, operating results and financial condition.

If the license agreement entered between E&S and Jumpit were to be terminated for any reason, our rights acquired from Global Link would also be terminated. The termination of this agreement or a material change in its terms could have a material adverse effect on our business.

LATIN AND SOUTH AMERICA

Hardline phone service is still unavailable in many parts of Latin and South America leaving cell phones as a necessary alternative. While the region contains some economically challenged areas, it still has a large enough population of consumers with disposable income that would constitute a potentially viable market for cell phones and, in turn, Cellboost.

NORTH AMERICA AND ISRAEL

Under the Asset Purchase Agreement, we are entitled to a royalty stream relating to the sales of Cellboost in North America (including Canada) and Israel. The amount of royalties payable with respect to sales to retailers is $0.10 per unit; royalties on sales to distributors are $0.05 per unit. Currently, Cellboost can be found in Cingular, Office Max, Office Depot, Radio Shack, 7 Eleven, Staples, Fry's Electronics, Amazon.com, AT&T and Wal-Mart as well as a variety of other retailers.

COMPETITION

Currently, we face competition primarily from the gadget market (i.e. solar batteries, hand crank batteries and keychain adapters). However, management believes that the power solutions presented by these competing items are inconvenient and require the use of other auxiliary devices. Management believes that most consumers value the solution that need not be accompanied by any other devices. To initialize use, Cellboost(TM) batteries need merely to be plugged in and do not require the use of any other device or product.

We could also face potential competition from sources other than those referred to above. In addition, new developments in battery technology could produce a longer lasting power supply. However, management is currently unaware of any commercial advancement in portable power sources that is currently available at competitive prices.

OUR STRATEGY

Our objective is to accelerate the development of new markets for Cellboost in Latin and South America. Our immediate objective is to implement a dual-pronged marketing plan in an effort to establish markets for Cellboost in Latin and South American markets. However, the implementation of any part or component of our strategy is expressly subject to our raising capital resources in an amount sufficient or adequate to maintain our operations and to realize our business plan. While we are trying to raise funds, we currently have no commitments for any funding and we cannot assure you that we will be able to raise funds on commercially acceptable terms or at all.

The first prong of our marketing plan is marketing and sales to wireless phone carriers in the region through industry specific print advertising and active marketing at trade shows, in an effort to begin the process of introducing Cellboost to carriers and their distributors. As this market segment grows, we intend to actively market Cellboost to regional distributors and retailers in order to broaden its availability.

The second prong of the marketing plan consists of marketing and sales to consumers. Experience in North America has shown that education of consumers to the benefits of the product leads directly to increased sales. However, we believe that this prong of the marketing plan cannot commence until there is sufficient availability of the product in the market to satisfy consumer demand. Under the terms of the agreement between Global Link and E&S, we are entitled to purchase Cellboost units from E&S at net cost (to E&S).

We have engaged Superior Associates in order to design an appropriate marketing plan for the penetration of the South and Latin American markets. These consultants have prepared budgets and forecasts indicating what the cost of the marketing plan may be. However, management believes that it will need additional funds in order to establish and develop a distribution framework for Latin and South America. Unless the royalty revenues significantly increase, we anticipate that we will need to raise capital through the issuance of securities in order to exploit any opportunities. If we are unable to raise the needed funds and if the royalty revenues do not materialize in the needed amounts, we will need to curtail expenditures and delay or cancel the execution of our plans. We do not currently have any commitment for financing and we can not assure you that we will be able to raise capital on commercially acceptable terms or at all.

We cannot assure you that we will be successful in realizing our business plan and establishing a distribution route for the Cellboost product in South America or that even if we successfully establish such marketing framework, that we will become profitable. We are subject to several business risks and we will need to raise additional capital in order to effect our business plan.

In an effort to realize our business plan, we are also exploring the possibility of combining our business with that of another participant in our industry. We currently we have no commitments in this regard and we cannot assure you that will ever enter into a definitive agreement regarding any such combination.

