licensed rights. We do not rely on patent protection, but instead rely on common
      law trade secret protection. From time to time, we may encounter disputes over
      rights and obligations concerning intellectual property. Also, the efforts
      we
      have taken to protect our proprietary rights may not be sufficient or effective.
      Any significant impairment of our intellectual property rights could harm our
      business, our reputation, or our ability to compete. Also, protecting our
      intellectual property rights could be costly and time consuming.
Manufacturing
We
      utilize generally available materials and a small number of customized
      components to manufacture our products. This enables us to maintain high quality
      products and enable rapid development and deployment of new products and
      technologies. We design and produce many of our own components and
      sub-assemblies in order to retain quality control. All of our manufacturing
      is
      conducted at our Chatsworth, California headquarters.
7
Raw
      materials or sub-components required in the manufacturing process are generally
      available from several sources. An unanticipated interruption or delay in the
      supply of any of these components or materials, or the inability to obtain
      these
      components and materials from alternate sources at acceptable prices and within
      a reasonable amount of time, would impair our ability to meet scheduled product
      deliveries to our customers and could cause customers to cancel
      orders.
We
      rely
      exclusively on our own production capability to manufacture certain strategic
      components. Because we manufacture, package and test these components, products
      and systems at our own facilities and such items may not be readily available
      from other sources, any interruption in our manufacturing would adversely affect
      our business.
Customers
For
      the
      years ended December 31, 2005 and 2004, we had one and two major customers,
      whose revenue volume comprised approximately 14% and 21%, respectively, of
      our
      total revenue. As of December 31, 2005 and 2004 the amounts due from these
      customers were $97,030 and $148,240, respectively.
Governmental
      Regulations
Our
      operations are subject to various federal, state and local environmental
      protection regulations governing the use, storage, handling and disposal of
      hazardous materials, chemicals, various radioactive materials and certain waste
      products. In the United States, we are subject to the federal regulation and
      control of the Environmental Protection Agency. We are further subject to
      regulation by the Los Angeles Fire Department and the South Coast Air Quality
      Management Department. Comparable authorities are involved in other countries
      and jurisdictions. We believe that compliance with federal, state and local
      environmental protection regulations will not have a material adverse effect
      on
      our capital expenditures, earnings and competitive and financial
      position.
Although
      we believe that our safety procedures for using, handling, storing and disposing
      of such materials comply with the standards required by federal and state laws
      and regulations, we cannot completely eliminate the risk of accidental
      contamination or injury from these materials. In the event of such an accident
      involving such materials, we could be liable for damages and such liability
      could exceed the amount of our liability insurance coverage and the resources
      of
      our business.
Legal
      Proceedings
We
      are
      not a party to any pending legal proceedings that, if decided adversely to
      us,
      would have a material adverse effect upon our business, results of operations
      or
      financial condition and are not aware of any threatened or contemplated
      proceeding by any governmental authority against our company. To our knowledge,
      we are not a party to any pending civil or criminal action or investigation.
Facilities
Our
      principal executive offices and manufacturing facilities are currently located
      in an 18,000 square foot property located at 20710 Lassen Street, Chatsworth,
      California 91311. We owned the facility until 2005 when it was sold to a third
      party. We now have lease with a term expiring in August 2008 at approximately
      $9,996 per month.
Employees
We
      have
      43 full-time employees and 30 temporary, but full time employees. We have six
      employees in R&D/Engineering, three in sales & marketing, and three in
      general and administration. No employee is represented by a labor union, and
      we
      have never suffered an interruption of business caused by labor disputes.
8
MANAGEMENT'S
      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
Overview
This
      management's discussion and analysis relates specifically to the financial
      statements of Chatsworth Data Corporation (the "Company") for the years ended
      December 31, 2004 and December 31, 2005 and the first quarter of March 31,
      2005
      and March 31, 2006. After the Closing, Adera Mines Limited, the registrant
      will
      report the operations of CDC as its subsidiary but will only report on the
      effective date of the Closing. These historical financial statements of CDC
      will
      not be included in the body of future filings.
The
      Company is a leading designer and manufacturer of optical mark readers and
      scanners and impact recording devices that are used to capture data at its
      source and transfer the captured data to the user's data base. The optical mark
      readers and scanners are sold to original equipment manufacturers ("OEM's") and
      value added resellers ("VAR's") in four vertical markets: education, gaming and
      lottery, vote tabulation, and health care. Our impact recording devices are
      sold
      to "end users." Our optical mark reader and scanner sales to OEM's and VAR'S are
      generated through direct orders to the Company and our sole sales representative
      in Minneapolis, Minnesota. Our impact recording device sales are primarily
      direct orders to the Company.
Our
      sales
      are derived primarily from the sale of optical mark readers and scanners and
      impact recording devices. Revenues are recorded when products are shipped and
      are net of an allowance for estimated returns. Allowances for bad debts are
      also
      recorded at the time of sale. Because we ship product as orders are received,
      generally no more than 90 days after order, we do not maintain a significant
      ongoing backlog. However, the size of our backlog does fluctuate greatly
      depending on the size and mix of product orders and what can be considered
      pre-orders of newly released products not yet ready for shipment.
Cost
      of
      sales consists of expenses associated with sales of our products. These costs
      include: (i) personnel related costs, (ii) costs of purchased materials, (iii)
      shipping and freight costs, and (iv) other overhead costs. We realize higher
      gross margins on our impact recording devices than on our optical mark readers
      and scanners. We expense all research and development costs.
Result
      of Operations
Quarter
      Ended March 31, 2006 compared with quarter ended March 31, 2005
Net
      Sales.
Our net
      sales decreased from $1,594,387 for the quarter ended March 31, 2005 to
      $1,515,896 for the quarter ended March 31, 2006, a decrease of $78,491 or
      4.9%.
Cost
      of Sales.
Our cost
      of sales increased from $1,137,277 for the quarter ended March 31, 2005 to
      $1,185,525 for the quarter ended March 31, 2006, an increase of $48,248 or
      4.2%.
Gross
      Profit
.
      Our
      overall gross profit margin percentage decreased from 28.7% for the quarter
      ended March 31, 2005 to 21.8% for the quarter ended March 31, 2006.
Selling
      and General and Administrative Expenses
.
Selling
      and general and administrative expenses decreased from $455,269 for the quarter
      ended March 31, 2005 to $271,366, a decrease of $183,903, for the quarter ended
      March 31, 2006, a decrease of 40.4%. The decrease is principally due to a
      decrease in executive officers compensation of $278,690 offset by an increase
      in
      legal and accounting, outside consulting costs and rent.
Operating
      Income.
Operating
      income increased from $1,841 for the quarter ended March 31, 2005 to $59,005
      for
      the quarter ended March 31, 2006, an increase of $57,164. The percentage change
      is not meaningful.
Other
      Income.
Other
      income decreased from $26,229 for the quarter ended March 31, 2005 to $4,366
      for
      he quarter ended March 31, 2006, a decrease of $21,863 or 83.35%. Rental income
      decreased from $23,801 for the quarter ended March 31, 2005 to $0 for the
      quarter ended March 31, 2006 due to sale of the building which generated rent
      from third parties in 2005 prior to sale later in 2005. There will be no further
      rental income.
9
Income
      Tax Expense.
Income
      tax expense was not recorded for the quarter ended March 31, 2005 or for the
      quarter ended March 31, 2006 because CDC was operated as a Subchapter S
      corporation prior to the Purchase which means that taxes are paid at the
      shareholder level and not at the corporate level. After the Purchase, CDC will
      file a consolidated return with Registrant and will directly pay federal and
      California state income taxes at the corporate level at an estimated combined
      rate of 39.8%
Fiscal
      Year Ended December 31, 2005 compared with fiscal year ended December 31,
      2004
Our
      net
      income and results of operations were affected by the nonrecurring sale of
      our
      office and manufacturing facility in 2005. We received $2,934,331 of income
      on
      the sale.
The
      following table sets forth certain consolidated income statement data as a
      percentage of net sales:
Comparative
        Statements of Operations
2005
%
2004
%
Sales
$
5,561,583
100.00
$
5,742,135
100.00
Cost
                of Sales
4,381,685
78.78
4,480,950
78.04
Gross
                Profit
1,179,898
21.22
1,261,185
21.96
Selling
                General and Administrative
619,266
11.13
1,165,149
20.29
Income
                from Operations
560,632
10.08
96,036
1.67
Other
                Income:
Rental
                Income
29,432
0.53
77,983
1.36
Deposit Forfeiture
                by Customer
—
—
62,256
1.08
Gain
                on Sale of Land and Building
2,934,331
52.76
—
—
Miscellaneous
                Income
366
0.01
3,503
0.06
Interest
                Income
15,199
0.27
2,630
0.05
Total
                Other Income
2,979,328
53.57
146,372
2.55
Income
                Before Taxes
3,539,960
63.65
242,408
4.22
Income
                Taxes
54,561
0.98
2,904
0.05
Net
                Income
$
3,485,399
62.67
$
239,504
4.17
10
Net
      Sales.
Our net
      sales decreased from $5,742,135 for our fiscal year ended December 31, 2004
      to
      $5,561,563 for our fiscal year ended December 31, 2005, a decrease of $180,552,
      or 3.1%
Cost
      of Sales.
Our cost
      of sales decreased from $4,480,950 for our fiscal year ended December 31, 2004
      to $4,381,685 for our fiscal year ended December 31, 2005, a decrease of $99,265
      or 2.2%.
Gross
      Profit
.
      Our
      overall gross profit margin percentage remained relatively the same at 21%
      of
      sales.
Selling
      and Marketing Expenses
.
Selling
      and general and administrative expenses decreased from $1,165,149 for our fiscal
      year ended December 31, 2004 to $619,266 for our fiscal year ended December
      31,
      2005, a decrease of $545,883 or 46.85% principally due to a decrease in
      executive officers compensation of $566,900.
Operating
      Income.
Operating
      income increased from $96,036 for our fiscal year ended December 31, 2004 to
      $560,632 for our fiscal year ended December 31, 2005, an increase of $464,596
      or
      483.7%. As described above, the increase is due principally to a reduction
      in
      compensation of $566,900.
