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<SEC-DOCUMENT>0000897069-05-001571.txt : 20050627
<SEC-HEADER>0000897069-05-001571.hdr.sgml : 20050627
<ACCEPTANCE-DATETIME>20050624185709
ACCESSION NUMBER:		0000897069-05-001571
CONFORMED SUBMISSION TYPE:	S-3/A
PUBLIC DOCUMENT COUNT:		6
FILED AS OF DATE:		20050627
DATE AS OF CHANGE:		20050624

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FLEXIBLE SOLUTIONS INTERNATIONAL INC
		CENTRAL INDEX KEY:			0001069394
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS CHEMICAL PRODUCTS [2890]
		IRS NUMBER:				911922863
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		S-3/A
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-124751
		FILM NUMBER:		05916001

	BUSINESS ADDRESS:	
		STREET 1:		2614 QUEENSWOOD DR
		CITY:			VICTORIA B C V8N 1X5
		STATE:			A1
		BUSINESS PHONE:		2504779969

	MAIL ADDRESS:	
		STREET 1:		2614 QUEENSWOOD DR
		CITY:			VICTORIA BC CANADA
		STATE:			A1
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-3/A
<SEQUENCE>1
<FILENAME>sks147a.htm
<DESCRIPTION>6/24/05
<TEXT>
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     <TD WIDTH=73% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>As filed with the Securities and Exchange Commission on June 24, 2005</FONT></TD>
     <TD WIDTH=27% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Registration File No. 333-124751&nbsp;</FONT></TD></TR>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>UNITED STATES
<BR>SECURITIES AND EXCHANGE COMMISSION  </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Washington, D.C. 20549 </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>AMENDMENT NO. 1<BR>TO<BR>FORM S-3 </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>REGISTRATION STATEMENT
UNDER <BR>THE SECURITIES ACT OF
1933 </FONT></H1>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>FLEXIBLE SOLUTIONS INTERNATIONAL, INC.</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(Exact name of registrant as specified in its charter)</FONT></TD></TR>
</TABLE>
<BR>

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<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nevada</FONT></TD>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>91-1922863</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(State or other jurisdiction of</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(I.R.S. Employer</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>incorporation or organization)</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Identification No.)</FONT></TD></TR>
</TABLE>
<BR>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=94% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>615 Discovery Street</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Victoria, British Columbia</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>V8T 5G4, CANADA</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(250) 477-9969</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(Address, including zip code, and telephone number,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>including area code, of registrant's principal executive offices)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>Daniel B. O'Brien</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>President and Chief Executive Officer</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Flexible Solutions International, Inc.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>615 Discovery Street</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Victoria, British Columbia</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>V8T 5G4, CANADA</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(250) 477-9969</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(Name, address, including zip code, and telephone number,</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>including area code, of agent for service)</FONT></TD></TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>with copies to:</I> </FONT></P>





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<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Andrew B. Serwin, Esq.</FONT></TD>
     <TD WIDTH=50% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Paul A. Stewart, Esq.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Foley &amp; Lardner LLP</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Foley &amp; Lardner LLP</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>402 W. Broadway, Suite 2300</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>One Maritime Plaza, Sixth Floor</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>San Diego, California 92101-3542</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>San Francisco, California 94111-3409</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(619) 234-6655</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(415) 434-4484</FONT></TD></TR>
</TABLE>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>APPROXIMATE
DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:</B> At any time and from time to time
after the effective date of this Registration Statement. </FONT></P>

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<HR SIZE=5 COLOR=GRAY NOSHADE>



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     <HR ALIGN=CENTER WIDTH=50% SIZE=1 color=black NOSHADE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the only securities being registered on this Form are being offered pursuant to dividend
or interest reinvestment plans, please check the following box: |_| </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
any of the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest reinvestment plans, check
the following box: |X| </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the
same offering: |_| </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities
Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering: |_| </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
delivery of the prospectus is expected to be made pursuant to Rule 434 under the
Securities Act, please check the following box: |_| </FONT></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CALCULATION OF
REGISTRATION FEE </FONT></H1>










<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR>
     <TD COLSPAN=5><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
<TR VALIGN=Bottom>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Title of each class of<BR>
securities to be registered</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Amount to be<BR>
registered (1)</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Proposed maximum<BR>
offering price per<BR>
unit (2)</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Proposed maximum<BR>
aggregate offering price (2)</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Amount of<BR>
registration<BR>
fee</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=20% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares of common stock, par value $0.001 per share</FONT></TD>
     <TD WIDTH=15% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;900,000</FONT></TD>
     <TD WIDTH=25% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>$3.925</FONT></TD>
     <TD WIDTH=25% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>$3,532,500</FONT></TD>
     <TD WIDTH=15% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>$415.775</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=20% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Shares of common stock, par value $0.001 per share, underlying warrants</FONT></TD>
     <TD WIDTH=15% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;900,000</FONT></TD>
     <TD WIDTH=25% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>$3.925</FONT></TD>
     <TD WIDTH=25% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>$3,532,500</FONT></TD>
     <TD WIDTH=15% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>$415.775</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=20% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;</FONT></TD>
     <TD WIDTH=15% ALIGN=CENTER><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD WIDTH=25% ALIGN=CENTER><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD WIDTH=25% ALIGN=CENTER><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD>
     <TD WIDTH=15% ALIGN=CENTER><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=20% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=1>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</FONT></TD>
     <TD WIDTH=15% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>1,800,000</FONT></TD>
     <TD WIDTH=25% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>---</FONT></TD>
     <TD WIDTH=25% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>$7,065,000</FONT></TD>
     <TD WIDTH=15% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=1>$831.55*</FONT></TD></TR>
<TR>
     <TD COLSPAN=5><HR NOSHADE COLOR=#000000 SIZE=2></TD></TR>
</TABLE>
<BR>


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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               A total of 1,800,000 shares of common stock are being registered hereby, including 900,000 shares of common stock issuable upon the exercise of certain
               outstanding warrants. Pursuant to Rule 416 of the Securities Act of 1933, as
               amended ("Securities Act"), such number of shares of common stock registered hereby shall include
               an indeterminate number of shares of common stock that may be issued in
               connection with a stock split, stock dividend, recapitalization or similar
               event. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               Estimated solely for the purpose of calculating the registration fee in accordance
               with Rule 457(c) under the Securities Act. Based on the
               average of the high and low prices per share of common stock of the registrant
               as reported on the American Stock Exchange on May 4, 2005. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TR VALIGN=TOP>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3) </FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
               Pursuant to Rule 457(g) of the Securities Act, no registration fee is required for the warrants since the shares of common stock underlying the warrants are being registered hereby. </FONT></TD>
               </TR>
               </TABLE>
               <BR>

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               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
               <TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*</FONT></TD>
               <TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously paid.</FONT></TD>
               </TR>
               </TABLE>
               <BR>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>The
registrant hereby amends this Registration Statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further amendment
which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section&nbsp;8(a)&nbsp;of the Securities Act, or
until this Registration Statement shall become effective on such date as the Commission
acting pursuant to said Section 8(a), may determine.</B> </FONT></P>

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<HR SIZE=1 NOSHADE COLOR=BLACK WIDTH=25% ALIGN=CENTER>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Information
contained herein is subject to completion or amendment. A Registration Statement relating
to these securities has been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted prior to the time the
Registration Statement becomes effective. This prospectus shall not constitute an offer to
sell or the solicitation of an offer to buy nor shall there be any sale of these
securities in any state in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.</I> </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Subject to Completion
Dated June 24, 2005. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS </FONT></H1>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[FLEXIBLE LOGO]</FONT></P>







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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FLEXIBLE SOLUTIONS
INTERNATIONAL, INC. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,800,000 Shares of
Common Stock </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain
of our shareholders (the &#147;Selling Shareholders&#148;) are offering to sell up to
1,800,000 shares of our common stock (the &#147;Shares&#148;), 900,000 of which are
issuable upon the exercise of warrants to purchase common stock issued to the Selling
Shareholders. The Selling Shareholders acquired the Shares from us in a private placement
that closed on April 13, 2005. We are not offering or selling any of the Shares. The
Selling Shareholders may sell the Shares on the open market at market price in ordinary
broker transactions or in negotiated transactions, and they may pay broker commissions in
connection with such transactions. We will not receive any of the proceeds of sale of the
Shares nor pay any broker commissions in connection with such sales. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
common stock is listed on the American Stock Exchange under the trading symbol
&#147;FSI&#148;. On May 5, 2005, the closing price of our common stock was $4.00 per
share. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Before
investing in our securities, you should carefully consider each of the factors described
under &#147;Risk Factors&#148; beginning on page <U>I-6</U> of this prospectus.</I></B>  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Shareholders and any broker-dealer executing selling orders on behalf of or
purchasing from the Selling Shareholders may be deemed to be an &#147;underwriter&#148;
within the meaning of the Securities Act of 1933, as amended (the &#147;Securities
Act&#148;). Commissions received by any such broker-dealer may be deemed to be
underwriting commissions or discounts under the Securities Act. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Neither
the Securities and Exchange Commission (the &#147;Commission&#148;) nor any state
securities commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary is a criminal
offense.</I></B> </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should read this prospectus and any supplement carefully before you invest. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
date of this prospectus is  ___________________, 2005. </FONT></P>








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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>TABLE OF CONTENTS </FONT></H1>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Page </FONT><HR WIDTH=30% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=85% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>ABOUT THIS PROSPECTUS </FONT></TD>
     <TD WIDTH=15% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-1 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>WHERE YOU CAN FIND MORE INFORMATION </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-1 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-1 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-2 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>SPECIAL NOTE REGARDING TRADEMARKS </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-3 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>PROSPECTUS SUMMARY </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-4 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our Company </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-4 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Offering </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-5 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Corporate Information </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-6 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>RISK FACTORS </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-6 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>USE OF PROCEEDS </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-14 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>SELLING SHAREHOLDERS </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-14 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>PLAN OF DISTRIBUTION </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-16 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>VALIDITY OF COMMON STOCK </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-18 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>EXPERTS </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-18 </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><BR>INDEMNIFICATION </FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE="2">I-18 </FONT></TD></TR>
</TABLE>


<BR>
<BR>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>i </FONT></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ABOUT THIS PROSPECTUS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus is a part of a Registration Statement that we have filed with the Commission.
You should rely only on the information provided in this prospectus or any supplement or
amendment. We have not authorized anyone else to provide you with additional or different
information. You should not assume that the information in this prospectus or any
supplement or amendment is accurate as of any date other than the date on the front of
this prospectus or any supplement or amendment. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless
the context otherwise requires, &#147;Flexible Solutions,&#148; &#147;we,&#148;
&#147;our,&#148; &#147;us&#148; and similar expressions refer to Flexible Solutions
International, Inc., a Nevada corporation, and its subsidiaries, and the term &#147;common
stock&#148; means our Shares of common stock, par value $0.001 per share. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WHERE YOU CAN FIND
MORE INFORMATION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
file reports, proxy statements and other information with the Commission. Information
filed with the Commission by us can be inspected and copied at the public reference room
maintained by the Commission at 450 Fifth Street, N.W., Room&nbsp;1024, Washington, D.C.
20549. You may also obtain copies of this information by mail from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Further information on the operation of the Commission&#146;s public reference room
in Washington, D.C. can be obtained by calling the Commission at 1-800-SEC-0330. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Commission also maintains a website that contains reports, proxy statements and other
information about issuers, such as us, who file electronically with the Commission. The
address of that website is <U>http://www.sec.gov</U>. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
common stock is listed on the American Stock Exchange (AMEX: FSI), and reports, proxy
statements and other information concerning us can also be inspected at the offices of the
American Stock Exchange at 86 Trinity Place, New York, New York 10006. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INCORPORATION OF
CERTAIN DOCUMENTS BY REFERENCE </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Commission allows us to &#147;incorporate by reference&#148; into this prospectus certain
information which we file with the Commission. This means we can fulfill our obligations
to provide you with certain important information by referring you to other documents
which we have filed with the Commission. The information which is incorporated by
reference is an important part of this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are incorporating by reference into this prospectus the following documents which we have
filed, or may later file, with the Commission under the Securities Exchange Act of 1934,
as amended (the &#147;Exchange Act&#148;). The information we file with the Commission
later will automatically update and supersede the present information. </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our Quarterly Report on Form 10-QSB for the quarter ended March 31, 2005 (filed with the Commission on May 13, 2005); </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2004 (filed with the
Commission on March 24, 2005); </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
Form 8-K (filed with the Commission on January 10, 2005);</FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-1 </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
Form 8-K (filed with the Commission on March 24, 2005);</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
Form 8-K (filed with the Commission on April 6, 2005);</FONT></TD>
</TR>
</TABLE>
<BR>