EMPLOYEES AND CONSULTANTS

We currently have only one employee, our Chief Executive Officer and President. Our Chief Executive Officer and President also currently serves as our sole director. In October 2003, we entered into a three-year employment agreement with our Chief Executive Officer and President. The agreement originally provided for a salary of $120,000 per annum. In December 2004, we entered into an amendment to the employment agreement pursuant to which, beginning in January 2005 and continuing through the term of the agreement, our Chief Executive Officer and President is not entitled to a salary.

We have entered into several consulting agreements pursuant to which we obtain significant services, including office premises, administrative services as well as other more specialized services such as marketing.

In October 2003, prior to our acquisition of our wholly owned subsidiary, Cell Power LLC entered into a consulting services contract with Superior Associates ("Superior"). Superior developed our business plan, created our initial web page and provided us with operational and logistical support services. The services covered under this agreement include the provisions of office premises, secretarial and administrative day-to-day services, warehousing and showroom services. Under our original agreement with Superior, we were required to remit monthly payments of $35,000 for five years; however, commencing January 2005, this agreement was revised to reduce the payments to $17,500 per month. We paid $70,000 to Superior under this contract in 2003, of which $35,000 was expensed as a consulting fee for the period from September 22, 2003 (inception) to October 31, 2003 and $35,000 was reflected as a pre-paid expense in our October 31, 2003 balance sheet. We paid $385,000 to Superior under this contract in fiscal year 2004. Aggregate fees incurred for services under this contract amounted to $420,000 (including $35,000 prepaid in 2003 and $385,000 paid in 2004) for of the year ended October 31, 2004 and $245,000 for the year ended October 31, 2005. The consultant agreed to waive the amounts due under this contract for November and December 2005 and January 2006.

Future payments under this agreement, as amended, for each year are as follows:

FOR THE YEAR ENDING OCTOBER 31, AMOUNT ----------- -------- 2006 $157,500 2007 210,000 2008 192,500 -------- Total $560,000 ========

In January 2004, we entered into a consulting contract for operational and financial services with Judah Marvin Feigenbaum. The original term of the agreement expired in July 2004 and was extended on a month-to-month basis until February 2005 at which time it was terminated. The agreement originally provided for monthly payments of $5,000 for six months and an option to purchase our common stock. In January 2005, the monthly payments were reduced to $3,000 per month. The option, which expires January 2014, provides for the purchase of 514,000 shares of our common stock at an exercise price of $0.75 per share.

AVAILABLE INFORMATION

The public may read and copy any materials we file with the Securities and Exchange Commission ("SEC") at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The SEC's Internet website is located at http://www.sec.gov.

FACTORS AFFECTING OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION

We are subject to various risks that may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our Common Stock could decline and you could lose all or part of your investment.

WE MUST RAISE FUNDS ON AN IMMEDIATE BASIS IN ORDER TO REMAIN IN BUSINESS.

We believe that our available cash resources are not sufficient to enable us to maintain operations through the second fiscal quarter of 2006. Although we raised approximately $90,000 in short-term debt financing between October 2005 and January 2006 and intend to seek additional needed funds through loans, the sale and issuance of additional debt and/or equity securities, or other financing arrangements, we have no commitments for any additional funding and we cannot assure you that we will be able to raise additional funds on commercially acceptable terms or at all. Unless we can raise needed capital or experience a significant increase in royalty income payable to us, we will need to curtail expenditures and cancel or delay the execution of our business plan and cease operations altogether. We are also exploring the possibility of combining our business with that of another participant in our industry. We currently we have no commitments in this regard and we cannot assure you that will ever enter into a definitive agreement regarding any such combination. To the extent that operating or marketing expenses increase, the need for additional funding may be accelerated and we cannot assure you that any such additional funding can be obtained on terms acceptable to us, if at all. If we are not able to generate sufficient capital to fund our current operations, either from operations or through additional financing, we may not be able to continue as a going concern. If we are unable to continue as a going concern, we may be forced to significantly reduce or cease our current operations. This could significantly reduce the value of our securities and cause investment losses for our shareholders.

OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM HAS EXPRESSED SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN, WHICH MAY HINDER OUR ABILITY TO OBTAIN FUTURE FINANCING.