Other
      Income.
Other
      income increased from $146,372 for our fiscal year ended December 31, 2004
      to
      $2,979,328 for our fiscal year ended December 31, 2005, an increase of
      $2,832,596 principally due to the sale of our office building and manufacturing
      facility in 2005. The gain from the sale of the office and manufacturing
      facility was $2,934,331. Rental income decreased from $77,983 to $29,432 since
      in 2005 we only collected rental income from the building for a partial year.
      Interest income increased from $2,630 to $15,199.
Income
      Tax Expense.
Income
      tax expense of $54,561 was recorded for the fiscal year ended December 31,
      2005
      compared to $2,904 for the fiscal year ended December 31, 2004. These numbers
      reflect only a minimal California tax because CDC was operated as a Subchapter
      S
      corporation prior to the Purchase which in general means that taxes are paid
      at
      the shareholder level and not at the corporate level. After the purchase, CDC
      will be a C corporation and will directly pay federal and California state
      income taxes at the corporate level at an estimated combined rate of
      39.8%
Liquidity
      and Capital Resources
As
      of
      December 31, 2005, our cash and cash equivalents were $859,460. This was an
      increase of $297,816 from $561,644 at December 31, 2004. During 2005, we
      generated operating cash flow of $367,644.
As
      of
      March 31, 2006 our cash and cash equivalents were $552,424. This was a decrease
      of $307,036 from $859,460 at December 31, 2005. This decrease was a result
      of an
      increase in accounts receivable, inventory, prepaid expenses and a decrease
      in
      accounts payable and income taxes payable.
We
      expect
      to fund our operations and capital expenditures from internally generated funds.
      We believe that our existing cash balances will be sufficient to meet our
      working capital, capital expenditure and investment requirements for at least
      the next 12 months. We may require additional funds for other purposes, such
      as
      acquisitions of complementary businesses, and may seek to raise such additional
      funds through public and private equity financings or from other sources.
      However, we cannot assure you that additional financing will be available at
      all
      or that, if available, such financing will be obtainable on terms favorable
      to
      us or that any additional financing will not be dilutive.
11
At
      the
      Purchase, we will have a note in the amount of $2.0 million which is payable
      $1.0 million one year from the Closing Date and $1.0 million two years after
      the
      Closing Date. Interest is payable quarterly. We believe cash flow from
      operations will be sufficient to repay the note.
Off-Balance
      Sheet Arrangements and Aggregate Contractual Obligations
We
      do not
      have any off-balance sheet transactions, arrangements, or obligations (including
      contingent obligations) that would have a material effect on our financial
      results.
Operating
      Lease.
On
      August
      17, 2005, the Company sold its land and building, a 29,000 square foot structure
      located on 1.3 acres of land in Chatsworth, California (the Property) to an
      unrelated third party for $3,292,800. The book value of the Property at August
      17, 2005 was $168,111 and costs of sale were $190,358, resulting in a gain
      of
      $2,934,331. Also on the same date the Company entered into a sublease agreement
      to lease approximately 14,500 square feet of the Property from an unrelated
      third party who leased the entire Property from the new owner. The sublease
calls
      for
      minimum lease payments of $9,996 per month, or
$119,952
      per year, and
expires
      in August 2008.
The
      Company determined it
relinquished
      substantially all of the use of the Property and retained only a minor portion
      of such use because the present value of rental for the leaseback represented
      less than 10 percent of the fair value of the Property when sold. Accordingly,
the
      gain
      on the sale portion of the transaction was recognized in its entirety.
The
      lease
      portion of the transaction was classified as an operating lease.
The
      sublease is personally guaranteed by the Company's stockholders.
Purchase
      Obligations.
We enter
      into commitments with certain suppliers to purchase components for our products.
      We typically commit to purchases of components in quantities to cover specific
      orders and therefore expect these obligations to be satisfied within six
      months.
As
      of
      December 31, 2005, our approximate contractual obligations for operating leases
      and purchase obligations (by period due) were as follows:
December
                31, 2006
$
119,952
December
                31, 2007
$
119,952
December
                31,
                2008
$
79,968
Total
$
319,872
Retirement
      Plan.
We
      currently have a 401(k) plan for employees of Chatsworth Data Corporation.
      We
      match 50%
of
      employee contributions up to 3% of employee compensation, but have no obligation
      to pay fixed benefits to our employees.
Employee
      contributions vest immediately and Company matching contributions vest over
      7
      years.
Other
      Obligations.
At the
      Purchase, we will have a note in the amount of $2.0 million payable to the
      former shareholders of Chatsworth Data Corporation. This note is payable $1.0
      million one year from the Purchase date and $1.0 million 2 years from the
      Purchase date. Interest accrues at the rate of LIBOR plus 1% per annum is
      payable quarterly. As of December 31, 2005, we had no long-term purchase
      obligations or material capital lease obligations.
Critical
      Accounting Policies and Estimates
The
      foregoing discussion is based on our consolidated financial statements, which
      have been prepared in accordance with accounting principles generally accepted
      in the United States of America. The preparation of these financial statements
      requires management to make judgments, estimates and assumptions that affect
      the
      amounts reported in the financial statements and accompanying notes. Actual
      results could differ from those estimates. The following is a list of our
      critical accounting policies defined as those policies that we believe are
      the
      most important to the portrayal of our financial condition and results of
      operations and/or require management's significant judgments and estimates. This
      is not intended to be a comprehensive list of all of our accounting policies.
      Our significant accounting policies are more fully described in Note 5 of
      our Notes to Consolidated Financial Statements.
12
Revenue
      Recognition.
The
      Company recognizes revenue when there is persuasive evidence that an arrangement
      exists, delivery of the product has occurred and title has passed, the selling
      price is both fixed and determinable, and collectibility is reasonably assured,
      all of which generally occurs upon shipment of the Company's product or delivery
      of the product to the destination specified by the customer.
Impairment
      of Long-Lived Assets.
We
      evaluate the recoverability of the carrying amount of long-lived assets whenever
      events or changes in circumstances indicate that the carrying amount of an
      asset
      may not be fully recoverable. We evaluate the recoverability of goodwill and
      other intangible assets with indefinite useful lives annually or more frequently
      if events or circumstances indicate that an asset may be impaired. Management
      uses judgment when applying impairment rules to determine when an impairment
      test is necessary. Examples of factors which could trigger an impairment review
      include a significant decrease in the market value of an asset, a significant
      change in the extent or manner in which an asset is used, and significant
      adverse changes in legal factors or the business climate that impact the value
      of an asset.
Impairment
      losses are measured as the amount by which the carrying value of an asset
      exceeds its estimated fair value. Estimating fair value requires that we
      forecast future cash flows related to the asset subject to review. These
      forecasts require assumptions about demand for our products and services, future
      market conditions and technological developments. Other assumptions include
      determining the discount rate and future growth rates. Changes to these
      assumptions could result in an impairment charge in future periods.
Income
      Taxes
The
      Company, with the consent of its shareholders, has elected under the Internal
      Revenue Code to be an S corporation. In lieu of corporation income taxes, the
      shareholders of an S corporation are taxed on their proportionate share of
      the
      Company's taxable income. Therefore, no provision or liability for federal
      income tax has been included in these financial statements.
The
      State
      of California has adopted the S Corporation election. However, a 1½% tax is
      required to be paid by the Company. This provision for tax is based on the
      income reported in the financial statements.
Recent
      Accounting Pronouncements and Developments
In
      December 2004, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standard ("SFAS") No. 123 (R), "Share-Based
      Payment" ("SFAS 123(R)"). SFAS No. 123 (R) revises SFAS 123, "Accounting for
      Stock-Based Compensation" and supersedes Accounting Principles Board ("APB")
      Opinion No. 25, "Accounting for Stock Issued to Employees." In general, the
      accounting required by SFAS 123R is similar to that of SFAS No. 123. However,
      SFAS No. 123 gave companies a choice to either recognize the fair value of
      stock options in their income statements or disclose the pro forma income
      statement effect of the fair value of stock options in the notes to the
      financial statements. SFAS 123R eliminates that choice and requires the fair
      value of all share-based payments to employees, including the fair value of
      grants of employee stock options, be recognized in the income statement,
      generally over the option vesting period. During the first quarter of 2006,
      the
      Company will adopt SFAS No. 123R. The adoption of SFAS No. 123R will not have
      any impact on the Company's financial statement presentation or
      disclosures.
In
      November 2004, the Financial Accounting Standards Board ("FASB") issued
      SFAS No. 151, "Inventory Costs — An Amendment of ARB No. 43,
      Chapter 4" (SFAS No. 151). SFAS No. 151 clarifies that abnormal
      amounts of idle facility expense, freight, handling costs and spoilage should
      be
      expensed as incurred and not included in overhead. Further, SFAS No. 151
      requires that allocation of fixed and production facilities overhead to
      conversion costs should be based on normal capacity of the production
      facilities. The provisions in SFAS No. 151 are effective for inventory
      costs incurred during fiscal years beginning after June 15, 2005.
      Accordingly, the Company will adopt SFAS No. 151 effective January 1, 2006.
      The
      adoption of SFAS No. 151 is not expected to have any impact on the Company's
      financial statement presentation or disclosures.
13
In
      December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
      Assets, an amendment to APB Opinion No. 29" ("SFAS No. 153"). SFAS No.
      153 amends Accounting Principles Board Opinion No. 29, "Accounting for
      Nonmonetary Transactions", to require that exchanges of nonmonetary assets be
      measured and accounted for at fair value, rather than at carryover basis, of
      the
      assets exchanged. Nonmonetary exchanges that lack commercial substance are
      exempt from this requirement. SFAS No. 153 is effective for nonmonetary
      exchanges entered into in fiscal periods beginning after June 15, 2005.
      Accordingly, the Company will adopt SFAS No. 153 effective January 1, 2006.
      The
      adoption of SFAS No. 153 is not expected to have any impact on the Company's
      financial statement presentation or disclosures.