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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
Form 8-K (filed with the Commission on April 14, 2005);</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
description of our common stock in our Registration Statement on Form 8-A (filed with the
Commission on November 12,               2002); and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>all
documents filed by us with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this prospectus and before the termination of the
offering. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
will provide to each person to whom a prospectus is delivered, including any beneficial
owner, a copy of any or all of the information which is incorporated by reference in this
prospectus, but which is not delivered with this prospectus. We will provide such
information, at no cost to the requesting person, upon written or oral request made to: </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Flexible Solutions
International, Inc. <BR>Attn: Investor Relations
<BR>615 Discovery Street
<BR>Victoria, British
Columbia <BR>V8T 5G4, CANADA
<BR>(250) 477-9969 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;You
should rely only on the information provided or incorporated by reference in this
prospectus or in the applicable supplement to this prospectus. You should not assume that
the information in this prospectus and the applicable supplement is accurate as of any
date other than the date on the front cover of the document. If information in
incorporated documents conflicts with information in this prospectus, you should rely on
the most recent information. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CAUTIONARY NOTE
REGARDING FORWARD-LOOKING STATEMENTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some
of the statements contained in this prospectus and incorporated by reference herein
discuss our plans and strategies for our business or make other forward-looking
statements, as this term is defined in the Private Securities Litigation Reform Act. The
words &#147;anticipates,&#148; &#147;believes,&#148; &#147;estimates,&#148;
&#147;expects,&#148; &#147;plans,&#148; &#147;intends,&#148; &#147;may,&#148;
&#147;could,&#148; &#147;will,&#148; &#147;continue,&#148; &#147;seek,&#148;
&#147;should,&#148; &#147;would&#148; and similar expressions are intended to identify
these forward-looking statements, but are not the exclusive means of identifying them.
These forward-looking statements reflect the current views of our management; however,
various risks, uncertainties and contingencies could cause our actual results, performance
or achievements to differ materially from those expressed in, or implied by, these
statements, including, without limitation, the following: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
relatively limited operating history and history of operating losses;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
further decline in the domestic and global economy that may delay the development and
introduction of our products;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
success, or lack thereof, in the introduction and marketing of new products into existing
and new markets;</FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-2 </FONT></P>


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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to manufacture existing and new products in volumes demanded by our customers and
at competitive prices with               adequate gross margins;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
risk of increased competition and our ability to increase our market share relative to
our competitors;</FONT></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to successfully integrate our business with operations of businesses we have
acquired and may acquire in the               future;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to finance the growth of our business with internal resources or through outside
financing at reasonable rates;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to manage our growth; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to produce our products at quality levels demanded by our customers.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
we believe that the expectations reflected in these forward-looking statements are
reasonable and achievable, such statements involve risks and uncertainties and no
assurance can be given that the actual results will be consistent with these
forward-looking statements. Except as otherwise required by Federal securities laws, we
undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, changed circumstances or any other
reason, after the date of this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>For
a discussion of important risks of an investment in our securities, including factors
that could cause actual results to   differ materially from results referred to in the
forward-looking statements, see &#147;Risk Factors&#148; beginning on page I-6 of this
prospectus. </I></B> </FONT></P>



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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SPECIAL NOTE REGARDING
TRADEMARKS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WATER$AVR&reg;,
H$&reg;, <IMG SRC="tinyflex.gif">&reg;, HEAT$AVR PRO&reg;, HEAT$AVR&reg;, W$&reg;, and ECOSAVR&#153; are our
trademarks. This prospectus may also contain trademarks and trade names of other
companies. All trademarks and trade names appearing in this prospectus are the property of
their respective owners. </FONT></P>

<BR>
<BR>
<BR>
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<BR>
<BR>
<BR>
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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-3 </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS SUMMARY </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>You
should read this summary together with the other information contained in other parts of
this prospectus and the documents which are incorporated by reference. Because it is a
summary, it does not contain all of the information that you should consider before
investing in our common stock.</I> </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our Company </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
were incorporated as Flexible Solutions, Ltd. (referred to hereinafter as "Flexible Ltd."),
a British Columbia corporation, on January 26, 1991.  On May 12, 1998, we merged Flexible
Ltd. with and into Flexible Solutions International, Inc., a Nevada corporation, and, in
exchange for all of the outstanding shares of Flexible Ltd., we issued 7,000,000 shares
of common stock, which represented all of our then-issued and then-outstanding shares, to
the former shareholders of Flexible Ltd.  Flexible Ltd. is now our wholly-owned
subsidiary.  Since November 2002, our common stock has traded on the American Stock
Exchange under the trading symbol "FSI". </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Flexible
Solutions is the parent holding company of Flexible Ltd., WaterSavr Global Solutions Inc.
(hereinafter referred to as "WaterSavr") and NanoChem Solutions Inc. (hereinafter
referred to as "NanoChem"). </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Flexible
Solutions, Ltd.</I> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Flexible
Ltd. was organized to develop and market swimming pool chemical products designed to
reduce heat loss.  To that end, we have developed HEAT$AVR&reg;, a chemical product for use
in swimming pools and personal spas that forms a thin, transparent layer on the water's
surface that reduces water evaporation and heat loss. We market the HEAT$AVR&reg; product as
a cost-effective and convenient way to save on the cost of energy required to heat pools
and spas.  Our studies indicate that approximately 70% of the energy lost from a swimming
pool occurs through water evaporation.  By using our HEAT$AVR&reg; product, we can minimize
that heat loss and save our customers money on their pool and spa energy needs. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>WaterSavr
Global Solutions Inc.</I> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
2002, we established WaterSavr to concentrate on the marketing of our WATER$AVR&reg; product.
 WATER$AVR&reg; is a patented powder that, when deployed onto a water surface of any size,
will significantly reduce evaporation.  We market WATER$AVR&reg; as a water conservation
product for use where water is standing or gently flowing and the need for water
conservation can justify the cost of purchase and deployment of the product.  We believe
that our WATER$AVR&reg; product may find a market for use in the following markets:
 reservoirs, potable water storage, aqueducts and canals, agricultural irrigation, flood
water crops, lawn and turf care, potted and bedding plants, stock watering ponds, and
mining. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
also produce and market WATER$AVR-BTI&#153;, a patent pending modification of the original
WATER$AVR&reg; that combines evaporation control with control of mosquito larvae.  The BTI
portion of the product is a recognized and approved, environmentally friendly method of
killing mosquito larvae during the first, second and third stages of larvae development. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>NanoChem
Solutions Inc.</I> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
May 25, 2004, we formed NanoChem in order to acquire certain of the assets of Donlar
Corporation, which owned a broad portfolio of environmentally friendly technologies and
products.  In June 2004, NanoChem purchased these assets from Donlar Corporation's
bankruptcy estate for $6.15 million.  The principal products that we acquired from Donlar
Corporation consist of water-soluble chemicals utilizing thermal polyaspartate
biopolymers (hereinafter referred to as "TPAs"), which are beta-proteins manufactured
from the common biological amino acid, L-aspartic.  TPAs can be formulated to prevent
corrosion and scaling in water piping within the petroleum, chemical, utility and mining
industries.  TPAs are also used as proteins to enhance fertilizers in improving crop
yields and as additives for household laundry detergents, consumer care products, and
pesticides. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-4 </FONT></P>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Offering </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
prospectus concerns an offering of up to 1,800,000 Shares by the Selling Shareholders. We
are not offering or selling any of the Shares. We have registered this offering in
compliance with registration rights which we granted to the Selling Shareholders when we
sold the Shares to them. The Selling Shareholders are not required to sell the Shares;
sales of the Shares are entirely at the discretion of each Selling Shareholder. The Shares
consist of 900,000 Shares of common stock purchased by the Selling Shareholders in a
private transaction for $3,375,000 on April 13, 2005, together with 900,000 additional Shares of our
common stock issuable to the Selling Shareholders pursuant to warrants purchased by them
contemporaneously with their purchase of such common stock. The warrants have a 4-year
term and, subject to the ownership restrictions set forth below, are immediately exercisable at a price of $4.50 per share. Under the terms of the warrants,
the holders thereof may not exercise the warrants to the extent such exercise would cause
any such holder, together with its affiliates, to have acquired a number of Shares of
common stock that would exceed either 4.999% or 9.999% of our then outstanding common
stock, including for purposes of such determination Shares issuable upon exercise of the
warrants. The restriction that prevents such holders, together with its affiliates, from
acquiring a number of Shares that would exceed 4.999% of our then outstanding common stock
may be waived by the holder of the warrant as to itself upon not less than 61 days notice
to us. The Selling Shareholders may sell the Shares either on the open market at market
price in ordinary broker transactions or in negotiated transactions, and they may pay
broker commissions in connection with such transactions. We will not receive any of the
proceeds of sale of the Shares nor pay any broker commissions in connection with such
sales. We will pay the costs of registering the offer and sale of the Shares with the
Commission and any required state securities agencies. </FONT></P>




<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=top>
     <TD WIDTH=25% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Securities Offered</B></FONT></TD>
     <TD WIDTH=75% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Selling Shareholders are offering up to 1,800,000 Shares, with 900,000 of those Shares consisting of Shares issuable pursuant to the exercise of warrants purchased by the Selling Shareholders.  When issued, the warrants were immediately exercisable through April 8, 2009.</FONT></TD></TR>
<TR VALIGN=top>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><B>Terms of the Offering</B></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>We have agreed to use our best efforts to keep this registration statement effective until the earlier of (i) four years after its effective date, (ii) all the Shares of the Selling Shareholders registered under this Registration Statement have been sold or (iii) all the Shares of the Selling Shareholders registered under this Registration Statement may be sold without volume restrictions pursuant to Rule 144(k) under the Securities Act.</FONT></TD></TR>
<TR VALIGN=top>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><B>Use of Proceeds</B></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>We will not receive any of the proceeds from any sale of the Shares offered by this prospectus by the Selling Shareholders. To the extent the Selling Shareholders exercise their warrants for cash, we intend to use the proceeds we receive from such exercise(s) for general corporate purposes.</FONT></TD></TR>
<TR VALIGN=top>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><B>Trading Symbol</B></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>FSI</FONT></TD></TR>
</TABLE>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-5 </FONT></P>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Corporate Information </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
principal executive offices are located at 615 Discovery Street, Victoria, British
Columbia, V8T 5G4, Canada. Our telephone number is (250) 477-9969. Our website is located
at <U>http://www.flexiblesolutions.com</U>. We do not intend the information found on our
website to be a part of this prospectus. </FONT></P>