For the period from September 22, 2003 (inception) through October 31, 2004 and for the year ended October 31, 2005, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern, which may hinder our ability to obtain future financing. Our ability to continue as a going concern is an issue raised as a result of our recurring losses from operations and cash flow deficiencies since our inception. We are continuing to incur losses. Our ability to continue as a going concern is dependant on our ability to generate revenues from operations and/or to obtain funds from outside sources by selling our securities or by obtaining loans from financial institutions when possible. Our continued net losses and stockholders' deficit increase the difficulty we are experiencing in meeting our goals and we cannot assure you that our methods will prove successful.

WE HAVE A HISTORY OF LOSSES SINCE OUR INCEPTION AND EXPECT TO INCUR LOSSES FOR THE FORESEEABLE FUTURE.

We have incurred net losses of $2,237,499 since our inception. We have not yet achieved profitability and we cannot assure you that we will become profitable within the foreseeable future as we must continue to fund our operating and capital expenditures, establish and expand our markets, and develop our sales and marketing and advertising plans. We cannot assure you that we will ever achieve or sustain profitability or that our operating losses will not increase in the future.

WE HAVE A LIMITED OPERATING HISTORY IN WHICH TO EVALUATE OUR BUSINESS

We have limited operating history and limited assets. Our limited financial resources are significantly less than those of other companies in our industry, which can develop, market and sell similar products. We cannot assure you, however, that the implementation of the overall business plan developed by management, will result in sales or that if it does result in sales, that such sales will necessarily translate into profitability. Failure to properly develop our plan of expansion will prevent us from becoming a profitable enterprise.

WE ARE ENTITLED TO RECEIVE ROYALTIES FROM SALES MADE BY E&S, WHICH ROYALTY REVENUE COMBINED WITH DIRECT SALES OF CELLBOOST COMPRISES ALL OF OUR REVENUE TO DATE. IF THE PAYMENT OF SUCH ROYALTIES WERE TO CEASE AND/OR WE LOST OUR RIGHT TO DISTRIBUTE CELLBOOST OUR RESULTS FROM OPERATIONS WOULD BE MATERIALLY IMPACTED.

A substantial portion of the revenues we have generated to date have been royalty revenues paid by E&S. Unless we establish a marketing presence in South America and generate revenues from sales in that region, we anticipate that royalty payments from E&S will continue to be a substantial source of revenues for our company. Accordingly, the maintenance of a good working relationship with E&S may be vital to our business. If E&S were to cease payment of the royalty, then our revenues will be negatively impacted and we may be forced to cease operations.

In September 2005, we filed a complaint in the Superior Court of the State of California in Los Angeles County against E&S and certain other defendants alleging, among other things, that E&S has purported to grant a third party the exclusive right to distribute Cellboost units Latin America without our consent in violation of the royalty and sub-distribution agreement and asset purchase agreement and has falsified sales reports to reduce the reported number of Cellboost units sold and otherwise withheld information from us in an effort to deprive us of the royalties rightfully owed to it under the royalty and sub-distribution agreement and the asset purchase agreement. In December 2005, the defendants filed a demurrer with respect to some of our causes of action and defendants for failure to state a claim on which relief can be granted. In February 2006, the defendants' demurrer was granted with respect to certain causes of action and defendants, and the Company was granted leave to amend its original complaint. We cannot currently estimate the damages that it has incurred as a result of these actions and are seeking an open book accounting to permit us to do so.

IN PERFORMING ITS ASSESSMENT OF OUR INTERNAL CONTROLS OVER FINANCIAL REPORTING, MANAGEMENT IDENTIFIED A MATERIAL WEAKNESS IN OUR ABILITY TO RECORD REVENUE, WHICH WAS INITIALLY BROUGHT TO THE ATTENTION OF MANAGEMENT BY OUR INDEPENDENT AUDITORS AND, IF WE ARE UNABLE TO IMPLEMENT OUR PLAN TO RECTIFY THIS WEAKNESS, WE MAY NOT BE ABLE TO FILE ACCURATE REPORTS WITH THE SEC WHICH COULD RESULT IN THE DELISTING OF OUR COMPANY FROM THE OTC BULLETIN BOARD AND LIMIT OUR ABILITY TO OBTAIN FUTURE FINANCING.