In
      May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
      Corrections" ("SFAS No. 154"). SFAS No. 154 is a replacement of APB
      Opinion No. 20, "Accounting Changes" and SFAS No. 3, "Reporting
      Accounting Changes in Interim Financial Statements - (an Amendment of APB
      Opinion No. 28)" and provides guidance on the accounting for and reporting
      of accounting changes and error corrections. SFAS No. 154 establishes
      retrospective application as the required method for reporting a change in
      accounting principle, and provides guidance for determining whether
      retrospective application of a change in accounting principle is impracticable
      and for reporting a change when retrospective application is impracticable.
      Retrospective application is the application of a different accounting principle
      to a prior accounting period as if that principle had always been used or as
      the
      adjustment of previously issued financial statements to reflect a change in
      the
      reporting entity. SFAS No. 154 also addresses the reporting of the
      correction of an error by restating previously issued financial statements.
      SFAS
      No. 154 is effective for accounting changes and error corrections occurring
      in fiscal years beginning after December 15, 2005. Accordingly, the Company
      will adopt the provisions of SFAS No. 154 effective January 1, 2006. The
      adoption of SFAS No. 154 is not expected to have any impact on the Company's
      financial statement presentation or disclosures.
Subsequent
      Event
Our
      former president and chief executive officer, chief financial officer and all
      but one member of our board of directors resigned effective on the date of
      the
      Purchase.  New management has been appointed and began to serve on the same
      day.
OFF-BALANCE
      SHEET ARRANGEMENTS
We
      have
      not entered into any financial guarantees or other commitments to guarantee
      the
      payment obligations of any third parties. We have not entered into any
      derivative contracts that are indexed to our shares and classified as
      shareholder's equity or that are not reflected in our consolidated financial
      statements. Furthermore, we do not have any retained or contingent interest
      in
      assets transferred to an unconsolidated entity that serves as credit, liquidity
      or market risk support to such entity. We do not have any variable interest
      in
      any unconsolidated entity that provides financing, liquidity, market risk or
      credit support to us or engages in leasing, hedging or research and development
      services with us.
INFLATION
We
      believe that inflation has not had a material effect on our operations to
      date.
14
RISK
      FACTORS
Before
      investing in our common stock you should carefully consider the following risk
      factors, the other information included herein and the information included
      in
      our other reports and filings.  Our business, financial condition, and the
      trading price of our common stock could be adversely affected by these and
      other
      risks.
RISKS
      OF THE BUSINESS
The
      markets for our products are subject to continuing change that may impair our
      ability to successfully sell our products
.
      The
      market's for our products is volatile and subject to continuing change. We must
      continuously adjust our marketing strategy to address the changing state of
      the
      markets for our products, we may not be able to anticipate changes in the market
      and, as a result, our product strategies may be unsuccessful.
Our
      products may become obsolete if we are unable to stay abreast of technological
      developments
.
      Our
      data capture industry is characterized by continuous technological development.
      If we are unable to stay abreast of such developments, our products may become
      obsolete. We lack the substantial research and development resources of some
      of
      our competitors. This may limit our ability to remain technologically
      competitive.
We
      are dependent for our success on a few key executive officers. Our inability
      to
      retain those officers would impede our business plan and growth strategies,
      which would have a negative impact on our business and the value of your
      investment.
Our
      success depends on the skills, experience and performance of key members of
      our
      management team. We are heavily dependent on the continued services of J.
      Stewart Asbury, our Chief Executive Officer, Clayton Woodrum our Chief Financial
      Officer and Sid L. Anderson our Executive Director. We do have an employment
      agreement with Mr. Asbury and consulting agreements with Mr. Woodrum and Mr.
      Anderson. We do not have long-term employment agreements with other members
      of
      our senior management team. Each of those individuals without long-term
      employment agreements may voluntarily terminate his employment with the Company
      at any time upon short notice. Were we to lose one or more of these key
      executive officers, we would be forced to expend significant time and money
      in
      the pursuit of a replacement, which would result in both a delay in the
      implementation of our business plan and the diversion of limited working
      capital. We can give you no assurance that we can find satisfactory replacements
      for these key executive officers at all, or on terms that are not unduly
      expensive or burdensome to our company. Although we intend to issue stock
      options or other equity-based compensation to attract and retain employees,
      such
      incentives may not be sufficient to attract and retain key personnel.
We
      are also dependent for our success on our ability to attract and retain
      technical personnel, sales and marketing personnel and other skilled management.
Our
      success depends to a significant degree upon our ability to attract, retain
      and
      motivate highly skilled and qualified personnel. Failure to attract and retain
      necessary
technical
      personnel, sales and marketing personnel and skilled management could
adversely
      affect our business. If we fail to attract, train and retain sufficient numbers
      of these highly qualified people, our prospects, business, financial condition
      and results of operations will be materially and adversely affected.
We
      experience seasonal and quarterly fluctuations in demand for our products.
Our
      quarterly results may fluctuate quarter to quarter as a result of market
      acceptance of our products, the mix, pricing and presentation of the products
      offered and sold, the hiring and training of additional personnel, the timing
      of
      inventory write downs, the cost of materials, the incurrence of other operating
      costs and factors beyond our control, such as general economic conditions and
      actions of competitors. Accordingly, the results of operations in any quarter
      will not necessarily be indicative of the results that may be achieved for
      a
      full fiscal year or any future quarter.
Our
      business is dependent upon proprietary intellectual property
      rights
.
      We have
      employed proprietary information to design our products. We seek to protect
      our
      intellectual property rights through confidentiality agreements and inventions
      agreements. However, no assurance can be given that such measures will be
      sufficient to protect our intellectual property rights. If we cannot protect
      our
      rights, we may lose our competitive advantage. Moreover, if it is determined
      that our products infringe on the intellectual property rights of third parties,
      we may be prevented from marketing our products.
15
We
      have no committed source of additional capital.
For the
      foreseeable future, we intend to fund our operations and capital expenditures
      from operations and our cash on hand. If our capital resources are insufficient,
      we may need additional funds to continue our operations, pursue business
      opportunities (such as expansion, acquisitions of complementary businesses
      or
      the development of new products or services), to react to unforeseen
      difficulties or to respond to competitive pressures. We cannot assure you that
      at such time as we need funds that alternative financing arrangements will
      be
      available in amounts or on terms acceptable to us, if at all. If additional
      financing is not available when required or is not available on acceptable
      terms, we may be unable to fund our expansion, successfully promote our current
      products, license new products or enhance our products and services, take
      advantage of business opportunities, or respond to competitive pressures, any
      of
      which could have a material adverse effect on our business and the value of
      our
      common stock. If we choose to raise additional funds through the issuance of
      equity securities, this may cause significant dilution of our common stock,
      and
      holders of the additional equity securities may have rights senior to those
      of
      the holders of our common stock. If we obtain additional financing by issuing
      debt securities, the terms of these securities could restrict or prevent us
      from
      paying dividends and could limit our flexibility in making business decisions.
We
      may incur debt or issue preferred stock in the future
.
      In
      order to fund operations, we may issue debt instruments or preferred stock
      which
      will have a senior claim on our assets in the event of a sale of assets. Future
      debt service may cause strain on cash flow and impair business
      operations.
Our
      business could be harmed if we fail to maintain proper inventory
      levels.
We
      manufacturer our products prior to the time we receive customers' orders. We do
      this to minimize purchasing costs, the time necessary to fill customer orders
      and the risk of non-delivery. However, we may be unable to sell the products
      we
      have manufactured in advance. Inventory levels in excess of customer demand
      may
      result in inventory write-downs, and the sale of excess inventory at discounted
      prices could significantly impair our brand image and have a material adverse
      effect on our operating results and financial condition. Conversely, if we
      underestimate demand for our products or if we fail to produce the quality
      products that we require at the time we need them, we may experience inventory
      shortages. Inventory shortages might delay shipments to customers, negatively
      impact distributor relationships, and diminish brand loyalty.
We
      face intense competition, including competition from companies with
      significantly greater resources than ours, and if we are unable to compete
      effectively with these companies, our market share may decline and our business
      could be harmed.
Our
      industry is highly competitive with numerous competitors, most of whom are
      well-established manufacturers. A number of our competitors have significantly
      greater financial, technological, manufacturing, marketing and distribution
      resources than we do. Their greater capabilities in these areas may enable
      them
      to compete more effectively on the basis of price and production and more
      quickly develop new products and technologies. In addition, new companies may
      enter the markets in which we compete, further increasing competition in the
      laser industry. We may not be able to compete successfully in the future, and
      increased competition may result in price reductions, reduced profit margins,
      loss of market share and an inability to generate cash flows that are sufficient
      to maintain or expand our development and marketing of new products, which
      would
      adversely impact the trading price of our common shares.
16
We
      may not be able to effectively manage our growth.
We
      intend to grow our business by expanding our technology, sales, administrative
      and marketing organizations. Any growth in or expansion of our business is
      likely to continue to place a strain on our management and administrative
      resources, infrastructure and systems. As with other growing businesses, we
      expect that we will need to refine and expand our business development
      capabilities, our systems and processes and our access to financing sources.
      We
      also will need to hire, train, supervise and manage new employees. These
      processes are time consuming and expensive, will increase management
      responsibilities and will divert management attention. We cannot assure you
      that
      we will be able to:
o
expand
                our systems effectively or efficiently or in a timely
                manner;
o
allocate
                our human resources optimally;
o
meet
                our capital needs;
o
identify
                and hire qualified employees or retain valued employees;
                or
o
incorporate
                effectively the components of any business or product line that we
                may
                acquire in our effort to achieve
                growth.
Our
      inability or failure to manage our growth and expansion effectively could harm
      our business and materially and adversely affect our operating results and
      financial condition.
Our
      planned international operations and the operations of our manufacturers and
      suppliers in China are subject to additional risks that are beyond our control
      and that could harm our business.