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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>RISK FACTORS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Investing
in our common stock involves a significant degree of risk. You should carefully consider
the following risk factors and all the other information contained in this prospectus or
incorporated by reference before investing in our common stock. If any of the following
risks actually occurs, our business, financial condition and results of operations could
suffer, in which case the trading price of our common stock may decline.</I> </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks Related to our
Business </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We
have a limited operating history upon which to evaluate our potential for future success.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although
we were incorporated in 1991, we have been operating in our present form only since May
1998. To date, we have generated limited revenues from the sale of our products and do not
expect to generate significant revenues until we sell a significantly larger number of our
products. Accordingly, we have only a limited operating history upon which you can base an
evaluation of our business and prospects. The likelihood of our success must be considered
in light of the risks and uncertainties frequently encountered by middle stage companies
like ours in an evolving market. If we are unsuccessful in addressing these risks and
uncertainties, our business will be materially harmed. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We
have incurred significant operating losses since inception and may not sustain
profitability in the future.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have experienced operating losses and negative cash flow from operations since our
inception and we currently have an accumulated deficit. To the extent that our revenues do
not increase, our results of operations and liquidity will be materially adversely
affected. If we experience slower than anticipated revenue growth or if our operating
expenses exceed our expectations, we may not achieve profitability. Even if we achieve
profitability in the future, we may not be able to sustain it. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We
are a middle stage company and are more vulnerable to certain factors than our larger
competitors.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are a middle stage company and are subject to all of the following: (a) middle stage
companies typically have narrower product lines and smaller market shares than large
businesses; (b) middle stage companies tend to be more vulnerable to competitors' actions
and market conditions, as well as general economic downturns; (c) middle stage companies
tend to experience substantial variations in operating results; (d) middle stage companies' success
typically depends on the management talents and efforts of one or two persons or a small
group of persons-the death, disability or resignation of one or more of these persons
could have a material adverse impact on a middle stage company; and (e) middle stage
companies often need substantial additional capital to expand or compete. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-6 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Fluctuations
in our operating results may cause our stock price to decline, which in turn would negatively affect your investment in us.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Given
the nature of the markets in which we participate, we cannot reliably predict future
revenues and profitability. Changes in competitive, market and economic conditions may
cause us to adjust our operations. A high proportion of our costs are fixed, due in part
to our sales, research and development and manufacturing costs. Thus, small declines in
revenue could disproportionately affect our operating results. Factors that may affect our
operating results and the market price of our common stock include: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>demand
for and market acceptance of our products;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>competitive
pressures resulting in lower selling prices;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>adverse
changes in the level of economic activity in regions in which we do business;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>adverse
changes in industries, such as swimming pool construction, on which we are particularly
dependent;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in the portions of our revenue represented by various products and customers;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>delays
or problems in the introduction of new products;</FONT></TD>
</TR>
</TABLE>
<BR>



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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
announcement or introduction of new products, services or technological innovations by
our competitors;</FONT></TD>
</TR>
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<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>variations
in our product mix;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
timing and amount of our expenditures in anticipation of future sales;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>increased
costs of raw materials or supplies; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in the volume or timing of product orders.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We
have not paid, and do not expect to pay, dividends on our common stock.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have not paid any dividends on our common stock since our inception and do not intend to
pay any dividends to our common shareholders in the foreseeable future. We intend to
reinvest any earnings in the development and expansion of our business. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Although we have tried to minimize its effects, our
operations are subject to seasonal fluctuation.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
use of our swimming pool products increases in summer months in most markets and results
in our sales from January to June being greater than in July through December. Markets for
our WATER$AVR&reg; product are also seasonal, dependent on the wet versus dry seasons in
particular countries. We attempt to sell into a variety of countries with different
seasons on both sides of the equator in order to minimize seasonality. Our TPA business is
the least seasonal, however there is a small increase in the spring related to inventory
building for the crop season in the United States and a small slowdown in December as
oilfield customers run down stock in advance of year end, but otherwise, little seasonal
variation. We believe we are able to adequately respond to these seasonal fluctuations by
reducing or increasing production as needed. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-7 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Interruptions
in our ability to purchase raw materials and components may adversely affect our
profitability.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
purchase certain raw materials and components from third parties pursuant to purchase
orders placed from time to time. Because we do not have guaranteed long-term supply
arrangements with our suppliers, any material interruption in our ability to purchase
necessary raw materials or components could have a material adverse effect on our
business, financial condition and results of operations. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
WATER$AVR&reg; product has not proven to be a revenue producing product and we may never
recoup the cost associated with its  development.</I></B>  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
marketing efforts of our WATER$AVR&reg; product may result in continued losses. We
introduced our WATER$AVR&reg; product in June 2002 and, to date, we have delivered
quantities for testing by potential customers, but only one customer has ordered the
product for commercial use. This product can achieve success only if it is ordered in
substantial quantities by commercial customers who have determined that the water saving
benefits of the product exceed the costs of purchase and deployment of the product. We can
offer no assurance that we will receive sufficient orders of this product to achieve
profits or cover the additional expenses incurred to manufacture and market this product.
We expect to spend $400,000 on the marketing and production of our WATER$AVR&reg; product
in fiscal 2005. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>If
we do not introduce new products in a timely manner, our products could become obsolete
and our operating results would  suffer. </I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Without
the timely introduction of new products and enhancements, our products could become
obsolete over time, in which case our revenue and operating results would suffer. The
success of our new product offerings will depend upon several factors, including our
ability to: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>accurately
anticipate customer needs;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>innovate
and develop new products and applications;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>successfully
commercialize new products in a timely manner;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>price
our products competitively and manufacture and deliver our products in sufficient volumes
and on time; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>differentiate
our products from our competitors&#146; products.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
developing any new product, we may be required to make a substantial investment before we
can determine the commercial viability of the new product. If we fail to accurately
foresee our customers&#146; needs and future activities, we may invest heavily in research
and development of products that do not lead to significant revenues. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We
are dependent upon certain customers, the loss of any of which would be detrimental to our operating results.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Among
our current customers, we have identified six that are sizable enough that the loss of any
one would be significant. Any such loss of one or more of these customers could result in
a substantial reduction in our revenues. For this reason, we concentrate on maintaining
good sales relations with these customers. We also try and minimize this risk by seeking
out new customers. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-8 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
acquisition activities could disrupt our ongoing business and affect our results of operations.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June 2004, our subsidiary, NanoChem, completed the acquisition of Donlar Corporation,
which provided us with domestic and international patents relating to environmental
products and technologies, as well as a 56,780 square foot manufacturing plant on 40 acres
of property in an area outside of Chicago, Illinois. Acquisitions such as these often
involve risks, including: (i) disruption of our ongoing business; and (ii) an inability to
successfully integrate the acquired technologies and operations into our businesses and
maintain uniform standards, controls, policies and procedures. In addition, in order to
finance future acquisitions, we may have to raise additional funds, through either public
or private financings. We may be unable to obtain such funds or may be able to do so only
on unfavorable terms. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Economic,
political, and other risks associated with international sales and operations could
adversely affect our sales.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
fiscal year 2004, revenues from shipments made outside of the United States accounted for
approximately 65% of our revenues, 10% in fiscal year 2003 and 10% in fiscal year 2002.
Since we sell our products worldwide, our business is subject to risks associated with
doing business internationally. We anticipate that revenues from international operations
will continue to represent a sizable portion of our total revenue. Accordingly, our future
results could be harmed by a variety of factors, including: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in foreign currency exchange rates;</FONT></TD>
</TR>
</TABLE>
<BR>



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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in a country's or region's political or economic conditions, particularly in developing
or emerging markets;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>longer
payment cycles of foreign customers and difficulty of collecting receivables in foreign
jurisdictions;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>trade
protection measures and import or export licensing requirements;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>differing
tax laws and changes in those laws;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>difficulty
in staffing and managing widespread operations;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>differing
protection of intellectual property and changes in that protection; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>differing
regulatory requirements and changes in those requirements.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>We
are subject to credit risk and may be subject to substantial write-offs if any of our customers default on their payment obligations to us.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While
we are no longer subject to the concentrated credit risk that we were previously subject
to because of our relationship with Sunsolar Technologies, it is still a foreseeable risk
that our exposure to bad debts will increase as we shift to servicing a larger number of
customers in the swimming pool and personal spa, water evaporation, and TPA industries. We
currently allow our major customers between 30 and 45 days to pay for each shipment of
product we make to them. This practice, while customary, represents risk that we would be
subject to substantial write-offs of our accounts receivable if one or more of these
customers defaulted on their payment obligations to us. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-9 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
products can be hazardous if not handled, stored and used properly; it is unlikely that we would survive costly litigation.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Some
of our products are flammable and must be stored properly to avoid fire risk.
Additionally, some of our products may cause irritation to a person&#146;s eyes if they
are exposed to the concentrated product. Although we label our products to warn of such
risks, our sales could be reduced if our products were to be viewed as being dangerous to
use or if they are implicated in causing personal injury or property damage. We are not
currently aware of any circumstances in which our products have caused harm or property
damage to consumers.  Nevertheless, it would be difficult for us to weather the effects of costly litigation on our business. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
failure to comply with environmental regulations may create significant environmental
liabilities and force us to modify our manufacturing processes.</I></B>  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are subject to various federal, state and local environmental laws, ordinances and
regulations relating to the use, storage, handling and disposal of certain of our chemical
substances. Under such laws, we may become liable for the costs of removal or remediation
of these substances that have been used by our consumers or in our operations. Such laws
may impose liability without regard to whether we knew of, or caused, the release of such
substances. Any failure by us to comply with present or future regulations could subject
us to the imposition of substantial fines, suspension of production, alteration of
manufacturing processes, or cessation of operations, any of which could have a material
adverse effect on our business, financial condition, and results of operations. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
failure to protect our intellectual property could impair our competitive position.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While
we own certain patents and trademarks, some aspects of our business cannot be protected by
patents or trademarks. Accordingly, in these areas there are few legal barriers that
prevent potential competitors from copying certain of our products, processes and
technologies or from otherwise entering into operations in direct competition with us. In
particular, we have been informed that our former exclusive agent for the sale of our
products, Sunsolar, is now competing with us in the swimming pool and personal spa
markets. As a former distributor, they were given access to many of our sales, marketing
and manufacturing techniques. Accordingly, we are doing all that we can to ensure our
proprietary products and technologies are not used by them (or others) without our
permission. </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
products may infringe on the intellectual property rights of others, and resulting claims
against us could be costly and prevent us from making or selling certain products.</I></B>  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third
parties may seek to claim that our products and operations infringe their patent or other
intellectual property rights. We may incur significant expense in any legal proceedings to
protect our proprietary rights or to defend infringement claims by third parties. In
addition, claims of third parties against us could result in awards of substantial damages
or court orders that could effectively prevent us from making, using or selling our
products in the U.S. or abroad. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>A
claim for damages could materially and adversely affect our financial condition and
results of operations.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
business exposes us to potential product liability risks, particularly with respect to our
consumer swimming pool and personal spa products. There are many factors beyond our
control that could lead to liability claims, including the failure of our products to work
properly and the chance that consumers will use our products incorrectly or for purposes
for which they were not intended. There can be no assurance that the amount of product
liability insurance that we carry will be sufficient to protect us from product liability
claims. A product liability claim in excess of the amount of insurance we carry could have
a material adverse effect on our business, financial condition and results of operations. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-10 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
ongoing success is dependent upon the continued availability of certain key employees.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
business would be adversely affected if the executive services of Daniel B. O&#146;Brien
ceased to be available to us because we currently do not have any other employee with an
equivalent level of expertise in and knowledge of our industry. If Mr. O&#146;Brien no
longer served as our President and Chief Executive Officer, we would have to recruit one
or more new executives, with no real assurance that we would be able to engage a
replacement executive with the required skills on satisfactory terms. The market for
skilled employees is highly competitive, especially for employees in the fields in which
we operate. While our compensation programs are intended to attract and retain the
employees required for it to be successful, there can be no assurance that we will be able
to retain the services of all of our key employees or a sufficient number to execute on
our plans, nor can there be any assurances that we will be able to continue to attract new
employees as required. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Raising
additional capital or consummation of additional acquisitions through the issuance of
equity could dilute your ownership interest in us.</I></B>  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is likely that we will need to obtain additional funds in the future to grow our product
development, manufacturing, marketing and sales activities at the pace that we intend, to
continue to fund operating losses until our cash flow turns positive, or to fund
acquisitions. If we are unable to raise additional funds in the future, and if our sales and operating expenses remain as they have in the past,
we estimate that we have sufficient cash to continue current operations for an additional twelve months.  If we determine that we do need to raise additional capital in the future
and we are not successful in doing so, we might have to significantly scale back or delay
our growth plans, reduce staff and delay planned expenditures on research and development
and capital expenditures in order to continue as a going concern. Any reduction or delay
in our growth plans could materially adversely affect our ability to compete in the
marketplace, take advantage of business opportunities and develop or enhance our products. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
we receive additional funds through the issuance of equity securities or convertible debt
securities, our existing shareholders will likely experience dilution of their present
equity ownership position and voting rights. Depending on the number of shares issued and
the terms and conditions of the issuance, new equity securities could have rights,
preferences, or privileges senior to those of our common stock. The need to raise
additional capital will most likely be dilutive to our current shareholders and could
result in new investors receiving rights that are superior to those of existing
shareholders. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR"  -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Risks Related to our
Capital Structure and this Offering </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
Articles of Incorporation contain provisions that could discourage a takeover.</I></B> </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Articles of Incorporation authorize our Board of Directors to issue up to 1,000,000 shares
of preferred stock in one or more series, to fix the rights, preferences, privileges and
restrictions granted to or imposed upon any wholly unissued shares of preferred stock, to
fix the number of shares constituting any such series, and to fix the designation of any
such series, without further vote or action by shareholders. The terms of any series of
preferred stock, which may include priority claims to assets and dividends and special
voting rights, could adversely affect the rights of the holders of our common stock and
thereby reduce the value of our common stock. The issuance of preferred stock, coupled
with the concentration of ownership in the directors and executive officers, could
discourage certain types of transactions involving an actual or potential change in
control of our company, including transactions in which the holders of common stock might
otherwise receive a premium for their shares over then current prices, otherwise dilute
the rights of holders of common stock, and may limit the ability of such shareholders to
cause or approve transactions which they may deem to be in their best interests, all of
which could have a material adverse effect on the market price of our common stock. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-11 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Our
Articles of Incorporation limit the liability of our directors, which may limit the
remedies we or our shareholders have  available.</I></B>  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Articles of Incorporation provide that, pursuant to the Nevada Revised Statutes, the
liability of our directors for monetary damages shall be eliminated to the fullest extent
permissible under Nevada law. This is intended to eliminate the personal liability of a
director for monetary damages in an action brought by us, or in our right, for breach of a
director&#146;s duties to us or our shareholders and may limit the remedies available to
us or our shareholders. This provision does not eliminate the directors&#146; fiduciary
duty and does not apply to liabilities for: (i) acts or omissions that involve intentional
misconduct or a knowing and culpable violation of law; (ii) acts or omissions that a
director believes to be contrary to the best interests of our company or our shareholders
or that involve the absence of good faith on the part of the director; (iii) any
transaction from which a director derived an improper personal benefit; (iv) acts or
omissions that show a reckless disregard for the director&#146;s duty to us or our
shareholders in circumstances in which the director was aware, or should have been aware,
in the ordinary course of performing a director&#146;s duties, of a risk of serious injury
to us or our shareholders; (v) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director&#146;s duty to us or our
shareholders; and (vi) certain transactions or the approval of transactions in which a
director has a material financial interest. </FONT></P>