In January 2005, in connection with the audit of our financial statements for the year ended October 31, 2004, Marcum & Kliegman LLP, our independent registered public accounting firm ("Marcum"), identified a material weakness in our controls over financial reporting under standards established by the Public Company Accounting Oversight Board with respect to our royalty reporting. The material weakness identified by Marcum relates to our ability to record royalty revenue, which depends upon our receipt of data from E&S, which they provide in reports that are furnished to us on a calendar quarterly basis. As of the quarter ended January 31, 2005, the end of the calendar quarter did not coincide with the end of our fiscal quarters. This required us to estimate revenue for the final month of the fiscal quarter ended January 31, 2005. For the year ended October 31, 2004, the effect of this timing difference was not material to our financial statements.

However, during the quarter ended January 31, 2005, regardless of the insignificance of the impact of the amount of royalties involved, our sole director and chief executive officer identified a material weakness in our internal controls over financial reporting. For the year ended October 31, 2004 our royalty revenue was $95,044 or 75.3% of total revenue and for the year ended October 31, 2005 it was $66,542 or 28.8% of total revenues.

In order to rectify this deficiency, E&S agreed to provide us with our royalty reports in accordance with our fiscal quarters on a going forward basis and did so for the quarters ended April 30 and July 31 and October 31, 2005. In the event that, in the future, we are unable to obtain reports based on our fiscal periods on a going forward basis, we will not be able to accurately report our financial results. Further, if there is a significant difference between our reported royalty revenue and the actual royalty revenue from prior periods, we may be required to restate our financial statements. If we are unable to accurately report our financial reports or are required to restate prior financial statements, we may be unable to timely file our required annual and quarterly reports and, as a result, we may be delisted from the OTC Bulletin Board. Further, if we are unable to accurately report our results or are required to restate prior financial statements, we may be unable to obtain the required financing to fund our operations in the future and our shareholders may lose their entire investment.

OUR FUTURE SUCCESS IS DEPENDENT, IN PART, ON THE PERFORMANCE AND CONTINUED SERVICE OF OUR PRESIDENT.

Our performance and future operating results are substantially dependent on the continued service and performance of our President, Jacob Herskovits, our sole employee, executive officer and director. We rely on Mr. Herskovits to develop our business and identify possible acquisitions. If Mr. Herskovits's services become unavailable, our business and prospects would be adversely affected. We do not currently maintain "key man" insurance for Mr. Herskovits and intend to obtain this type of insurance only when and if we have positive cash flow and are profitable. The loss of the services of Mr. Herskovits could have a material adverse effect on our financial condition, operating results, and, on the market price of our common stock.

OUR RIGHTS TO THE CELLBOOST PRODUCT ARE SUBJECT TO A THIRD PARTY LICENSE AGREEMENT, OVER WHICH WE HAVE NO CONTROL.

The rights that we have to Cellboost are derived from the license agreement entered between Jumpit AG and E&S. This agreement has terms and conditions that must be met in order for E&S to remain as the exclusive licensee of the patent. These terms and conditions relate to yearly sales and to payment obligations. E&S has granted certain of its rights under the license agreement to Global Link with whom our wholly owned subsidiary, Cell Power LLC, entered into a royalty and sub-distribution agreement and an asset purchase agreement. If, for any reason whatsoever, the license agreement between Jumpit and E&S is terminated or E&S were to lose its rights thereunder, or the sublicense agreement entered between E&S and Global Link were terminated, we would also lose all rights we currently have to the Cellboost product, thereby terminating our only source of income. Such a development would have a material adverse effect on our business, financial condition and prospects.

In addition, Global Link has communicated that it believes that we have breached certain provisions of our agreement with it, a contention with which we disagree.

In September 2005, we filed a complaint in the Superior Court of the State of California in Los Angeles County against E&S and certain other defendants alleging, among other things, that E&S has purported to grant a third party the exclusive right to distribute Cellboost units Latin America without our consent in violation of the royalty and sub-distribution agreement and asset purchase agreement and has falsified sales reports to reduce the reported number of Cellboost units sold and otherwise withheld information from us in an effort to deprive us of the royalties rightfully owed to it under the royalty and sub-distribution agreement and the asset purchase agreement. In December 2005, the defendants filed a demurrer with respect to some of our causes of action and defendants for failure to state a claim on which relief can be granted. In February 2006, the defendants' demurrer was granted with respect to certain causes of action and defendants, and the Company was granted leave to amend its original complaint. We cannot currently estimate the damages that it has incurred as a result of these actions and is seeking an open book accounting to permit us to do so.