Although
      our products are currently manufactured and sold in the United States, we intend
      to market our products internationally in the future. International sales,
      would
      subject us to additional risks associated with doing business abroad,
      including:
o
political
                unrest, terrorism and economic instability resulting in the disruption
                of
                trade from foreign countries in which our products are
                manufactured;
o
difficulties
                in managing foreign operations, including difficulties associated
                with
                inventory management and collection on foreign accounts
                receivable;
o
dependence
                on foreign distributors and distribution
                networks;
o
the
                imposition of new laws and regulations, including those relating
                to labor
                conditions, quality and safety standards as well as restrictions
                on the
                transfer of funds;
o
disruptions
                or delays in shipments;
o
changes
                in local economic and non-economic conditions and standards in which
                our
                manufacturers, suppliers or customers are located;
                and
o
reduced
                protection for intellectual property rights in jurisdictions outside
                the
                United States.
These
      and
      other factors beyond our control could interrupt our manufacturers' production
      in offshore facilities, influence the ability of our manufacturers to export
      our
      products cost-effectively or at all, inhibit our and our unaffiliated
      manufacturer's ability to produce certain materials and
influence
      our ability to sell our products in international markets, any of which could
      have an adverse effect on our business, financial condition and
      operations.
If
      our competitors misappropriate our proprietary know-how and trade
      secrets,
it
      could have a material adverse affect on our business.
We
      depend
      heavily on the expertise of our production team. If any of our competitors
      copies or otherwise gains access to similar products independently, we might
      not
      be able to compete as effectively. The measures we take to protect our designs
      may not be adequate to prevent their unauthorized use. Further, the laws of
      foreign countries may provide inadequate protection of such intellectual
      property rights. We may need to bring legal claims to enforce or protect such
      intellectual property rights. Any litigation, whether successful or
      unsuccessful, could result in substantial costs and diversions of resources.
      In
      addition, notwithstanding the rights we have secured in our intellectual
      property, other persons may bring claims against us that we have infringed
      on
      their intellectual property rights or claims that our intellectual property
      right interests are not valid. Any claims against us, with or without merit,
      could be time consuming and costly to defend or litigate and therefore could
      have an adverse affect on our business.
If
      our facilities were to experience catastrophic loss, our operations would be
      seriously harmed.
Our
      facilities could be subject to a catastrophic loss from fire, flood, earthquake
      or terrorist activity. All of our research and development activities,
      manufacturing, our corporate headquarters and other critical business operations
      are located near major earthquake faults in Chatsworth, California, an area
      with
      a history of seismic events. Any such loss at this facility could disrupt our
      operations, delay production, and revenue and result in large expenses to repair
      or replace the facility. While we have obtained insurance to cover most
      potential losses, we cannot assure you that our existing insurance coverage
      will
      be adequate against all other possible losses.
17
New
      rules, including those contained in and issued under the Sarbanes-Oxley Act
      of
      2002, may make it difficult for us to retain or attract qualified officers
      and
      directors, which could adversely affect the management of our business and
      our
      ability to obtain or retain listing of our common stock.
We
      may be
      unable to attract and retain qualified officers, directors and members of board
      committees required to provide for our effective management as a result of
      the
      recent and currently proposed changes in the rules and regulations which govern
      publicly-held companies, including, but not limited to, certifications from
      executive officers and requirements for financial experts on the board of
      directors. The perceived increased personal risk associated with these recent
      changes may deter qualified individuals from accepting these roles. The
      enactment of the Sarbanes-Oxley Act of 2002 has resulted in the issuance of
      a
      series of new rules and regulations and the strengthening of existing rules
      and
      regulations by the SEC. Further, certain of these recent and proposed changes
      heighten the requirements for board or committee membership, particularly with
      respect to an individual's independence from the corporation and level of
      experience in finance and accounting matters. We may have difficulty attracting
      and retaining directors with the requisite qualifications. If we are unable
      to
      attract and retain qualified officers and directors, the management of our
      business could be adversely affected.
Our
      internal controls over financial reporting may not be effective, and our
      independent auditors may not be able to certify as to their effectiveness,
      which
      could have a significant and adverse effect on our business.
We
      are
      subject to various regulatory requirements, including the Sarbanes-Oxley Act
      of
      2002. We, like all other public companies, must incur additional expenses and,
      to a lesser extent, diversion of our management's time in our efforts to comply
      with Section 404 of the Sarbanes-Oxley Act of 2002 regarding internal
      controls over financial reporting. We have not evaluated our internal controls
      over financial reporting in order to allow management to report on, and our
      independent auditors to attest to, our internal controls over financial
      reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002 and
      the rules and regulations of the SEC, which we collectively refer to as
      Section 404. We have never performed the system and process evaluation and
      testing required in an effort to comply with the management assessment and
      auditor certification requirements of Section 404, which will initially
      apply to us as of December 31, 2006. Our lack of familiarity with Section
      404 may unduly divert management's time and resources in executing the business
      plan. If, in the future, management identifies one or more material weaknesses,
      or our external auditors are unable to attest that our management's report is
      fairly stated or to express an opinion on the effectiveness of our internal
      controls, this could result in a loss of investor confidence in our financial
      reports, have an adverse effect on our stock price and/or subject us to
      sanctions or investigation by regulatory authorities.
Economic,
      political, military or other events in the United States could interfere with
      our success or operations and harm our business.
We
      market
      and sell our products and services in the United States and abroad. The
      September 11, 2001 terrorist attacks disrupted commerce throughout the
      United States and other parts of the world. The continued threat of similar
      attacks throughout the world and the military action, or possible military
      action, taken by the United States and other nations, in Iraq or other countries
      may cause significant disruption to commerce throughout the world. To the extent
      that such disruptions further slow the global economy or, more particularly,
      result in delays or cancellations of purchase orders for our products or extends
      the sales cycles with potential customers, our business and results of
      operations could be materially adversely affected. We are unable to predict
      whether the threat of new attacks or the responses thereto will result in any
      long-term commercial disruptions or if such activities or responses will have
      a
      long-term material adverse effect on our business, results of operations or
      financial condition.
MARKET
      RISKS
Our
      common stock may be thinly traded, so you may be unable to sell at or near
      ask
      prices or at all if you need to sell your shares to raise money or otherwise
      desire to liquidate your shares.
Prior
      to
      the Acquisition, our predecessor had no trading volume on the OTC Bulletin
      Board. Through this the Acquisition, CDC has essentially become public without
      the typical initial public offering procedures which usually include a large
      selling group of broker-dealers who may provide market support after going
      public. Thus, we will be required to undertake efforts to develop market
      recognition for us and support for our shares of common stock in the public
      market. The price and volume for our common stock that will develop cannot
      be
      assured.
18
The
      number of persons interested in purchasing our common stock at or near ask
      prices at any given time may be relatively small or non-existent. This situation
      may be attributable to a number of factors, including the fact that we are
      a
      small company which is relatively unknown to stock analysts, stock brokers,
      institutional investors and others in the investment community that generate
      or
      influence sales volume, and that even if we came to the attention of such
      persons, they tend to be risk-averse and would be reluctant to follow an
      unproven company such as ours or purchase or recommend the purchase of our
      shares until such time as we became more seasoned and viable. As a consequence,
      there may be periods of several days, weeks, months, or more when trading
      activity in our shares is minimal or non-existent, as compared to a seasoned
      issuer which has a large and steady volume of trading activity that will
      generally support continuous sales without an adverse effect on share price.
      We
      cannot give you any assurance that a broader or more active public trading
      market for our common stock will develop or be sustained. While we are trading
      on the OTC Bulletin Board, the trading volume we will develop may be limited
      by
      the fact that many major institutional investment funds, including mutual funds,
      as well as individual investors follow a policy of not investing in Bulletin
      Board stocks and certain major brokerage firms restrict their brokers from
      recommending Bulletin Board stocks because they are considered speculative,
      volatile and thinly traded.
The
      application of the "penny stock" rules to our common stock could limit the
      trading and liquidity of the Common Stock, adversely affect the market price
      of
      our common stock and increase your transaction costs to sell those shares.
As
      long
      as the trading price of our common stock is below $5 per share, the open-market
      trading of our common stock will be subject to the "penny stock" rules, unless
      we otherwise qualify for an exemption from the "penny stock" definition. The
"penny stock" rules impose additional sales practice requirements on certain
      broker-dealers who sell securities to persons other than established customers
      and accredited investors (generally those with assets in excess of $1,000,000
      or
      annual income exceeding $200,000 or $300,000 together with their spouse). These
      regulations, if they apply, require the delivery, prior to any transaction
      involving a penny stock, of a disclosure schedule explaining the penny stock
      market and the associated risks. Under these regulations, certain brokers who
      recommend such securities to persons other than established customers or certain
      accredited investors must make a special written suitability determination
      regarding such a purchaser and receive such purchaser's written agreement to a
      transaction prior to sale. These regulations may have the effect of limiting
      the
      trading activity of our common stock, reducing the liquidity of an investment
      in
      our common stock and increasing the transaction costs for sales and purchases
      of
      our common stock as compared to other securities.
The
      market price for our common stock may be particularly volatile given our status
      as a relatively unknown company with a small and thinly traded public float
      and
      lack of history as a public company which could lead to wide fluctuations in
      our
      share price.
The
      market for our common stock may be characterized by significant price volatility
      when compared to seasoned issuers, and we expect that our share price could
      continue to be more volatile than a seasoned issuer for the indefinite future.
      The potential volatility in our share price is attributable to a number of
      factors. First, as noted above, our shares of common stock may be sporadically
      and thinly traded. As a consequence of this lack of liquidity, the trading
      of
      relatively small quantities of shares by our stockholders may disproportionately
      influence the price of those shares in either direction. The price for our
      shares could, for example, decline precipitously in the event that a large
      number of our shares of common stock are sold on the market without commensurate
      demand, as compared to a seasoned issuer which could better absorb those sales
      without adverse impact on its share price. Many of these factors will be beyond
      our control and may decrease the market price of our common shares, regardless
      of our operating performance. We cannot make any predictions or projections
      as
      to what the prevailing market price for our common stock will be at any time.
In
      addition, the market price of our common stock could be subject to wide
      fluctuations in response to:
o
quarterly
                variations in our revenues and operating expenses;
o
announcements
                of new products or services by us;
o
fluctuations
                in interest rates;
o
significant
                sales of our common stock, including "short"
                sales;
o
the
                operating and stock price performance of other companies that investors
                may deem comparable to us; and
o
news
                reports relating to trends in our markets or general economic
                conditions.