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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Due
to the current market price of our common stock, in conjunction with the fact that we are
a relatively small company with a history of operating losses, the future trading market
for our stock may not be active on a consistent basis, which may make it difficult for you
to sell your Shares.</I></B>  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
trading volume of our stock in the future will depend in part on our ability to increase
our revenue and reduce or eliminate our operating losses, which should increase the
attractiveness of our stock as an investment, thereby leading to a more liquid market for
our stock on a consistent basis. If an active and liquid trading market does not exist for
our common stock, you may have difficulty selling your Shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Due
to the concentration of holdings of our stock, two investors may be able to control
matters requiring shareholder approval or could cause our stock price to decline through
future sales because they beneficially own a large percentage of our common stock.</I></B>  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There
are 12,733,916 shares of our common stock outstanding as of May 2, 2005, of which Daniel
B. O&#146;Brien beneficially owns approximately 41% and Dr. Robert O&#146;Brien
beneficially owns approximately 16% (each of the aforementioned percentages includes stock
options and warrants that are currently exercisable). As a result of their significant
ownership, Mr. O&#146;Brien and Dr. O&#146;Brien may have the ability to exercise a
controlling influence over our business and corporate actions requiring shareholder
approval, including the election of our directors, a sale of substantially all of our
assets, a merger between us and another entity or an amendment to our Articles of
Incorporation. This concentration of ownership could delay, defer or prevent a change of
control and could adversely affect the price investors might be willing to pay in the
future for shares of our common stock. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-12 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A
significant percentage of the outstanding shares of our common stock, including the shares
beneficially owned by Mr. O&#146;Brien and Dr. O&#146;Brien, can be sold in the public
market from time to time, subject to limitations imposed by Federal securities laws. The
market price of our common stock could decline as a result of sales of a large number of
our presently outstanding shares of common stock by Mr. O&#146;Brien and Dr. O&#146;Brien
or other shareholders in the public market or due to the perception that these sales could
occur. This could also make it more difficult for us to raise funds through future
offerings of our equity securities. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-13 </FONT></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>USE OF PROCEEDS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Shareholders are selling the Shares and will receive all of the proceeds from any
sales. We will not receive any sales proceeds; except that, to the extent the Selling
Shareholders exercise their warrants for cash, we intend to use the proceeds we receive
from such<BR> exercise(s) for general corporate purposes. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SELLING SHAREHOLDERS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the Shares being offered in this prospectus are being offered by the Selling
Shareholders listed below. We have registered this offering because of registration rights
we granted to the Selling Shareholders when we sold the Shares to them. The Selling
Shareholders are not required to sell all or any of the Shares. The Shares consist of
900,000 Shares purchased by the Selling Shareholders in a private placement for $3,375,000 on April 13,
2005, together with 900,000 additional Shares issuable to the Selling Shareholders
pursuant to warrants purchased by them contemporaneously with the purchase of the Shares.
Subject to the ownership restrictions set forth below, the warrants are immediately exercisable at a price of $4.50 per share and have a 4-year term. Under
the terms of the warrants, the holders thereof may not exercise the warrants to the extent
such exercise would cause any such holder, together with its affiliates, to have acquired
a number of Shares that would exceed either 4.999% or 9.999% of our then outstanding
common stock, including for purposes of such determination Shares issuable upon exercise
of the warrants. The restriction that prevents such holders, together with its affiliates,
from acquiring a number of Shares that would exceed 4.999% of our then outstanding common
stock may be waived by the holder of the warrant as to itself upon not less than 61 days
notice to us. Other than as disclosed herein, no Selling Shareholder has had any position,
office or other material relationship with us during the past three years. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
table below lists the Selling Shareholders and other information regarding the beneficial
ownership of the common stock held by each of the Selling Shareholders. The column titled
&#147;Ownership Prior to Offering&#148; lists, for each Selling Shareholder, the number of
shares of common stock held by such shareholder including Shares issuable (pursuant to
warrants) to such shareholder. The column titled &#147;Shares Being Offered&#148; lists
the Shares of common stock (including shares issued or issuable upon exercise of warrants)
being offered by this prospectus by each Selling Shareholder. The column titled
&#147;Ownership After Offering&#148; assumes the sale of all of the Shares offered by each
Selling Shareholder, although each Selling Shareholder may sell all, some or none of his
or its Shares in this offering. </FONT></P>





<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=2>OWNERSHIP<BR>
PRIOR TO OFFERING <SUP>(1)</SUP></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SHARES<BR>
BEING OFFERED <SUP>(2)</SUP></FONT></TH>
     <TH COLSPAN=2><FONT FACE="Times New Roman, Times, Serif" SIZE=2>OWNERSHIP<BR>
AFTER OFFERING</FONT></TH></TR>
<TR VALIGN=Bottom>
     <TH ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Selling Shareholder*</FONT><HR WIDTH=40% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares</FONT><HR WIDTH=40% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>%</FONT><HR WIDTH=40% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Shares</FONT><HR WIDTH=40% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>%</FONT><HR WIDTH=40% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD WIDTH="44%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SF Capital Partners, Ltd. <SUP>(3)</SUP></FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;800,000</FONT></TD>
     <TD WIDTH="6%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;4.99%</FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(4)</SUP></FONT></TD>
     <TD WIDTH="15%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;800,000</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD WIDTH="6%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Catalina Capital <SUP>(5)</SUP></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;280,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;2.20%</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;280,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>HSBC Guyerzeller <SUP>(6)</SUP></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;200,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;1.57%</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;200,000</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Perritt Emerging Opportunities Fund <SUP>(7)</SUP></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;200,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;1.57%</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;200,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nite Capital, L.P. <SUP>(8)</SUP></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;140,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;1.10%</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;140,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bluegrass Growth Fund, L.P. <SUP>(9)</SUP></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;68,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;0.53%</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;68,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bluegrass Growth Fund, Ltd. <SUP>(10)</SUP></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;68,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;0.53%</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;68,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Alexander Klinkman <SUP>(11)</SUP></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;44,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;0.35%</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;44,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Total</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,800,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12.84%</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><SUP>(12)</SUP></FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,800,000</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-0-</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>**</FONT></TD></TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-14 </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>*  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>The
percentage of ownership for each holder is calculated based on 12,733,916 Shares
outstanding on May 2, 2005. Beneficial ownership is determined in accordance with Rule
13d-3 of the Exchange Act and generally includes Shares over which the holder has voting
or investment power, subject to community property laws. All Shares obtainable upon
conversion of securities or exercise of stock options or warrants (including those that
are not currently exercisable but will become exercisable within 60 days hereafter) are
considered to be beneficially owned by the person holding the options or warrants for
computing that person&#146;s percentage, but are not treated as outstanding for computing
the percentage of any other person.<BR><BR>None of the Selling Shareholders are, or are affiliates of, registered broker-dealers; except that SF Capital
Partners, Ltd. ("SF Capital") and HSBC Guyerzeller ("HSBC") may be deemed to be affiliates of registered broker-dealers.  SF Capital and HSBC have
represented to us that they each purchased the Shares in the ordinary course of business and, at the time of the
purchase of the Shares, neither had any agreements or understandings, directly or indirectly, with any person
to distribute the Shares. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>**  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Less
than 1%. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(1)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes
Shares covered by this prospectus. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(2)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Assumes
the completion of this offering and that the Selling Shareholders
                    dispose of all of their Shares covered by this prospectus, that they
do not                     dispose of any securities owned by them, but not covered by
this prospectus, and                     that they do not acquire any additional
securities. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(3)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes
400,000 Shares purchased in a private placement on April 13, 2005, and
                    400,000 Shares issuable upon the exercise of warrants granted to SF
Capital on April 13, 2005.
Michael A. Roth and                     Brian J. Stark possess voting and dispositive
power over all of the Shares held                     by SF Capital. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(4)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>The
warrants to purchase 400,000 Shares are exercisable only to the extent that
                    the number of Shares issuable upon exercise of the warrants, together
with all                     other Shares then-owned by SF Capital (but not including
Shares underlying                     unexercised portions of the warrants) would not
exceed 4.999% of the                     then-outstanding common stock as determined in
accordance with Section 13(d) of                     the Exchange Act. Accordingly, the
number of Shares shown as beneficially owned                     by SF Capital prior to
this offering is limited to 4.999% of the                     then-outstanding Shares. In
the absence of ownership limitations, SF Capital                     would beneficially
own 6.28% of our then-outstanding common stock as determined                     in
accordance with Section 13(d) of the Exchange Act. </FONT></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(5)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes
140,000 Shares purchased in a private placement on April 13, 2005, and
                    140,000 Shares issuable upon the exercise of warrants granted on
April 13, 2005.                     Mike Baum is the President of Catalina Capital (&#147;Catalina&#148;)
and                     consequently has voting control and investment discretion over
the Shares held                     by Catalina. Mr. Baum disclaims beneficial ownership
of the Shares held by                     Catalina. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(6)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes
100,000 Shares purchased in a private placement on April 13, 2005, and
                    100,000 Shares issuable upon the exercise of warrants granted on
April 13, 2005.                     David Garndo is the signing officer of HSBC
 and                     consequently has voting control
and investment discretion over the Shares held                     by HSBC. Mr. Garndo
disclaims beneficial ownership of the Shares held by HSBC. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(7)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes
100,000 Shares purchased in a private placement on April 13, 2005, and
                    100,000 Shares issuable upon the exercise of warrants granted on
April 13, 2005.                     Michael Corbett is the President of Perritt Emerging
Opportunities Fund                     (&#147;Perritt&#148;) and consequently has voting
control and investment                     discretion over the Shares held by Perritt.
Mr. Corbett disclaims beneficial                     ownership of the Shares held by
Perritt. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(8)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes
70,000 Shares purchased in a private placement on April 13, 2005, and
                    70,000 Shares issuable upon the exercise of warrants granted on April
13, 2005.                     Keith Goodman is the Manager of the General Partner of Nite
Capital, L.P.                     (&#147;Nite Capital&#148;) and consequently has voting
control and investment                     discretion over the Shares held by Nite
Capital. Mr. Goodman disclaims                     beneficial ownership of the Shares
held by Nite Capital. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(9)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes
34,000 Shares purchased in a private placement on April 13, 2005, and
                    34,000 Shares issuable upon the exercise of warrants granted on April
13, 2005.                     Deborah Solomon is the Managing Member of Bluegrass Growth
Fund Partners LLC                     (&#147;Bluegrass LLC&#148;), which manages
Bluegrass Growth Fund, L.P.                     (&#147;Bluegrass LP&#148;), and
consequently has voting control and investment                     discretion over the
Shares held by Bluegrass LP. Both Bluegrass LLC and Ms.                     Solomon
disclaim beneficial ownership of the Shares held by Bluegrass LP. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(10)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes 34,000 Shares purchased in a private placement on April 13, 2005, and 34,000 Shares issuable upon the
exercise of warrants granted on April 13, 2005.  Deborah Solomon is the Managing Member of Bluegrass LLC, which
manages Bluegrass Growth Fund, Ltd. ("Bluegrass Ltd."), and consequently has voting control and investment
discretion over the Shares held by Bluegrass Ltd.  Both Bluegrass LLC and Ms. Solomon disclaim beneficial
ownership of the Shares held by Bluegrass Ltd.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(11)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Includes 22,000 Shares purchased in a private placement on April 13, 2005, and 22,000 Shares issuable upon the
exercise of warrants granted on April 13, 2005.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>(12)  </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=1>Pursuant to the terms of the warrants, the number of Shares shown as beneficially owned by each Selling
Shareholder prior to this offering is limited to no greater than 4.999% per Selling Shareholder of the
then-outstanding Shares.  In the absence of ownership limitations, the Selling Shareholders would beneficially
own, in the aggregate, 14.14% of our then-outstanding common stock as determined in accordance with Section 13(d)
of the Exchange Act.</FONT></TD>
</TR>
</TABLE>
<BR>