WE ARE DEPENDENT ON REVENUES GENERATED BY A SOLE PRODUCT AND THUS WE ARE SUBJECT TO MANY ASSOCIATED RISKS

Our revenue is generated through the sale of a portable cell phone battery known as "Cellboost" in South America, which is defined as all countries south of Mexico and north of Tierra Del Fuego, Argentina and through royalty payments on all sales of Cellboost units in North America, Mexico, Puerto Rico, the US Virgin Islands, the Caribbean and Israel. Unless we expand our product offerings to include related or other products, our likely source of revenues for the foreseeable future will continue to be generated by the Cellboost portable battery. Accordingly, 100% of our revenue is dependent upon the sale of Cellboost. Our business may be impacted in the event that:

o potential users are satisfied with other means for charging their cell phone battery; or

o technological developments render Cellboost obsolete; or

o our patent is infringed upon.

Thus, we may expend our financial resources on marketing and advertising without generating concomitant revenues. If we cannot generate sufficient revenues to cover our overhead, manufacturing and operating costs, we will fail.

OUR SOLE EXECUTIVE OFFICER AND DIRECTOR CURRENTLY BENEFICIALLY OWNS 15,125,000 SHARES OF COMMON STOCK OR 46.9% OF OUR OUTSTANDING COMMON STOCK, AND, AS A RESULT, YOU WILL NOT BE ABLE TO CONTROL OR EFFECT THE POLICY OF OUR COMPANY.

We currently have one executive officer (our President) and director. Our sole officer and director, Jacob Herskovits, beneficially owns 15,000,000 shares of common stock. In addition, Mr. Herskovits holds an option to purchase 500,000 shares of common stock which vests in equal annual installments of 125,000 shares over four years, the first installment of which vested in September 2005. The option is exercisable at a per share exercise price of $0.50. As of February 13, 2006, Mr. Herskovits beneficial holdings represented 46.9% of the total issued and outstanding shares of our common stock. As a result, Mr. Herskovits will have a decisive influence in the election of our directors, shaping of our policies and procedures, determining if and when any dividends are paid and determining the circumstances under which we may be sold or merged, along with other important corporate decisions.

THERE ARE LOW BARRIERS TO ENTRY INTO THE PORTABLE CELL PHONE BATTERY INDUSTRY AND, AS A RESULT, MANY COMPANIES MAY BE ABLE TO COMPETE WITH LIMITED FINANCIAL RESOURCES.

Our products do not require large capital expenditures for the development or manufacture of equipment or other fixed assets. As a result, barriers to entering this industry may be low. If the intellectual property protection with respect to the Cellboost product does not prove effective, a firm with limited financial resources may be able to compete in our product lines.

THE PORTABLE CELL PHONE BATTERY INDUSTRY AND TECHNOLOGY IN GENERAL IS SUBJECT TO RAPID CHANGES AND IF WE ARE UNABLE TO ADAPT TO SUCH CHANGE OUR TECHNOLOGY MAY BECOME OBSOLETE.

The markets in which we compete are characterized by rapidly changing technology, evolving industry standards, frequent new service and product announcements, introductions and enhancements and changing consumer demands. We may not be able to keep up with these rapid changes. As a result, our future success will depend on our ability to adapt to rapidly changing technologies, to adapt our services to evolving industry standards and to continually improve the performance, features and reliability of our service in response to competitive service and product offerings and the evolving demands of the marketplace.

INCREASED COMPETITION IN THE PORTABLE CELL PHONE BATTERY INDUSTRY MAY MAKE IT DIFFICULT FOR OUR COMPANY TO GENERATE SALES.

Currently, we face competition primarily from the gadget market (i.e., solar batteries, hand crank batteries, key chain adapters). We could also face competition from other sources. New developments in battery technology could produce a longer lasting power supply. In addition, replacement batteries may also become available at cost convenient prices.