19
The
      stock
      market, in general, and the market prices for penny stock companies in
      particular, have experienced volatility that often has been unrelated to the
      operating performance of such companies. These broad market and industry
      fluctuations may adversely affect the price of our stock, regardless of our
      operating performance.
Stockholders
      should be aware that, according to SEC Release No. 34-29093, the market for
      penny stocks has suffered in recent years from patterns of fraud and abuse.
      Such
      patterns include (1) control of the market for the security by one or a few
      broker-dealers that are often related to the promoter or issuer; (2)
      manipulation of prices through prearranged matching of purchases and sales
      and
      false and misleading press releases; (3) boiler room practices involving
      high-pressure sales tactics and unrealistic price projections by inexperienced
      sales persons; (4) excessive and undisclosed bid-ask differential and markups
      by
      selling broker-dealers; and (5) the wholesale dumping of the same securities
      by
      promoters and broker-dealers after prices have been manipulated to a desired
      level, along with the resulting inevitable collapse of those prices and with
      consequent investor losses. Our management is aware of the abuses that have
      occurred historically in the penny stock market. Although we do not expect
      to be
      in a position to dictate the behavior of the market or of broker-dealers who
      participate in the market, management will strive within the confines of
      practical limitations to prevent the described patterns from being established
      with respect to our securities. The occurrence of these patterns or practices
      could increase the volatility of our share price.
Limitations
      on director and officer liability and indemnification of our officers and
      directors by us may discourage stockholders from bringing suit against a
      director.
Our
      articles of incorporation and bylaws provide, with certain exceptions as
      permitted by governing state law, that a director or officer shall not be
      personally liable to us or our stockholders for breach of fiduciary duty as
      a
      director, except for acts or omissions which involve intentional misconduct,
      fraud or knowing violation of law, or unlawful payments of dividends. These
      provisions may discourage stockholders from bringing suit against a director
      for
      breach of fiduciary duty and may reduce the likelihood of derivative litigation
      brought by stockholders on our behalf against a director. In addition, our
      articles of incorporation and bylaws may provide for mandatory indemnification
      of directors and officers to the fullest extent permitted by governing state
      law.
We
      do not expect to pay dividends for the foreseeable future, and we may never
      pay
      dividends
.
      We
      currently intend to retain any future earnings to support the development and
      expansion of our business and do not anticipate paying cash dividends in the
      foreseeable future. Our payment of any future dividends will be at the
      discretion of our board of directors after taking into account various factors,
      including but not limited to our financial condition, operating results, cash
      needs, growth plans and the terms of any credit agreements that we may be a
      party to at the time. In addition, our ability to pay dividends on our common
      stock may be limited by state law. Accordingly, investors must rely on sales
      of
      their Common Stock after price appreciation, which may never occur, as the
      only
      way to realize their investment.
A
      single investor own or control at least 48% of our outstanding common stock,
      which may limit your ability and the ability of our other stockholders, whether
      acting alone or together, to propose or direct the management or overall
      direction of our Company. Additionally, this concentration of ownership could
      discourage or prevent a potential takeover of our Company that might otherwise
      result in shareholders receiving a premium over the market price for our shares.
We
      estimate that approximately 48% of our outstanding shares of common stock is
      owned and controlled by a single investro stockholder. Such concentrated control
      of the Company may adversely affect the price of our common stock. Our principal
      stockholders may be able to control matters requiring approval by our
      stockholders, including the election of directors, mergers or other business
      combinations. Such concentrated control may also make it difficult for our
      stockholders to receive a premium for their shares of our common stock in the
      event we merge with a third party or enter into different transactions which
      require stockholder approval. These provisions could also limit the price that
      investors might be willing to pay in the future for shares of our common stock.
Accordingly,
      the existing principal stockholders together with
our
      directors and executive officers
will
      have the power to control the election of our directors and the approval of
      actions for which the approval of our stockholders is required. If you acquire
      shares, you may have no effective voice in the management of the
      Company.
20
Future
      sales of our equity securities could put downward selling pressure on our
      securities, and adversely affect the stock price. There is a risk that this
      downward pressure may make it impossible for an investor to sell his securities
      at any reasonable price, if at all.
Future
      sales of substantial amounts of our equity securities in the public market,
      or
      the perception that such sales could occur, could put downward selling pressure
      on our securities, and adversely affect the market price of our common
      stock.
DESCRIPTION
      OF PROPERTY
The
      Company's headquarters is currently located at 20710 Lassen Street, Chatsworth,
      CA 91311. Our operations are located in an 14,500 square foot building which
      allows us to conduct our operations on site, including research and development,
      fabrication, processing and packaging.
SECURITY
      OWNERSHIP OF CERTAIN
BENEFICIAL
      OWNERS AND MANAGEMENT
SECURITY
      OWNERSHIP OF BENEFICIAL OWNERSHIP AND MANAGEMENT PRIOR TO THE SECURITIES
      AGREEMENT
The
      following table sets forth, as of July 31, 2006, certain information regarding
      the ownership of the Company's capital stock by the following persons on such
      date: each of the directors and executive officers, each person who is known
      to
      be a beneficial owner of more than 5% of any class of our voting stock, and
      all
      of our officers and directors as a group. Unless otherwise indicated below,
      to
      our knowledge, all persons listed below had sole voting and investing power
      with
      respect to their shares of capital stock, except to the extent authority was
      shared by spouses under applicable community property laws.
Beneficial
      ownership is determined in accordance with the rules of the Securities and
      Exchange Commission and generally includes voting or investment power with
      respect to securities. Shares of our common stock subject to options, warrants
      or convertible securities exercisable or convertible within 60 days of July
      31,
      2006 were deemed outstanding for computing the percentage of the person or
      entity holding such options, warrants or convertible securities but are not
      deemed outstanding for computing the percentage of any other person, and was
      based upon the number of shares of the Common Stock issued and outstanding,
      as
      of July 31, 2006 which was 26,750,000 shares.
Title
                  of
Class
Name
                  and Address
Of
Beneficial
                  Owners (1)
Amount
                  and Nature
Of
                  Beneficial Ownership
Percent
Of
Class
Common
                  Stock
Slavko
                  Bebek
2,500,000
42.87%
Common
                  Stock
Maryna
                  Bilynaska
2,500,000
42.87%
All
                  officers and directors as a group (2 persons)
85.7%
(1)
Unless
                otherwise noted, the address for each of the named beneficial owners
                and
                directors and officers is 1020 Harwood St., #1201, Vancouver, BC,
                Canada
                V6E4R1.
21
SECURITY
      OWNERSHIP OF BENEFICIAL OWNERSHIP AND MANAGEMENT AFTER THE CLOSING OF THE
      PURCHASE AGREEMENT
The
      following table sets forth information with respect to the beneficial ownership
      of the outstanding shares of Company's capital stock immediately following the
      Purchase by (i) each person known by Registrant who will beneficially own five
      percent (5%) or more of the outstanding shares; (ii) the officers who will
      take
      office as of the effective date of the Purchase; (iii) directors as of the
      effective date of the Purchase and director nominees who will take office as
      soon as the appropriate information statement can be mailed to the stockholders
      of registrant and the accompanying waiting period passes and (iv) all the
      aforementioned officers and directors as a group.
Title
                  of
Class
Name
                  and Address
Of
Beneficial
                  Owners (1)
Amount
                  and Nature
Of
                  Beneficial Ownership
Percent
Of
Class
                  (3)
Common
                  Stock
Sidney
                  L. Anderson(4)
5,000,000
17,39%
Common
                  Stock
William
                  H. Moothart(2)
76,923
*
Common
                  Stock
Gregory
                  A. Nihon(2)
0
*
Common
                  Stock
Kerry
                  Stirton(2)
0
*
Common
                  Stock
J.
                  Stewart Asbury(7)
150,000
*
Common
                  Stock
Clayton
                  E. Woodrum(5)
680,000
2.49%
Common
                  Stock
Iain
                  Drummond (2)
0
*
Common
                  Stock
Francis
                  Mailhot(6)
1,690,000
6.1%
Common
                  Stock
Cypress
                  Advisors
1,500,000
5.6%
Common
                  Stock
Caramat
                  Ltd. (8)
3,000,000
10.81%
Common
                  Stock
Vision
                  Opportunity Master Fund Ltd. (9)
15,360,000
48.3%
Common
                  Stock
McCorkell
                  Investment Company LLC (10)
1,500,000
5.5%
Common
                  Stock
Ashcrete
                  Research & Development, LLC (11)
1,800,000
6.58%
Common
                  Stock
Nite
                  Capital (11)
1,800,000
6.58%
All
                  officers, directors and director nominees as a group (7
                  persons)
5,906,923
20.12%
(1)
Unless
                otherwise noted, the address for each of the named beneficial owners
                is:
                20710 Lassen Street, Chatsworth, CA 91311. Unless otherwise indicated,
                beneficial ownership is determined in accordance with Rule 13d-3
                promulgated under the Exchange Act and generally includes voting
                and/or
                investment power with respect to securities. Shares of common stock
                subject to options or warrants that are currently exercisable or
                exercisable within sixty days of August 7, 2006 are deemed to be
                beneficially owned by the person holding such options or warrants
                for the
                purpose of computing the percentage of ownership set forth in the
                above
                table, unless otherwise indicated.
(2)
Such
                persons are director nominees that the directors of Registrant have
                elected to the Board of Directors which appointment shall be effective
                upon compliance with Rule 14f1 of the Securities and Exchange Act
                of
                1934.
(3)
The
                calculations of percentage of beneficial ownership are based on 26,675,000
                shares of common stock outstanding as of July 31,
                2006.
22
(4)
Includes
                2,000,000 shares underlying options exercisable at $0.30 per
                share.
(5)
Includes
                500,000 shares underlying options exercisable at $0.30 per share;
                and a
                warrant to purchase 60,000 shares at $.30 per
                share.
(6)
Includes
                900,000 shares underlying options exercisable at $0.30 per
                share.
(7)
Includes
                50,000 shares underlying options exercisable at $0.30 per
                share.
(8)
Includes
                1,000,000 shares underlying options exercisable at $0.30 per
                share.