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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-15 </FONT></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PLAN OF DISTRIBUTION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Shareholders and any of their pledgees, donees, transferees, assignees and
successors-in-interest may, from time to time, sell any or all of their Shares on any
stock exchange, market or trading facility on which the Shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The Selling Shareholders
may use any one or more of the following methods when selling Shares: </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ordinary
brokerage transactions and transactions in which the broker-dealer solicits investors;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>block
trades in which the broker-dealer will attempt to sell the Shares as agent, but may
position and resell a portion of the block as principal to facilitate the transaction; </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>an
exchange distribution in accordance with the rules of the applicable exchange;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>privately
negotiated transactions;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>to
cover short sales made after the date that this Registration Statement is declared
effective by the Commission;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>broker-dealers
may agree with the Selling Shareholders to sell a specified number of such Shares at a
stipulated price per               Share;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>a
combination of any such methods of sale; and</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>any
other method permitted pursuant to applicable law.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Shareholders may also sell shares under Rule 144 under the Securities Act, if
available, rather than under this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Broker-dealers
engaged by the Selling Shareholders may arrange for other broker-dealers to participate in
sales. Broker-dealers may receive commissions or discounts from the Selling Shareholders
(or, if any broker-dealer acts as an agent for the purchaser of Shares, from the
purchaser) in amounts to be negotiated. The Selling Shareholders do not expect these
commissions and discounts to exceed what is customary in the types of transactions
involved. </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-16 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Shareholders may from time to time pledge or grant a security interest in some or
all of the Shares owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell Shares from time to time
under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act amending the list of Selling Shareholders
to include the pledgee, transferee or other successors in interest as Selling Shareholders
under this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon
being notified in writing by a Selling Shareholder that any material arrangement has been
entered into with a broker-dealer for the sale of common stock through a block trade,
special offering, exchange distribution or secondary distribution or a purchase by a
broker or dealer, a supplement to this prospectus will be filed by us, if required,
pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such
Selling Shareholder and of the participating broker-dealer(s), (ii) the number of Shares
involved, (iii) the price at which such Shares were sold, (iv) the commissions paid or
discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set out or
incorporated by reference in this prospectus, and (vi) other facts material to the
transaction. In addition, being notified in writing by a Selling Shareholder that a donee
or pledgee intends to sell more than 500 Shares, a supplement to this prospectus will be
filed by us if then required in accordance with applicable securities laws. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Shareholders may also transfer the Shares in other circumstances, in which case
the transferees, pledgees or other successors in interest will be the selling beneficial
owners for purposes of this prospectus. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Selling Shareholders and any broker-dealers or agents that are involved in selling the
Shares may be deemed to be &#147;underwriters&#148; within the meaning of the Securities
Act in connection with such sales. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the Shares purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act. Discounts,
concessions, commissions and similar selling expenses, if any, that can be attributed to
the sale of securities will be paid by the applicable Selling Shareholder and/or the
purchasers. Each Selling Shareholder has represented and warranted to us that it acquired
the securities subject to this Registration Statement in the ordinary course of such
Selling Shareholder&#146;s business and, at the time of its purchase of such securities
such Selling Shareholder had no agreements or understandings, directly or indirectly, with
any person to distribute any such securities. </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have advised each Selling Shareholder that it may not use Shares registered pursuant to
this Registration Statement to cover short sales of Shares made prior to the date on which
this Registration Statement shall have been declared effective by the Commission. If a
Selling Shareholder uses this prospectus for any sale of the Shares, it will be subject to
the prospectus delivery requirements of the Securities Act. The Selling Shareholders will
be responsible to comply with the applicable provisions of the Securities Act and the
Exchange Act, and the rules and regulations promulgated thereunder, including, without
limitation, Regulation M, as applicable to such Selling Shareholders in connection with
resales of their respective Shares under this Registration Statement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are required to pay all fees and expenses incident to the registration of the Shares, but
we will not receive any proceeds from the sale of the Shares. We have agreed to indemnify
the Selling Shareholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act. </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-17 </FONT></P>


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<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>VALIDITY OF COMMON
STOCK </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
law firm of Foley &amp; Lardner LLP, of San Francisco, California, will pass on the
validity of the Shares of common stock that may be offered by this prospectus. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXPERTS </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements of Flexible Solutions International, Inc. as of the years ended December
31, 2004 and 2003, incorporated by reference in this prospectus and in the Registration Statement by reference to
our Annual Reports on Form 10-KSB for the years ended December 31, 2004 and 2003, have been audited by Cinnamon
Jang Willoughby &amp; Company, an independent registered public accounting firm, to the extent and for the periods
stated in their reports, which are incorporated herein by reference and in the Registration Statement, and have
been so incorporated in reliance upon the reports of such firm given upon their authority as experts in auditing
and accounting.  The consolidated financial statements of Flexible Solutions International, Inc. as of the year
ended December 31, 2002, incorporated by reference in this prospectus and in the Registration Statement by
reference to our Annual Report on Form 10-KSB for the year ended December 31, 2002, have been audited by Panell
Kerr Forster, an independent registered public accounting firm, to the extent and for the period stated in their
report, which is incorporated herein by reference and in the Registration Statement, and have been so
incorporated in reliance upon the report of such firm given upon their authority as experts in auditing and
accounting.</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INDEMNIFICATION </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
Articles of Incorporation allow us to indemnify our officers and directors to the maximum
extent allowed under the laws of the State of Nevada. This includes indemnification for
liabilities which could arise under the Securities Act. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to our directors, officers
and controlling persons pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. </FONT></P>


<BR>
<BR>
<BR>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>I-18 </FONT></P>

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     <HR ALIGN=LEFT WIDTH=100% SIZE=1 color=black NOSHADE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No
dealer, salesperson or other person has been authorized to give any information or to make
any representations not contained in this prospectus in connection with the offering
covered by this prospectus. If given or made, such information or representations must not
be relied upon as having been authorized by Flexible Solutions, a Selling Shareholder, or
any underwriter. This prospectus does not constitute an offer to sell, or a solicitation
of any offer to buy, common stock in any jurisdiction to any person to whom it is unlawful
to make such an offer or solicitation in such jurisdiction. Neither the delivery of this
prospectus nor any sale made under this prospectus shall under any circumstances create
any implication that the information contained in this prospectus is correct as of any
time after the date of the prospectus or that there has been no change in the affairs of
Flexible Solutions after the date of this prospectus. </FONT></P>

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     <HR ALIGN=LEFT WIDTH=100% SIZE=1 color=black  NOSHADE>

<BR>
<BR>
<BR>


<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1,800,000 SHARES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FLEXIBLE SOLUTIONS
INTERNATIONAL, INC. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>COMMON STOCK </FONT></H1>

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<HR SIZE=1 NOSHADE WIDTH=15% color=black ALIGN=center>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PROSPECTUS </FONT></H1>

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<HR SIZE=1 NOSHADE WIDTH=15% color=black ALIGN=center>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>_____________, 2005  </FONT></H1>


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<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II </FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 14. Other Expenses
of Issuance and Distribution. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
following table sets forth an itemized estimate of fees and expenses, other than
underwriting fees and expenses, payable by us in connection with the offering described in
this Registration Statement: </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=40% align=center>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD WIDTH="79%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SEC Registration Fee</FONT></TD>
     <TD WIDTH="21%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$831.55&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>AMEX Additional Listing Fee</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$36,000.00&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Counsel Fees and Expenses</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$20,000.00&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Accounting Fees and Expenses</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$1,000.00&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Transfer Agent and Registrar Fees</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$1,500.00&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Miscellaneous</FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>$1,000.00&nbsp;</FONT></TD></TR>
<TR>
     <TD></TD>
     <TD ALIGN=RIGHT><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN="BOTTOM" BGCOLOR="#CCCCCC">
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>Total</B></FONT></TD>
     <TD ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>$60,331.55</B>&nbsp;</FONT></TD></TR>
</TABLE>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All
of the above expenses will be paid by the registrant. </FONT></P>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 15. Indemnification
of Directors and Officers. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsection
1 of Section 78.7502 of the Nevada Revised Statutes (the &#147;Nevada Law&#148;) empowers
a corporation to indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit, or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys&#146; fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he is not liable pursuant to Section 78.138 of
Nevada Law or if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was unlawful. Section
78.138 of Nevada Law provides that, with certain exceptions, a director or officer is not
individually liable to the corporation or its shareholders for any damages as a result of
any act or failure to act in his capacity as a director or officer unless it is proven
that (i) his act or failure to act constituted a breach of his fiduciary duties as a
director or officer, and (ii) his breach of those duties involved intentional misconduct,
fraud or a knowing violation of law. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsection
2 of Section 78.7502 of Nevada Law empowers a corporation to indemnify any person who was
or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that such person acted in any of the capacities set forth above against
expenses, including amounts paid in settlement and attorneys&#146; fees actually and
reasonably incurred by him in connection with the defense or settlement of such action or
suit if he acted in accordance with the standards set forth above, except that no
indemnification may be made in respect of any claim, issue or matter as to which such
person shall have been adjudged by a court of competent jurisdiction, after exhaustion of
all appeals therefrom, to be liable to the corporation or for amounts paid in settlement
to the corporation, unless and only to the extent that the court in which such action or
suit was brought or other court of competent jurisdiction determines that, in view of all
the circumstances of the case, such person is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>II-1 </FONT></P>