Our competition is likely to increase. We believe this will probably happen as additional competitors enter the market. In addition, cell phone providers may expand their efforts to provide a longer lasting battery or replacement batteries. In addition, competitors may charge less than we do for our portable battery, or may charge nothing at all in some circumstances, causing us to reduce, or preventing us from raising, our price. As a result, our business may suffer.

IF WE ARE UNABLE TO RETAIN MANAGEMENT AND OTHER PERSONNEL TO EFFECTIVELY MANAGE OUR GROWTH, INCLUDING SALES OF CELLBOOST IN LATIN AND SOUTH AMERICA, OUR OPERATIONS MAY BE SIGNIFICANTLY IMPACTED OR CURTAILED.

We intend to expand our operations rapidly and significantly, which requires us to raise substantial additional capital including possible sales of our common stock, which could substantially dilute existing shareholders. Our potential rapid growth will place significant demands on our management and other resources which, given the expected future growth rate, is likely to continue. To manage any future growth, we will need to attract, hire and retain highly skilled and motivated officers and employees and improve existing systems and/or implement new systems for:

o sales and sales management;

o operational and financial management; and

o training, integration and management of the growing employee base.

Specifically, we have exclusive sub-distribution rights of Cellboost in Latin and South America, which is defined as all countries south of Mexico and north of Tierra Del Fuego, Argentina. In order to develop our sales of Cellboost within this geographical area we will need to develop a management and sales structure.

Our failure to effectively manage our growth and implement a sales structure within our Latin and South America could have a material adverse effect on our financial condition and future prospects.

NEW CORPORATE GOVERNANCE REQUIREMENTS ARE LIKELY TO INCREASE OUR COSTS AND MAKE IT MORE DIFFICULT TO ATTRACT QUALIFIED DIRECTORS.

Since 2002, we have faced new corporate governance requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations adopted by the Securities and Exchange Commission. We expect that these laws, rules and regulations will continue to increase our legal and financial compliance costs and make some activities more difficult, time-consuming and costly. We expect that these new requirements will also continue to make it more difficult and more expensive for us to obtain director and officer liability insurance. We may be required to accept reduced coverage or incur significantly higher costs to obtain coverage. These new requirements may also make it more difficult for us to attract and retain qualified individuals to serve as members of our board of directors or committees of the board.

RISKS RELATED TO OUR COMMON STOCK

WE HAVE NO PLANS TO PAY DIVIDENDS.

Payment of dividends on our common stock is within the discretion of the Board of Directors and will depend upon our future earnings, our capital requirements, financial condition and other relevant factors. We have no plan to declare any dividends in the foreseeable future.

THE SUBSTANTIAL NUMBER OF SHARES THAT ARE OR WILL BE ELIGIBLE FOR SALE COULD CAUSE OUR COMMON STOCK PRICE TO DECLINE EVEN IF WE ARE SUCCESSFUL.

In August 2005, our registration statement on Form SB-2 (Registration No. 333-120573) relating to the resale of up to 14,836,576 shares of common stock held by certain of our stockholders was declared effective by the Securities and Exchange Commission. All of the shares covered by this registration statement are freely tradable.

Sales of significant amounts of common stock in the public market, or the perception that such sales may occur, could materially affect the market price of our common stock. These sales might also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

OUR COMMON STOCK IS SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE TRADING MARKET IN OUR SECURITIES IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE VALUE OF AN INVESTMENT IN OUR STOCK.

The Securities and Exchange Commission has adopted Rule 15g-9 which establishes the definition of a "penny stock," for the purposes relevant to us, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require:

o that a broker or dealer approve a person's account for transactions in penny stocks; and

o the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

In order to approve a person's account for transactions in penny stocks, the broker or dealer must:

o obtain financial information and investment experience objectives of the person; and

o make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Commission relating to the penny stock market, which, in highlight form:

o sets forth the basis on which the broker or dealer made the suitability determination; and

o that the broker or dealer received a signed, written agreement from the investor prior to the transaction.

Generally, brokers may be less willing to execute transactions in securities subject to the "penny stock" rules. This may make it more difficult for investors to dispose of our common stock and cause a decline in the market value of our stock.

Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading and about the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks.

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