(9)
Includes
                5,120,000 shares underlying options exercisable at $0.30 per
                share.
(10)
Includes
                500,000 shares underlying options exercisable at $0.30 per
                share.
(11)
Includes
                600,000 shares underlying options exercisable at $0.30 per
                share.
*
      less
      than one percent
DIRECTORS
      AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS-
APPOINTMENT
      OF NEW OFFICERS AND DIRECTORS
In
      connection with the Purchase Agreement, effective August 7, 2006, Slavko
      Bebek resigned as Chief Executive Officer, Chief Financial Officer but remained
      a Director of the Company subject to a resignation to take effect on the tenth
      day following the mailing of the 14f1 to shareholders of Registrant and Maryna
      Bilynska resigned as Secretary and Director. On August 7, 2006, the Mr.
      Bebek as sole director appointed J. Stewart Asbury III as Chief Executive
      Officer, Clayton E. Woodrum as Chief Financial Officer and appointed Sidney
      L.
      Anderson to serve as Chairman of the Board of Directors.
Our
      existing board of directors has the authority to appoint new directors of the
      Company, subject to Section 14f1 of the Securities Act of 1934 which requires
      that if a change in control of the board occurs, such change of control is
      not
      effective until 10 days after mailing a written notice of such change in control
      to all shareholders. The Company intends to prepare and mail such notice
      promptly after filing this Form 8-K. The persons so appointed to the Board
      of
      Directors are: William H. Moothart, Gregory A. Nihon,
Iain
      Drummond
and
      Kerry Stirton. Information regarding these Director nominees are included in
      this Form 8-K.
The
      following tables summarize the Company's current executive officers and
      directors and the proposed executive officers and directors of the Company:
Name
Age
Position
Sidney
                  L. Anderson
59
Chairman
                  of the Board and Executive Director
William
                  H. Moothart
71
Director
                  Nominee
Gregory
                  A. Nihon
30
Director
                  Nominee
Kerry
                  Stirton
42
Director Nominee
J.
                  Stewart Asbury III
58
Chief
                  Executive Officer
Clayton
                  Woodrum
66
Chief
                  Financial Officer
Iain
                  Drummond
36
Director
                  Nominee
Sidney
      L. Anderson.
Mr.
      Anderson was appointed Chairman of our Board of Directors upon closing of the
      Purchase. Mr. Anderson began his professional career with Peat, Marwick,
      Mitchell & Co., (currently KPMG) in Tulsa, OK where he was employed for over
      five years in the firm's tax department leaving in December 1977 as a Tax
      Manager. After leaving public accounting, Mr. Anderson practiced law for five
      years and was a Partner with the law firm of Pray, Walker, Jackman, Williamson
      & Marlar in Tulsa, OK. In 1981, Mr. Anderson founded Pan Western Energy
      Corporation, a small publicly traded oil and gas exploration and production
      company, where he served as the company's President and Chief Executive Officer
      and Chairman of its Board of Directors for nineteen years until the company
      was
      sold October 1, 2000. Since that time, Mr. Anderson has consulted with a number
      of companies on financial and business matters. Mr. Anderson received his
      undergraduate degree in Business Administration from the University of Oklahoma
      in 1969 and his Juris Doctorate degree from the University of Oklahoma in 1972.
      He was admitted to practice law in Oklahoma in 1972 and received his Certified
      Public Accountant certificate in 1975. Mr. Anderson has served on the board
      of
      numerous civic and academic organizations as well as public trust authorities
      including the board of trustees of Oklahoma State University - Tulsa and the
      University of Tulsa College of Business Administration Executive Advisory Board.
      Mr. Anderson has also served as a trustee of the Tulsa Industrial Authority
      and
      the University Center at Tulsa Trust Authority. Mr. Anderson currently serves
      on
      the Economic Development Commission for the City of Tulsa. Mr. Anderson is
      also
      a director of Health Science Group, Inc. (OTC:BB "HESG") and is chairman of the
      board's audit committee. In addition, Mr. Anderson served in the United States
      Army Reserve (Captain) from 1971 through 1986 and is a member of the National
      Eagle Scout Association.
23
William
      H. Moothart.
Although
      Mr. Moothart has been nominated to our board, and will begin service upon our
      compliance with Rule 14f1, Mr. Moothart has been Chairman, President, Treasurer
      and principal shareholder of our operating subsidiary, CDC since its inception
      in 1971. Prior to that time, Mr. Moothart was Director of Engineering for
      Whittaker Corporation from 1967 to 1971, Director of Litton Data Systems
      Division from 1962 to 1967, and a First Lieutenant in the United States Air
      Force assigned to the Air Research & Development Command. Mr. Moothart
      received his Bachelor of Science Mechanical Engineering degree from Loyola
      University in 1956 and did graduate work in Electrical Engineering at both
      Ohio
      State University and UCLA.
Gregory
      A Nihon.
Mr.
      Nihon
      was appointed to our Board as of the closing of the Purchase and the appointment
      will be effective upon our compliance with Rule 14f1. Mr. Nihon began his
      professional career with Banc of America Securities in New York where he was
      employed in the firm's Corporate and Investment Banking Division. Mr. Nihon
      later joined Morgan Stanley's London office, where he worked on pan-European
      investment banking and private equity transactions in the real estate sector.
      His transaction and product experience includes public equity, private equity
      fund placements, high yield, securitization, convertible debt offerings,
      M&A, and principal investments. Mr. Nihon later left the financial services
      industry to work as director of business development for NYSE-traded Lionsgate
      Entertainment, an independent film studio based in Santa Monica, CA. At
      Lionsgate Mr. Nihon handled an array of capital markets and financial reporting
      and controls responsibilities; he also ran "greenlight" models for individual
      film investments and sourced third-party production finance. In 2005, Mr. Nihon
      joined Nihon Global Partners, a family-office style investment firm and merchant
      bank, where he serves as a Managing Director. Mr. Nihon received his Bachelor
      of
      Arts degree from Columbia University and his Masters in Business Administration
      degree from the Harvard Business School.
Kerry
      Stirton
.
      Mr.
      Stirton was appointed to our Board as of the closing of the Purchase and the
      appointment will be effective upon our compliance with Rule 14f1. Mr. Stirton
      is
      currently Managing Director of Stellation Asset Management, a public equity
      investment management firm with a global fund of fund product. Kerry Stirton
      has
      been in the investment management sector for nearly ten years; including
      extensive hedge fund and direct investment experience. Most recently he was
      with
      Goldman Sachs, in the Global Equities Proprietary Trading Group. This experience
      provided a unique vantage point from which to observe the dynamics of different
      trading strategies across a wide set of styles and asset classes. His particular
      trading group used a combined global macro and fundamental equity research
      approach. Prior to Goldman, he was the Senior Research Analyst for the U.S.
      Multi-Industry Sector at Sanford C. Bernstein, the research subsidiary of
      Alliance Capital. His company research covered the most industry sectors of
      the
      analysts at Bernstein, and was ranked #1 by the Greenwich Survey of
      Institutional Investors. With over 100 hedge fund clients around the world,
      and
      more than 300 institutional investor clients, Mr. Stirton worked closely with
      a
      substantial array of different trading and investment styles. Again, the
      opportunity to assess various investment approaches, and to ascertain the
      psychological bents of various forms of investor at different points in a
      sector's investment cycle, remains a valuable backdrop to his fund of fund
      responsibilities. Mr. Stirton's earlier direct investment experience includes
      energy commodity trading at Louis Dreyfus Energy and US equity investing with
      CT
      Investment Management, where he ran a $300 million US trust portfolio and was
      investment analyst for the $1.6 billion US Equity portfolio - a top performer
      across the US mutual fund industry. Prior to his investment career, Mr. Stirton
      was a corporate strategy and valuation consultant, including 5 years at McKinsey
      & Co., where he worked in the manufacturing and investment management
      sectors. He earned law degrees from Harvard Law School and Oxford University,
      and holds a degree in Politics and Economics from the University of Toronto.
      Mr.
      Stirton was a Teaching Fellow at Harvard College, and a Rhodes Scholar.
24
J.
      Stewart Asbury III.
Mr.
      Asbury was appointed as our Chief Executive Officer at the closing of the
      Purchase. Mr. Asbury began his professional career with Arthur Andersen and
      company in Atlanta, Georgia. While with Arthur Andersen, Mr. Asbury was a Senior
      Consultant in the firm's consulting division which is now Accenture. His
      responsibilities primarily consisted of designing and implementing management
      and process systems. In 1980, Mr. Asbury joined Byers Engineering in Atlanta,
      Georgia where he was employed as Division Manager and was responsible for the
      creation of Byers' Geographical Information Systems products and markets. During
      his tenure as Division Manager, the division grew from $900,000 in annual
      revenues to $18.0 million in annual revenues and employed over 500 people.
      In
      1990, Mr. Asbury became Vice President of Byers Engineering and was responsible
      for the implementation of the company's Seibel sales tracking and management
      system. In 1998, Mr. Asbury became Senior Vice President of SpatialAge
      Solutions, a division of Byers Engineering focused on the GIS software products
      business. In 2001, he became President of SpatialAge Solutions and served in
      that capacity until 2005. Mr. Asbury received his BA in Psychology from the
      University of Georgia in 1969 and his MBA in Management Policy and Systems
      from
      the University of Georgia in 1978. He has served on the Board of Directors
      of
      the Geospatial Information and Technology Association and is a former President
      of that organization. From 1970 through 1974, Mr. Asbury served in the United
      States Air Force.
Clayton
      E. Woodrum.
Mr.