<!-- *************************************************************************** -->
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<HR SIZE=5 COLOR=GRAY NOSHADE>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
78.7502 of Nevada Law further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or proceeding referred
to in subsections (1) and (2) of Section 78.7502 of Nevada Law, or in the defense of any
claim, issue or matter therein, the corporation shall indemnify him against expenses
(including attorneys&#146; fees) actually and reasonably incurred by him in connection
with the defense or settlement of the action or suit. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
78.751 of Nevada Law provides that the articles of incorporation, the bylaws or an
agreement made by the corporation may provide that the expenses of officers and directors
incurred in defending a civil or criminal action, suit or proceeding must be paid by the
corporation as they are incurred and in advance of the final disposition of the action,
suit or proceeding, upon receipt of an undertaking by or on behalf of the director or
officer to repay the amount if it is ultimately determined by a court of competent
jurisdiction that he is not entitled to be indemnified by the corporation. Our Articles of
Incorporation and Bylaws require us to make such payment of expenses in advance upon
receipt of such an undertaking. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
78.751 of Nevada Law requires a corporation to obtain a determination that any
discretionary indemnification is proper under the circumstances. Such a determination must
be made by the corporation&#146;s shareholders; its board of directors by majority vote of
a quorum consisting of directors who were not parties to the action, suit or proceeding;
or under certain circumstances by independent legal counsel. Section 78.751 also provides
that the indemnification provided for by Section 78.7502 of Nevada Law and the advancement
of expenses authorized pursuant to Section 78.751 of Nevada Law shall not be deemed
exclusive or exclude any other rights to which the indemnified party may be entitled
except that indemnification ordered by a court pursuant to Section 78.7502 of Nevada Law
may not be made on or behalf of any officer or director if a final adjudication
establishes that his acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action for which indemnification is
sought. The scope of indemnification under the statute shall continue as to directors,
officers, employees or agents who have ceased to hold such positions, and to the benefit
of their heirs, executors and administrators. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
78.752 of Nevada Law empowers a corporation to purchase and maintain insurance or make
other financial arrangements on behalf of any person who is or was a director, officer,
employee or agent of the corporation or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against him or incurred by him
in any such capacity or arising out of his status as such whether or not the corporation
would have the power to indemnify him against such liabilities and expenses. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Section
78.138(7) of Nevada Law provides that, with certain exceptions, a director or officer is
not individually liable to the corporation or its shareholders for any damages as a result
of any act or failure to act in his capacity as a director or officer unless it is proven
that (i) his act or failure to act constituted a breach of his fiduciary duties as a
director or officer and (ii) his breach of those duties involved intentional misconduct,
fraud or a knowing violation of law. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have provided for indemnification to the fullest extent permitted by the provisions of
Nevada Law in our Articles of Incorporation and Bylaws. However, we do not currently
maintain any directors&#146; and officers&#146; liability insurance policies. The
foregoing summaries are necessarily subject to the complete text of the applicable Nevada
Law, our Articles of Incorporation and our Bylaws and are qualified in their entirety by
reference thereto. </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>II-2 </FONT></P>

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<HR SIZE=5 COLOR=GRAY NOSHADE>



<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 16. Exhibits. </FONT></H1>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Exhibit No.</U></B>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Description</U></B> </FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>          5.1  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Opinion
of Foley &amp; Lardner LLP.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         10.1  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Securities Purchase Agreement, dated as of April 8, 2005, entered into by and between the Company and the Selling
Shareholders.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         10.2  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form of Warrant, issued as of April 8, 2005, to each of the Selling Shareholders.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         23.1  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Foley &amp; Lardner LLP (included in Exhibit 5.1).</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         23.2*  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Cinnamon Jang Willoughby &amp; Company.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         23.3  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Panell Kerr Forster.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         24.1*  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Power
of Attorney (included on the signature page hereof).</FONT></TD>
</TR>
</TABLE>
<BR>



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<HR SIZE=1 NOSHADE WIDTH=15% color=black  ALIGN=LEFT>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Project" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>* Previously filed. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold-TNR" FSL="Project" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Item 17. Undertakings. </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)          The
undersigned registrant hereby undertakes:  </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;                    To file, during any period
in which offers or sales are being made, a           post-effective amendment to this
registration statement:  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;                    To include any prospectus
required by section 10(a)(3) of the Securities Act of           1933, as amended;  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;                    To reflect in the
prospectus any facts or events arising after the effective           date of the
registration statement (or the most recent post-effective amendment           thereof)
which, individually or in the aggregate, represent a fundamental change           in the
information set forth in the registration statement. Notwithstanding the
          foregoing, any increase or decrease in the volume of securities offered (if the
          total dollar value of securities offered would not exceed that which was
          registered) and any deviation from the low or high end of the estimated maximum
          offering range may be reflected in the form of prospectus filed with the SEC
          pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
          represent no more than a 20% change in the maximum aggregate offering price set
          forth in the &#147;Calculation of Registration Fee&#148; table in the effective
          registration statement;  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;                    To include any material
information with respect to the plan of distribution           not previously disclosed
in the registration statement or any material change to           such information in the
registration statement;  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information
required to be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Securities and Exchange Commission by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended, that are incorporated by reference in the Registration Statement. </FONT>
</TD>
</TR>
</TABLE>
<BR>


<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>II-3 </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;                    That, for the purpose of
determining any liability under the Securities Act of 1933, as
amended, each such post-effective amendment shall be           deemed to be a new
registration statement relating to the securities offered           therein, and the
offering of such securities at that time shall be deemed to be           the initial <I>bona
fide</I> offering thereof.  </FONT>
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;                    To remove from registration
by means of a post-effective amendment any of the           securities being registered
which remain unsold at the termination of the           offering.  </FONT>
</TD>
</TR>
</TABLE>
<BR>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)          The
undersigned registrant hereby undertakes that, for purposes of determining           any
liability under the Securities Act of 1933, as amended, each filing of the
          registrant&#146;s annual report pursuant to Section 13(a) or 15(d) of the
          Securities Exchange Act of 1934, as amended, that is incorporated by reference
          in the registration statement shall be deemed to be a new registration
statement           relating to the securities offered therein, and the offering of such
securities           at that time shall be deemed to be the initial <I>bona fide</I> offering
          thereof.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)          That,
insofar as indemnification for liabilities arising under the Securities           Act of
1933, as amended, may be permitted to directors, officers and controlling
          persons of the registrant pursuant to the foregoing provisions, or otherwise,
          the registrant has been advised that in the opinion of the Securities and
          Exchange Commission such indemnification is against public policy as expressed
          in the Securities Act of 1933, as amended, and is, therefore, unenforceable. In
          the event that a claim for indemnification against such liabilities (other than
          the payment by the registrant of expenses incurred or paid by a director,
          officer or controlling person of the registrant in the successful defense of
any           action, suit or proceeding) is asserted by such director, officer or
controlling           person in connection with the securities being registered, the
registrant will,           unless in the opinion of its counsel the matter has been
settled by controlling           precedent, submit to a court of appropriate jurisdiction
the question whether           such indemnification by it is against public policy as
expressed in the           Securities Act of 1933, as amended, and will be governed by
the final           adjudication of such issue.  </FONT></P>


<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>

<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>II-4 </FONT></P>

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<HR SIZE=5 COLOR=GRAY NOSHADE>




<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Project" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant
to the requirements of the Securities Act, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on this Form S-3 and
has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Victoria, Province of British Columbia, Canada,
on this 24<SUP>th</SUP> day of June 2005. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>FLEXIBLE SOLUTIONS INTERNATIONAL, INC.</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR><BR>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:&nbsp;&nbsp;<U>/s/ Daniel B. O'Brien</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name:&nbsp;&nbsp;&nbsp;Daniel B. O'Brien</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;President and Chief Executive Officer</FONT></TD></TR>
</TABLE>

<BR>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to the requirements of the Securities Act, this Amendment to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated. </FONT></P>






<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TH ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Signature</U></FONT></TH>
     <TH ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Title</U></FONT></TH>
     <TH ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Date</U></FONT></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=30% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><U>/s/ Daniel B. O'Brien</U></FONT></TD>
     <TD WIDTH=40% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>President and Chief Executive Officer</FONT></TD>
     <TD WIDTH=30% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>June 24, 2005</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Daniel B. O'Brien</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Principal Executive Officer), Director</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><U>/s/ Fred J. Kupel</U></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Chief Financial Officer (Principal Financial</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>June 24, 2005</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fred J. Kupel</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>and Accounting Officer)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><U>/s/ **</U></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>June 24, 2005</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>John H. Bientjes</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><U>/s/ **</U></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>June 24, 2005</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Robert N. O'Brien</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><U>/s/ **</U></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>June 24, 2005</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dale Friend</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><U>/s/ **</U></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Director</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>June 24, 2005</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Eric G. Hodges</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=30% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR>**By:<U>/s/ Daniel B. O'Brien</U></FONT></TD>
     <TD WIDTH=40% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Attorney-in-Fact</I></FONT></TD>
     <TD WIDTH=30% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>June 24, 2005</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Daniel B. O'Brien</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>


<BR>
<BR>
<BR>
<BR>


<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>II-5 </FONT></P>

<!-- MARKER PAGE="sheet: 18; page: 18" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>







<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Default" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INDEX TO EXHIBITS </FONT></H1>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Exhibit No.</U></B>  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><U>Description</U></B></FONT></TD>
</TR>
</TABLE>
<BR>



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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>          5.1  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Opinion
of Foley &amp; Lardner LLP.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         10.1  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Securities Purchase Agreement, dated as of April 8, 2005, entered into by and between the Company and the Selling
Shareholders.</FONT></TD>
</TR>
</TABLE>
<BR>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         10.2  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Form of Warrant, issued as of April 8, 2005, to each of the Selling Shareholders.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         23.1  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Foley &amp; Lardner LLP (included in Exhibit 5.1).</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         23.2*  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent
of Cinnamon Jang Willoughby &amp; Company.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         23.3  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Consent of Panell Kerr Forster.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>         24.1*  </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Power
of Attorney (included on the signature page hereof).</FONT></TD>
</TR>
</TABLE>
<BR>

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<HR SIZE=1 NOSHADE WIDTH=15% color=black ALIGN=LEFT>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>* Previously filed. </FONT></P>

<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>
<BR>



<!-- MARKER FORMAT-SHEET="Page Number Center" FSL="Project" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Index-1 </FONT></P>


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<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>3
<FILENAME>sks147d.htm
<DESCRIPTION>5.1 OPINION
<TEXT>
<HTML>
<HEAD>
<TITLE>
</TITLE>
</HEAD>
<BODY>

<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 5.1 </FONT></P>




<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH ALIGN="Left"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">FOLEY &amp; LARDNER LLP</FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="20%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="30%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">ONE MARITIME PLAZA, SIXTH FLOOR<BR>
SAN FRANCISCO, CA  94111-3409<BR>
415.434.4484&nbsp;&nbsp;TEL<BR>
415.434.4507&nbsp;&nbsp;FAX<BR>
www.foley.com<BR><BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2">June 23, 2005
</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="1"><BR><BR>
</FONT></TD></TR>
<TR VALIGN="TOP">
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U><B></B></U> </FONT>
</TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE="1">CLIENT/MATTER NUMBER<BR>
056598-0101
</FONT></TD></TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Flexible Solutions International, Inc.<BR>
2614 Queenswood Drive<BR>
Victoria, B.C. V8N 1 x 5<BR><BR>
</FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Re: </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><U>Registration Statement on Form S-3 With Respect to the Resale of 1,800,000 Shares of Common Stock</U></FONT> </TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Lv 0-TNR" FSL="Project" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Ladies and Gentlemen: </FONT></P>




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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have acted as counsel to Flexible Solutions International, Inc. (the "Company") in
connection with the preparation and filing of a Registration Statement on Form S-3 (the "Registration
Statement"), pursuant to which the Company is registering for resale under the Securities
Act of 1933, as amended (the "Securities Act"), an aggregate of up to 1,800,000 shares of
its common stock, $0.001 par value per share (the "Registered Shares"), which may be sold
by the selling shareholders named in the prospectus included in the Registration
Statement (the "Selling Shareholders").  The Registered Shares consist of (i) 900,000
shares of common stock (the "Shares") issued in connection with the Securities Purchase
Agreement dated as of April 8, 2005, by and among the Company and the purchasers named in
the signature pages thereto (the "Purchase Agreement") and (ii) up to 900,000 shares of
common stock (the "Warrant Shares") issuable upon exercise of warrants (the "Warrants")
issued under the Purchase Agreement.  We have examined the Purchase Agreement, the
Warrants, the Registration Statement and such documents and records of the Company as we
have deemed necessary for the purpose of this opinion. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
our examination, we have assumed the genuineness of all signatures, the legal capacity of
all natural persons, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified,
conformed, photostatic or facsimile copies and the authenticity of the originals of such
copies. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Based
upon the foregoing, we are of the opinion that the Shares have been validly issued and
are fully paid and nonassessable, and the Warrant Shares, when issued upon due and proper
exercise of the Warrants in accordance with the terms thereof and upon due execution by
the Company and registration by its registrar of the Warrant Shares, will be validly
issued, fully paid and nonassessable. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Please
note that we are opining herein as to the effect on the subject transaction only of the
federal laws of the United States and the General Corporation Law of the State of Nevada,
and we express no opinion with respect to the applicability thereto, or the effect
thereon, of the laws of any other jurisdiction. </FONT></P>




<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="20%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">
BOSTON  <BR>
BRUSSELS<BR>
CHICAGO <BR>
DETROIT
</FONT></TD>
     <TD WIDTH="20%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">
JACKSONVILLE<BR>
LOS ANGELES <BR>
MADISON     <BR>
MILWAUKEE
</FONT></TD>
     <TD WIDTH="20%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">
NEW YORK  <BR>
ORLANDO   <BR>
SACRAMENTO<BR>
SAN DIEGO
</FONT></TD>
     <TD WIDTH="20%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">
SAN DIEGO/DEL MAR<BR>
SAN FRANCISCO    <BR>
SILICON VALLEY   <BR>
TALLAHASSEE
</FONT></TD>
     <TD WIDTH="20%"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">
TAMPA           <BR>
TOKYO           <BR>
WASHINGTON, D.C.<BR>
WEST PALM BEACH
</FONT></TD></TR>
</TABLE>





<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 50; page: 50" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Flexible Solutions
International, Inc.<BR>
June 23, 2005<BR>Page 2 </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are opining only as to the matters set forth herein as of May 6, 2005.  We assume no
obligation to revise or supplement our opinions should the present laws, or the
interpretation thereof, be changed, or to revise or supplement our opinions in respect of
any circumstances or events that occur subsequent to such date. </FONT></P>


<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
hereby consent to the filing of this opinion as an exhibit to the Registration Statement
and any amendment thereto, including any and all post-effective amendments, and to the
reference to our firm in the prospectus of the Registration Statement under the heading "Validity
of Common Stock."  In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities Act. </FONT></P>






<TABLE WIDTH="100%" BORDER="0" CELLPADDING="0" CELLSPACING="0">
<TR VALIGN="BOTTOM">
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TH></TR>
<TR VALIGN="TOP">
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="50%"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Very truly yours,<BR>
<BR>
/s/ Foley &amp; Lardner LLP<BR>
<BR>
<BR><BR>
</FONT></TD></TR>
</TABLE>
<BR>


<BR><BR>




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</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>4
<FILENAME>sks147c.htm
<DESCRIPTION>10.1 SECURITIES PURCHASE AGREEMENT
<TEXT>
<HTML>
<HEAD>
<TITLE></TITLE>
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<BODY>



<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 10.1 </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major Center Bold-TNR" FSL="Workstation" -->
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECURITIES PURCHASE AGREEMENT </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Securities Purchase Agreement (this <B>&#147;Agreement&#148;</B>) is dated as of April 8,
2005, among Flexible Solutions International, Inc., a Nevada corporation (the
<B>&#147;Company&#148;</B>), and the investors identified on the signature pages hereto
(each, an <B>&#147;Investor&#148;</B> and collectively, the <B>&#147;Investors&#148;</B>). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WHEREAS,
subject to the terms and conditions set forth in this Agreement and pursuant to Section
4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, the
Company desires to issue and sell to each Investor, and each Investor, severally and not
jointly, desires to purchase from the Company certain securities of the Company, as more
fully described in this Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Company and the Investors agree as follows: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR"  -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE I.<BR>DEFINITIONS</FONT></P>


<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Definitions</U>.
In addition to the terms defined elsewhere in this Agreement, for all purposes of this
Agreement, the following terms shall have the meanings indicated in this Section 1.1:  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Action&#148;</B>
means any action, claim, suit, inquiry, notice of violation, proceeding (including,
without limitation, any investigation or partial proceeding such as a deposition) or
investigation pending or threatened in writing against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency, regulatory authority (U.S. or Canadian federal,
state, provincial, county, local or foreign), stock market, stock exchange or trading
facility. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Large Indent Lv 0-TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Additional
Shares&#148;</B> has the meaning set forth in Section 4.7. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Affiliate&#148;</B>
means any Person that, directly or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Available
Undersubscription Amount&#148;</B> has the meaning set forth in Section 4.3(b). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Basic
Amount&#148;</B> has the meaning set forth in Section 4.3(b). </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Business
Day&#148;</B> means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of New York or Victoria,
British Columbia are authorized or required by law or other governmental action to close. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Closing&#148;
</B>means the closing of the purchase and sale of the Securities pursuant to Article II of
this Agreement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Closing
Date&#148;</B> means the Business Day immediately following the date on which all of the
conditions set forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as
the parties may agree. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Commission&#148;</B>
means the U.S. Securities and Exchange Commission. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Common
Stock&#148;</B> means the common stock of the Company, par value $.001 per share, and any
securities into which such common stock may hereafter be reclassified, converted or
exchanged. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Common
Stock Equivalents&#148;</B> means any securities of the Company or any Subsidiary which
entitle the holder thereof to acquire Common Stock at any time, including without
limitation, any debt, preferred stock, rights, options, warrants or other instrument that
is at any time convertible into or exchangeable for, or otherwise entitles the holder
thereof to receive, Common Stock or other securities that entitle the holder to receive,
directly or indirectly, Common Stock. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Company
Counsel&#148;</B> means Foley &amp; Lardner LLP.</FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Company
Deliverables&#148;</B> has the meaning set forth in Section 2.2(a). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Disclosure
Materials&#148;</B> has the meaning set forth in Section 3.1(h). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Effective
Date&#148;</B> means the date that the initial Registration Statement required by Section
2(a) of the Registration Rights Agreement is first declared effective by the Commission. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Evaluation
Date&#148;</B> has the meaning set forth in Section 3.1(s). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Exchange
Act&#148;</B> means the Securities Exchange Act of 1934, as amended. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;First
Notice&#148;</B> has the meaning set forth in Section 4.3(a). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;GAAP&#148;</B>
means U.S. generally accepted accounting principles. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Intellectual
Property Rights&#148;</B> has the meaning set forth in Section 3.1(p). </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Investment
Amount&#148;</B> means, with respect to each Investor, the dollar amount that such
Investor is investing in the Securities at Closing, as indicated on such Investor&#146;s
signature page to this Agreement under the line &#147;Investment Amount&#148;. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Investor
Deliverables&#148;</B> has the meaning set forth in Section 2.2(b). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Investor Party&#148;</B>
has the meaning set forth in Section 4.9. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Lien&#148;</B>
means any lien, charge, encumbrance, security interest, right of first refusal or other
restrictions of any kind. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Losses&#148;</B>
has the meaning set forth in Section 4.9. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Material
Adverse Effect&#148;</B> means any of (i) a material and adverse effect on the legality,
validity or enforceability of any Transaction Document, (ii) a material and adverse effect
on the results of operations, assets, prospects, business or condition (financial or
otherwise) of the Company and the Subsidiaries, or (iii) an adverse impairment to the
Company&#146;s ability to perform on a timely basis any of its obligations under any
Transaction Document. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;New
Issue Securities&#148;</B> has the meaning set forth in Section 4.3. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;New York
Courts&#148;</B> means the state and federal courts sitting in the City of New York,
Borough of Manhattan. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Notice
of Acceptance&#148;</B> has the meaning set forth in Section 4.3(b). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Outside
Date&#148;</B> means April 15, 2005. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Per
Share Purchase Price&#148;</B> equals $3.75. </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Person&#148;</B>
means an individual or corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company, government (or
an agency or subdivision thereof) or other entity of any kind. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Refused
Securities&#148;</B> has the meaning set forth in Section 4.3(c). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Registration
Statement&#148;</B> means a registration statement meeting the requirements set forth in
the Registration Rights Agreement and covering the resale by the Investors of the Shares
and the Warrant Shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Registration
Rights Agreement&#148;</B> means the Registration Rights Agreement, dated as of the
Closing Date, among the Company and the Investors, in the form of <U>Exhibit B</U> hereto. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Rule
144&#148;</B> means Rule 144 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same effect as such Rule. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;SEC
Reports&#148;</B> has the meaning set forth in Section 3.1(h). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Securities&#148;</B>
means the Shares, the Warrants and the Warrant Shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Securities
Act&#148;</B> means the Securities Act of 1933, as amended. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Shares&#148;</B>
means the shares of Common Stock issued or issuable to the Investors pursuant to this
Agreement, including any Additional Shares. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Short
Sales&#148;</B> include, without limitation, all &#147;short sales&#148; as defined in
Rule 3b-3 of the Exchange Act and include all types of direct and indirect stock pledges,
forward sale contracts, options, puts, calls, short sales, swaps and similar arrangements
(including on a total return basis), and sales and other transactions through non-US
broker dealers or foreign regulated brokers having the effect of hedging the securities or
investment made under this Agreement. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Subsidiary&#148;</B>
means any subsidiary of the Company required to be identified in <U>Schedule 3.1(a)</U>. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Threshold
Price&#148; </B>means the  Purchase Price (subject to equitable adjustment for
stock splits, recombinations and similar events that may occur following the Closing Date
and prior to the date in question). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Trading
Day&#148;</B> means (i) a day on which the Common Stock is traded on a Trading Market
(other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a
Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if
the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not listed or
quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business
Day. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Trading
Market&#148;</B> means whichever of the New York Stock Exchange, the American Stock
Exchange, the NASDAQ National Market, the NASDAQ SmallCap Market or OTC Bulletin Board on
which the Common Stock is listed or quoted for trading on the date in question. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Transaction
Documents&#148;</B> means this Agreement, the Warrants, the Registration Rights Agreement,
and any other documents or agreements executed in connection with the transactions
contemplated hereunder. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Undersubscription
Amount&#148;</B> has the meaning set forth in Section 4.3(b). </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Warrants&#148;
</B>means the Common Stock purchase warrants in the form of <U>Exhibit A</U>, which are
issuable to the Investors at the Closing. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Warrant
Shares&#148; </B>means the shares of Common Stock issuable upon exercise of the Warrants. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE II.<BR>PURCHASE AND SALE</FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Closing</U>.
The Closing shall take place at the offices of Bryan Cave LLP, 1290 Avenue of the
Americas, New York, NY 10104 at 4:30 p.m. (New York time) on the Closing Date or at such
other location or time as the parties may agree.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Closing
Deliveries</U>. (a)&nbsp;&nbsp;At the Closing, the Company shall deliver or cause to be
delivered to each Investor the following (the <B>&#147;Company Deliverables&#148;</B>):  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          a
certificate evidencing a number of Shares equal to such Investor&#146;s
          Investment Amount divided by the Per Share Purchase Price, registered in the
          name of such Investor;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          a
Warrant, registered in the name of such Investor, pursuant to which such
          Investor shall have the right to acquire 100% of the number of Shares issuable
          to such Investor pursuant to Section 2.2(a)(i);  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          the
legal opinion of Company Counsel, in agreed form, addressed to the           Investors;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          the
Registration Rights Agreement, duly executed by the Company; and  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          an
officer&#146;s certificate, pursuant to Section 5.1(g) herein.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At the
Closing, each Investor shall deliver or cause to be delivered to the Company the following (the <B>&#147;Investor Deliverables&#148;</B>):  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          to
the Company, its Investment Amount, in United States dollars and in           immediately
available funds, by wire transfer to an account designated in           writing by the
Company for such purpose; and  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          the
Registration Rights Agreement, duly executed by such Investor.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5 </FONT></P>