      Woodrum was appointed Chief Financial Officer at closing of the Purchase. After
      graduating from Kansas State University, Pittsburg, Kansas, with a BSBA in
      Accounting, Mr. Woodrum began his professional career with Peat, Marwick,
      Mitchell & Co. (now KPMG) in the firm's Tulsa, Oklahoma office where he was
      employed from 1965 to 1975 in the tax department. During his tenure at Peat
      Marwick, Mr. Woodrum became a partner and was Partner-in-Charge of the Tulsa
      Tax
      Department from 1973 through 1975. In 1975, Mr. Woodrum joined BancOklahoma
      Corporation and Bank of Oklahoma as Chief Financial Officer where he served
      in
      that capacity until 1980. In 1980, Mr. Woodrum returned to Peat Marwick Mitchell
      & Co. as Partner-in-Charge of the Tulsa Tax Department and the firm's
      Financial Institutions Tax Practice. In 1984, Mr. Woodrum became senior partner
      in the Tulsa, Oklahoma based accounting firm of Woodrum, Kemendo, Tate &
Cuite, PLLC. Mr. Woodrum also has financial interests in Computer Data
      Litigation Services, LLC, which provides litigation support related to the
      analysis of electronically stored data, and, First Capital Management, LLC,
      which is a Registered Investment Advisor and provides investment advice to
      clients. In addition to his Certified Public Accountant's license, Mr. Woodrum
      is also a Certified Valuation Analyst and Investment Advisor Representative.
      Mr.
      Woodrum has served on numerous boards and trust authorities including the Tulsa
      Industrial Authority, University Center at Tulsa Foundation and the Hillcrest
      Medical Center Foundation. Mr. Woodrum is currently a director of Arena
      Resources, Inc.  ARD is listed on the American Stock Exchange.  Mr.
      Woodrum is Chairman of the Audit Committee and Compensation Committee of
      ARD.
Iain
      Drummond.
Mr.
      Drummond was appointed to our Board as of the closing of the Purchase and the
      appointment will be effective upon our compliance with Rule 14f1. Mr. Drummond
      began his professional career with Novera Optics, a telecom component start
      up
      company, where he was employed in the company's business development division.
      Mr. Drummond later joined Marketing Harmonic, Inc. as a group head in the
      broadband access networks division. During his tenure with Marketing Harmonic,
      Inc., Mr. Drummond became the Interim President of the company's broadband
      access networks division. Mr. Drummond received his Bachelor of Science in
      Optics from the University of Rochester in 1992, his Masters in Applied Physics
      from Yale in 1998, and his Masters in Business Administration from Chicago
      School of Business in 2001.
25
EXECUTIVE
      COMPENSATION
None
      of
      our executive officers of Registrant prior to the Purchase received compensation
      in excess of $100,000 for the fiscal years ended December 31, 2005, 2004 or
      2003, respectively. Slavka Bebek and Maryna Bilvnaska did not receive
      compensation for their positions as officers of the Company from the
      Registrant.
CDC
      SUMMARY COMPENSATION TABLE
LONG
                  TERM COMPENSATION
ANNUAL
                  COMPENSATION
AWARDS
PAYOUTS
Name
                  and Principal Position
Year
Salary
($)
Bonus
($)(1)
Other
Annual
                  Compensation
($)(2)
Restricted
Stock
                  Awards
($)
Securities
                  Underlying Options/SARs
LTIP
                  Payout
($)
All
                  Other Compensation
($)
William
                  Moothart
2003
2004
2005
189,228
189,228
182,228
336,000
157,484
92,309
903,384
Hannes
                  G. Boehm
2003
2004
2005
134,004
134,004
134,004
140,000
66,680
19,231
188,205
Frank
                  Leftkowitz
2003
2004
2005
157,404
157,404
157,404
308,000
144,053
84,615
828,103
C.
                  Bohman
2003
2004
2005
157,404
157,404
157,404
308,000
144,053
84,615
828,103
(1)
        CDC
        was a Subchapter S corporation prior to the Purchase. All bonuses were paid
        to
        cover income taxes of these employee shareholders.
(2)
      CDC
      owned its building; the building was sold in 2005 and this compensation
      represents bonus payment to employee shareholders from proceeds on the
      sale.
STOCK
      OPTION GRANTS AND EXERCISES
For
      the
      fiscal year ended December 31, 2005, neither the Company nor CDC issued any
      options to any officers, employees or directors.
EMPLOYMENT
      AGREEMENTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS FOR
      CDC
Neither
      the Company nor CDC had any such arrangement in the past three years. At the
      closing of the Purchase, the Company entered into the following compensation
      arrangements:
Asbury
      Agreement
:
      Mr.
      Asbury has been retained as the Chief Executive Officer of CDC for a three
      year
      term at a salary of $215,000 per year. In addition, he will be paid a $3,000
      monthly housing allowance for his first six months of employment and a $1,000
      per month auto allowance for the term. In addition, he was granted an option
      to
      purchase 1,000,000 shares of our common stock at $0.30 per share which vest
      equally over the 36 month term. If Mr. Asbury is terminated without cause,
      he
      will receive the greater of $60,000 or the balance of his salary for the
      remainder of the term and all unvested options will vest immediately.
26
Woodrum
      Agreement
:
      Mr.
      Woodrum has been engaged as a consultant to serve as the Chief Financial Officer
      of CDC for a term of one year at a salary of $8,000 per month. In addition,
      he
      was granted an option to purchase 500,000 shares of our common stock at $0.30
      per share which are fully vested on grant. This agreement is terminable upon
      30
      days notice by either party.
Anderson
      Agreement
:
      Mr.
      Anderson has been engaged as our Chairman of the Board of Directors, Executive
      Director, and consultant for compensation of $8,000 per month. Mr. Anderson
      will
      be reimbursed for expenses in connection with his work in connection with the
      Purchase which expenses are estimated to be $205,000. In consideration for
      executing this consulting agreement, Mr. Anderson was granted 2,000,000 shares
      of our common stock. Mr. Anderson shall not receive other compensation for
      such
      services as a director of the Company. In addition, the consulting agreement
      includes an option to purchase 2,000,000 shares of our common stock at $0.30
      per
      share which were fully vested upon grant. If Mr. Anderson participates in
      locating future acquisitions which are completed by the Company, he will receive
      2.5% of the total consideration paid by the Company in such transaction, payable
      in stock or cash at the Company's election. The agreement provides that even if
      Mr. Anderson is no longer serving as a Director, he will remain as a consultant
      at the foregoing rate of pay until July 2008.
COMPENSATION
      OF DIRECTORS
During
      the year ended December 31, 2005, the directors of Registrant did not receive
      any compensation for services as directors. The directors of CDC did not receive
      any separate compensation for their duties as directors during the year ended
      December 31, 2005.
We
      intend
      to adopt a director compensation policy for directors which will include
      compensation on a per meeting basis on upon appointment which will likely be
      a
      combination of cash compensation and stock options.
CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS
Sidney
      Anderson.
Mr..Anderson
      has requested reimbursement of approximately $205,000 of expenses for his
      activities prior to Closing; these funds will be reimbursed when the Company
      has
      the funds to do so. He also received 2,000,000 shares of our common stock for
      his execution of the Consulting Agreement under which he will provide services
      as the Chairman of our Board of Directors. He also received 1,000,000 shares
      of
      our common stock as part of compensation provided to a group which provided
      services, Chatsworth Acquisition Group.
DESCRIPTION
      OF SECURITIES
GENERAL
Our
      Company's Articles of Incorporation provide for authority to issue 100,000,000
      shares of Common Stock with a par value of $0.00001 per Share. Immediately
      after
      the Purchase, the capitalization of our Company consisted of 100,000,000 shares
      of authorized Common Stock with 26,750,000 shares of Common Stock
      issued.
COMMON
      STOCK
The
      holders of the Common Stock are entitled to receive dividends when and as
      declared by the Board of Directors, out of funds legally available therefore.
      The Company has not paid cash dividends in the past and does not expect to
      pay
      any within the foreseeable future since any earnings are expected to be
      reinvested in the Company. In the event of liquidation, dissolution or winding
      up of the Company, either voluntarily or involuntarily, each outstanding share
      of the Common Stock is entitled to share equally in the Company's assets. Each
      outstanding share of the Common Stock is entitled to equal voting rights,
      consisting of one vote per share.
27
WARRANTS
Each
      Investor in the SPA received warrants to purchase one-half of the shares
      purchased at an exercise price of $0.30 per share for a total of 8,710,000
      warrants. In addition, the Company issued 1,000,000 warrants at the same
      exercise price to a consultant who provided services in the Purchase. The
      Company also issued a warrant to purchase 103,000 shares at $.01 per share
      to a
      service provider at Closing.
OPTIONS
The
      Company intends to adopt an equity incentive plan for its officers, directors
      and consultants. The Company's employment and consulting agreements include
      option grants to come from the Company's future plan. If no plan is adopted by
      October 1, 2006, then the options will be issued as individual option
      agreements. A total of 3,500,000 options to purchase common stock at $.30 a
      share will be issued pursuant to these agreements.
MARKET
      PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS
Our
      common stock is not listed on any stock exchange. The common stock is traded
      over-the-counter on the Over-the-Counter Electronic Bulletin Board under the
      symbol "AAML". However, the business of the Registrant was not the business
      we
      will pursue after the Purchase and we do not believe the prior stock price
      information is relevant. Prior to the Closing, as of July 31, 2006, there were
      approximately 30 stockholders of record of our common stock.
DIVIDENDS
We
      have
      never paid any dividends on the Common Stock. We currently anticipate that
      any
      future earnings will be retained for the development of our business and do
      not
      anticipate paying any dividends on the Common Stock in the foreseeable
      future.
TRANSFER
      AGENT
Our
      transfer agent is Pacific Stock Transfer Company.
LEGAL
      PROCEEDINGS
From
      time
      to time, we may be involved in litigation or other business disputes including
      patent infringement, defamation and unfair competition. The Company's management
      is not aware of any material legal proceedings pending against the Company.
RECENT
      SALES OF UNREGISTERED SECURITIES
Pursuant
      to the SPA entered into by the Company on one hand, and a group of investors
      on
      the other hand, the Company issued 17,600,000 shares of the Company's Common
      Stock and 8,800,000 warrants to purchase shares of common stock at $.030 per
      share. The issuance of securities to the investors pursuant to the SPA was
      exempt from registration under the Securities Act pursuant to Section 4(2)
      and/or Regulation D thereof. We made this determination based on the
      representations of the investors which included, in pertinent part, that such
      shareholders were "accredited investors" within the meaning of Rule 501 of
      Regulation D promulgated under the Securities Act and that such shareholders
      were acquiring our common stock, for investment purposes for their own
      respective accounts and not as nominees or agents, and not with a view to the
      resale or distribution thereof, and that each person understood that the shares
      of our common stock may not be sold or otherwise disposed of without
      registration under the Securities Act or an applicable exemption
      therefrom.
28
Pursuant
      to our purchase of all of the outstanding stock of CDC, we issued a total of
      250,000 shares to the former shareholders of CDC valued at $60,000.
Pursuant
      to a Consulting Agreement, we issued 2,000,000 shares and 2,000,000 options
      to
      purchase common stock at $0.30 per share to our Chairman of the Board of
      Directors for services valued at $500,000 ($480,000 for shares and $20,000
      for
      options).
Pursuant
      to a services agreement, we issued a warrant to purchase 1,000,000 shares at
      $0.30 per share valued at $10,000.
Pursuant
      to a service agreement we issued 300,000 shares and a warrant to purchase
      103,000 shares at $0.01 per share valued at $3,000.
Pursuant
      to a service agreement we issued 1,500,000 shares valued at
      $360,000.
Pursuant
      to a services agreement, we issued 1,700,000 shares valued at
      $408,000.
INDEMNIFICATION
      OF DIRECTORS AND OFFICERS
The
      Registrant's By-Laws and Nevada Revised Statutes, Chapter 78 provide for
      limitation of liability and/or indemnification of the Registrant's directors and
      officers in a variety of circumstances, which may include liabilities under
      the
      Securities Act.
The
      Company may purchase or maintain insurance or make other financial arrangements
      on behalf of any person who is or was a Director, officer, employee, or agent
      of
      the Company, or is or was serving at the request of the Company as a Director,
      officer, employee or agent of another corporation, partnership, joint venture,
      trust or other enterprise asserted against him in his capacity as Director,
      officer, employee or agent, or arising of his status as such, whether or not
      the
      Company has the authority to indemnify him against such liability or
      expense.
The
      Company shall indemnify all of its officers and Directors, past, present, and
      future against any and all expenses incurred by them, and each of them,
      including but not limited to, legal fees, judgments and penalties which may
      be
      incurred, rendered or levied in any legal action or administrative proceeding
      brought against them for any act or omission alleged to have been committed
      while acting within the scope of their duties as officers or Directors of the
      Company. The expenses of officers and Directors incurred and in advance of
      final
      disposition of the action or proceeding upon receipt of an undertaking by or
      on
      behalf of the officer or Director to repay the amount if it is ultimately
      determined by a court of competent jurisdiction that he/she is not entitled
      to
      be indemnified by the Company. Such right of indemnification shall not be
      exclusive of any other rights of indemnification, which the officers and
      Directors may have or hereafter acquire. Without limitation of the foregoing,
      the Board of Directors may adopt by-laws from time to time to provide the
      fullest indemnification permitted.
Item
      3.02
UNREGISTERED
      SALES OF EQUITY SECURITIES
See
      Recent Sales of Unregistered Securities.
Item
      5.01
CHANGES
      IN CONTROL OF REGISTRANT
Under
      the
      SPA, the Registrant issued 17,420,000 shares of its common stock and 8,710,000
      warrants to issue shares of its common stock. The shares issued equaled at
      least
      73.9% of the outstanding shares of the Registrant's common stock. The closing of
      this transaction occurred on August 7, 2006 (the "Closing Date").
29
The
      directors of the Registrant have approved the SPA Agreement and the transactions
      contemplated thereunder. As a result of this transaction, the Investors acquired
      control of the Company because the purchased securities entitle the Investors
      to
      hold approximately 75% or the majority number of voting shares of the Company.
      As a result of this change in change in control, Slavko Bebek resigned as the
      Company's Chief Executive Officer and Chief Financial Officer. Maryna Bilynaska
      resigned all offices held and her position as director. Mr. Bebek, as the
      Company's sole remaining member of the Board, appointed J. Stewart Asbury as the
      Company's Chief Executive Officer, and Clayton E. Woodrum as the Company's Chief
      Financial Officer and appointed Sidney L. Anderson as Chairman of the Board.
      The
      Board consisting of Mr. Anderson and Bebek then nominated William H. Moothart,
      Gregory A Nihon,
Iain
      Drummond
and
      Kerry Stirton as Directors. Their appointment will be effective upon our
      compliance with Rule 14f1. Mr. Bebek has provided a resignation to be effective
      upon the effectiveness of the appointment of the new Board members
Item
                5.02
DEPARTURE
                OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT
                OF
                PRINCIPAL OFFICERS
(a)
Resignation
      of Director
Effective
      August 7, 2006, Ms Bilynska resigned from the board of directors of the
      Registrant. There were no disagreements between her and any officer or director
      of the Registrant. The Registrant provided a copy of the disclosures it is
      making in response to this Item 5.02 to her and informed her that she may
      furnish the Registrant as promptly as possible with a letter stating whether
      she
      agrees or disagrees with the disclosures made in response to this Item 5.02,
      and
      that if she disagrees, then the Registrant requests that she provide the
      respects in which she does not agree with the disclosures. The Registrant will
      file any letter received from her as an exhibit to an amendment to this current
      report on Form 8-K within two business days after receipt by the Registrant.
(b)
Resignation
      of Officers
Effective
      August 7, 2006, Bebek resigned as the Chief Executive Officer and Chief
      Financial Officer of the Registrant
,
and
      Bilynska resigned as Secretary.
(c)
Appointment
      of Directors
Effective
      August 7, 2006, Mr. Sidney L. Anderson was appointed to Registrant's Board
      of Directors. The Board has nominated William H. Moothart, Gregory A Nihon,
      Kerry Stirton and Iain Drummond to the Registrant's Board of Directors and they
      will begin their service as directors as soon as we comply with Rule
      14f1.
Descriptions
      of the newly appointed directors and officers can be found in Item 2.01 above,
      in the section titled "DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
      PERSONS."
(d)
Appointment
      of Chief Executive Officer and Chief Financial Officer
Effective
      August 7,  2006, Mr. J. Stewart Asbury was appointed as Chief Executive
      Officer of the Registrant.
Effective
      August 7,  2006, Mr. Clayton E. Woodrum was appointed as the Chief
      Financial Officer of the Registrant. Mr. Asbury and Mr. Woodrum have no family
      relationships with any of the Company's other executive officers or directors.
      Any related party transactions involving Mr. Asbury and Mr. Woodrum are
      described in Item 2.01 above.
Item
      5.03
AMENDMENTS
      TO ARTICLES OF INCORPORATION OR BYLAWS
In
      connection with the Purchase Agreement, the Company adopted amended and restated
      bylaws.
30
Item
      5.06
CHANGE
      IN SHELL COMPANY STATUS
Under
      the
      Purchase Agreement by and between Registrant on one hand and Target and its
      shareholders on the other hand, on the Closing Date, the Registrant purchased
      substantially all of the stock of Target for approximately $4,000,000 in cash,
      notes payable totaling $2,000,000 and the issuance of 250,000 shares of common
      stock valued in total at $60,000. The funds used by Registrant to close the
      Purchase Agreement were received from the Investors upon Closing of the SPA
      described in Item 1.01 above. The closing of this transaction occurred on August
      7, 2006. Prior to the transaction, the Registrant was an exploration company.
      That business generated no revenue for the Registrant. From and after the
      closing, the Registrant's operations will consist of the operations of
      Target.
Item
      9.01    FINANCIAL STATEMENT AND
      EXHIBITS
(a)
Financial
      Statements of Business Acquired
The
      financial statements of Chatsworth Data Corporation for the years ended December
      31, 2005 and December 31, 2004 and the unaudited financial statements for the
      quarter ended March 31, 2006 are incorporated herein by reference to Exhibit
      99.2 and Exhibit 99.3 to this Current Report.
(b)
Unaudited
      Pro Forma Financial Statements
The
      unaudited pro forma financial statements are incorporated herein by reference
      to
      Exhibit 99.4 to this Current Report.
[Missing
      Graphic Reference]
(c)
INDEX
      TO EXHIBITS.
Exhibit
                Number
Description
3.1
Articles
                of Incorporation of Registrant as filed with the State of Nevada
                (2)
3.2
Restated
                Bylaws of Registrant (1)
4.1
Form
                of Investor Warrant (1)
4.2
Form
                of Consultant Warrant (1)
10.1
Form
                of Common Stock and Warrant Purchase Agreement by and between Registrant
                and investors dated July 31, 2006. (1)
10.2
Form
                of Investor Rights Agreement by and between Registrant and investors
                dated
                July 31, 2006. (1)
10.3
Employment
                Agreement by and between Registrant and J. Stewart Asbury III dated
                July
                31, 2006. (1)
10.4
Consulting
                Agreement by and between Registrant and Sidney Anderson dated July
                31,
                2006.(1)
10.5
Form
                of Promissory Note issued to CDC stockholders(1)
10.6
Consulting
                Agreement by and between Registrant and Clayton
                Woodrum.(1)
10.7
Stock
                Acquisition Agreement for shares of CDC (1)
10.8
Consulting
                Agreement with Eurocatylst (1)
10.9
Consulting
                Agreement with Cypress (1)
99.1
Director's
                and Officer's Letter of Resignation by Maryna Bilynska and Officer's
                Letter of Resignation and Conditional Director's Resignation from Slavko
                Bebek to the Board of Directors of Registrant (1)
99.2
Financial
                statements of Chatsworth Data Corporation for the years ended December
                31,
                2005 and December 31, 2004(1)
99.3
Unaudited
                financial statements of Chatsworth Data Corporation for the quarter
                ended
                March 31, 2006(1)
99.4
Unaudited
                pro forma balance sheet as of December 31, 2005 and March 31, 2006
                and
                unaudited pro forma Statement of Operations for the fiscal year ended
                December 31, 2005 and the quarter ended March 31, 2006.
                (1)
(1)
Filed
        herewith.
(2)
        Incorporated by reference to Registrant's filing of a registration statement on
        Form SB-2 on March 12, 2004.
31
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.
Date:
                August 10, 2006
By:
/s/
                J. Stewart Asbury III
J. Stewart
              Asbury
              III
32