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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE III.<BR>REPRESENTATIONS AND WARRANTIES</FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Representations
 and  Warranties of the Company.  The Company  hereby makes the following
 representations and warranties to each Investor: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Subsidiaries</U>.&nbsp;&nbsp;The
Company has no direct or indirect Subsidiaries other than as specified in <U>Schedule
3.1(a)</U>. Except as disclosed in <U>Schedule 3.1(a)</U>, the           Company owns,
directly or indirectly, all of the capital stock of each           Subsidiary free and
clear of any and all Liens, and all the issued and           outstanding shares of
capital stock of each Subsidiary are validly issued and           are fully paid,
non-assessable and free of preemptive and similar rights.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Organization and Qualification</U>.&nbsp;&nbsp;The Company and each Subsidiary are duly  incorporated or otherwise
organized, validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization (as applicable), with the requisite power and authority
to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the
provisions of its respective certificate or articles of incorporation, bylaws or other
organizational or charter documents. The Company and each Subsidiary are duly qualified
to conduct its respective businesses and are in good standing as a foreign corporation or
other entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the failure to be
so qualified or in good standing, as the case may be, could not, individually or in the
aggregate, have or reasonably be expected to result in a Material Adverse Effect.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Authorization; Enforcement</U>.&nbsp;&nbsp;The  Company  has  the  requisite  corporate  power  and authority to enter into and to
consummate the transactions contemplated by each of the Transaction Documents and
otherwise to carry out its obligations thereunder. The execution and delivery of each of
the Transaction Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the part of the
Company and no further action is required by the Company in connection therewith. Each
Transaction Document has been (or upon delivery will have been) duly executed by the
Company and, when delivered in accordance with the terms hereof, will constitute the
valid and binding obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of, creditors&#146; rights and remedies or by other
equitable principles of general application.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No Conflicts</U>.&nbsp;&nbsp;The execution,  delivery and performance of the Transaction  Documents by the Company
and the consummation by the Company of the transactions contemplated thereby do not and
will not (i) conflict with or violate any provision of the Company&#146;s or any
Subsidiary&#146;s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a default (or
an event that with notice or lapse of time or both would become a default) under, or give
to others any rights of termination, amendment, acceleration or cancellation (with or
without notice, lapse of time or both) of, any agreement, credit facility, debt or other
instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding
to which the Company or any Subsidiary is a party or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction of any
court or governmental authority to which the Company or a Subsidiary is subject
(including federal and state securities laws and regulations), or by which any property
or asset of the Company or a Subsidiary is bound or affected; except in the case of each
of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or
reasonably be expected to result in a Material Adverse Effect.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Filings, Consents and Approvals</U>.&nbsp;&nbsp;The Company is not  required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or registration with,
any court or other federal, state, local or other governmental authority or other Person
in connection with the execution, delivery and performance by the Company of the
Transaction Documents, other than (i) the filing with the Commission of one or more
Registration Statements in accordance with the requirements Registration Rights
Agreement, (ii) filings required by state securities laws, (iii) the filing of a Notice
of Sale of Securities on Form D with the Commission under Regulation D of the Securities
Act, (iv) the filings required in accordance with Section 4.6 and 4.11, (v) <U>the filing
of an Additional Listing Application with the American Stock Exchange, </U>and (vi) those
that have been made or obtained prior to the date of this Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Issuance of Securities</U>.&nbsp;&nbsp;The Securities have been duly authorized and, when issued and paid
for in accordance with the Transaction Documents, will be duly and validly issued, fully
paid and nonassessable, free and clear of all Liens. The Company has reserved from its
duly authorized capital stock the shares of Common Stock issuable pursuant to this
Agreement and the Warrants in order to issue the Shares and the Warrant Shares.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Capitalization</U>.&nbsp;&nbsp;The
number of shares and type of all authorized, issued and outstanding capital
          stock of the Company, and all shares of Common Stock reserved for issuance
under           the Company&#146;s various option and incentive plans, is specified in
the SEC           Reports and on <U>Schedule 3.1(g)</U>. Except as specified in the SEC
Reports           and on <U>Schedule 3.1(g)</U>, no securities of the Company are
entitled to           preemptive or similar rights, and no Person has any right of first
refusal,           preemptive right, right of participation, or any similar right to
participate in           the transactions contemplated by the Transaction Documents.
Except as specified           in the SEC Reports and on <U>Schedule 3.1(g)</U>, there are
no outstanding           options, warrants, scrip rights to subscribe to, calls or
commitments of any           character whatsoever relating to, or securities, rights or
obligations           convertible into or exchangeable for, or giving any Person any
right to           subscribe for or acquire, any shares of capital stock of the Company,
or           contracts, commitments, understandings or arrangements by which the Company
or           any Subsidiary is or may become bound to issue additional shares of capital
          stock of the Company, or securities or rights convertible or exchangeable into
          shares of capital stock of the Company. The issue and sale of the Securities
          will not, immediately or with the passage of time, obligate the Company to
issue           shares of capital stock of the Company or other securities to any Person
(other           than the Investors under the Transaction Documents) and will not result
in a           right of any holder of Company securities to adjust the exercise,
conversion,           exchange or reset price under such securities.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>SEC Reports; Financial Statements</U>.&nbsp;&nbsp;The Company has filed all reports,  forms or other information
required to be filed by it under the Securities Act and the Exchange Act, including
pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date
hereof (or such shorter period as the Company was required by law to file such reports,
forms or other information) (the foregoing materials being collectively referred to
herein as the <B>&#147;SEC Reports&#148;</B> and, together with the Schedules to this
Agreement (if any), the <B>&#147;Disclosure Materials&#148;</B>) on a timely basis or has
timely filed a valid extension of such time of filing and has filed any such SEC Reports
prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and
the Exchange Act and the rules and regulations of the Commission promulgated thereunder,
and none of the SEC Reports, when filed, contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the SEC Reports
comply in all material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with GAAP applied on a
consistent basis during the periods involved, except as may be otherwise specified in
such financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries as of
and for the dates thereof and the results of operations and cash flows for the periods
then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end
audit adjustments. For purposes of this Agreement, any reports, forms or other
information provided to the Commission, whether by filing, furnishing or otherwise
providing, is included in the term &#147;filed&#148; (or any derivations thereof).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Press Releases</U>.&nbsp;&nbsp;The press  releases  disseminated  by the  Company  during  the twelve months preceding
the date of this Agreement do not individually or taken as a whole contain any untrue
statement of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made and when made, not misleading.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Material Changes</U>.&nbsp;&nbsp;Since the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in the SEC Reports, (i) there has been no
event, occurrence or development that has had or that could reasonably be expected to
result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities
(contingent or otherwise) other than (A) trade payables, accrued expenses and other
liabilities incurred in the ordinary course of business consistent with past practice and
(B) liabilities (not to exceed $100,000) not required to be reflected in the Company&#146;s
financial statements pursuant to GAAP or required to be disclosed in filings made with
the Commission, (iii) the Company has not altered its method of accounting or the
identity of its auditors, (iv) the Company has not declared or made any dividend or
distribution of cash or other property to its shareholders or purchased, redeemed or made
any agreements to purchase or redeem any shares of its capital stock, and (v) the Company
has not issued any equity securities, except pursuant to existing Company stock option
plans and consistent with past practice. The Company does not have pending before the
Commission any request for confidential treatment of information.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Litigation</U>.&nbsp;&nbsp;There
is no Action which (i) adversely affects or challenges the legality,           validity
or enforceability of any of the Transaction Documents or the Securities           or (ii)
except as specifically disclosed in the SEC Reports, could, if there           were an
unfavorable decision, individually or in the aggregate, have or           reasonably be
expected to result in a Material Adverse Effect. Neither the           Company nor any
Subsidiary, nor any director or officer thereof (in his or her           capacity as
such), is or has been the subject of any Action involving a claim of           violation
of or liability under federal or state securities laws or a claim of           breach of
fiduciary duty, except as specifically disclosed in the SEC Reports.           There has
not been, and to the knowledge of the Company, there is not pending           any
investigation by the Commission involving the Company or any current or           former
director or officer of the Company (in his or her capacity as such). The
          Commission has not issued any stop order or other order suspending the
          effectiveness of any registration statement filed by the Company or any
          Subsidiary under the Exchange Act or the Securities Act.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Labor Relations</U>.&nbsp;&nbsp;No  material  labor  dispute  exists  or,  to  the  knowledge  of the Company, is
imminent with respect to any of the employees of the Company.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Compliance</U>.&nbsp;&nbsp;Neither
the Company nor any Subsidiary (i) is in default under or in violation           of (and
no event has occurred that has not been waived that, with notice or           lapse of
time or both, would result in a default by the Company or any           Subsidiary
under), nor has the Company or any Subsidiary received notice of a           claim that
it is in default under or that it is in violation of, any indenture,           loan or
credit agreement or any other agreement or instrument to which it is a           party or
by which it or any of its properties is bound (whether or not such           default or
violation has been waived), (ii) is in violation of any order of any           court,
arbitrator or governmental body, or (iii) is or has been in violation of           any
statute, rule or regulation of any governmental authority, including without
          limitation all foreign, federal, state and local laws relating to taxes,
          environmental protection, occupational health and safety, product quality and
          safety and employment and labor matters, except in each case as could not,
          individually or in the aggregate, have or reasonably be expected to result in a
          Material Adverse Effect. The Company is in compliance with all effective
          requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and
          regulations thereunder, that are applicable to it, except where such
          noncompliance could not have or reasonably be expected to result in a Material
          Adverse Effect.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Regulatory Permits</U>.&nbsp;&nbsp;The  Company  and  the  Subsidiaries  possess  all  certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory authorities
necessary to conduct their respective businesses as described in the SEC Reports, except
where the failure to possess such permits could not, individually or in the aggregate,
have or reasonably be expected to result in a Material Adverse Effect, and neither the
Company nor any Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such permits.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Title to Assets</U>.&nbsp;&nbsp;The Company and the  Subsidiaries  have good and  marketable  title in fee
simple to all real property owned by them that is material to their respective businesses
and good and marketable title in all personal property owned by them that is material to
their respective businesses, in each case free and clear of all Liens, except for Liens
as do not materially affect the value of such property and do not materially interfere
with the use made and proposed to be made of such property by the Company and the
Subsidiaries. Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases of which the
Company and the Subsidiaries are in compliance, except as could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse Effect.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Patents and Trademarks</U>.&nbsp;&nbsp;The Company and the  Subsidiaries  have, or have rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses and other similar rights that are necessary or material for use in
connection with their respective businesses as described in the SEC Reports and which the
failure to so have could, individually or in the aggregate, have or reasonably be
expected to result in a Material Adverse Effect (collectively, the <B>&#147;Intellectual
Property Rights&#148;</B>). Neither the Company nor any Subsidiary has received a written
notice that the Intellectual Property Rights used by the Company or any Subsidiary
violates or infringes upon the rights of any Person. Except as set forth in the SEC
Reports, to the knowledge of the Company, all such Intellectual Property Rights are
enforceable and there is no existing infringement by another Person of any of the
Intellectual Property Rights.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Insurance</U>.&nbsp;&nbsp;The
Company and the Subsidiaries are insured by insurers of recognized financial
          responsibility against such losses and risks and in such amounts as are prudent
          and customary in the businesses in which the Company and the Subsidiaries are
          engaged. The Company has no reason to believe that it will not be able to renew
          its and the Subsidiaries&#146; existing insurance coverage as and when such
          coverage expires or to obtain similar coverage from similar insurers as may be
          necessary to continue its business on terms consistent with market for the
          Company&#146;s and such Subsidiaries&#146; respective lines of business.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Transactions With Affiliates and Employees</U>.&nbsp;&nbsp;Except as set forth in the SEC Reports, none of the
officers or directors of the Company and, to the knowledge of the Company, none of the
employees of the Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or
by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Internal Accounting Controls</U>.&nbsp;&nbsp;The Company and the  Subsidiaries  maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management&#146;s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain asset accountability, (iii) access to assets is
permitted only in accordance with management&#146;s general or specific authorization,
and (iv) the recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in Exchange Act
rules 13a-15(e) and 15(d)-15(e) for the Company and designed such disclosure controls and
procedures to ensure that material information relating to the Company, including its
Subsidiaries, is made known to the certifying officers by others within those entities,
particularly during the period in which the Company&#146;s Form 10-KSB or 10-QSB, as the
case may be, is being prepared. The Company&#146;s certifying officers have evaluated the
effectiveness of the Company&#146;s controls and procedures as of the last day of the
period covered by the Form 10-QSB for the Company&#146;s most recently ended fiscal
quarter (such date, the <B>&#147;Evaluation Date&#148;</B>). The Company presented in its
most recently filed Form 10-KSB or Form 10-QSB the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their
evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no
significant changes in the Company&#146;s internal controls (as <U>described</U> in Item
308(c) of Regulation S-K under the Exchange Act) or, to the Company&#146;s knowledge<U>,
without inquiry</U>, in other factors that could significantly affect the Company&#146;s
internal controls.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Solvency</U>.&nbsp;&nbsp;Based
on the financial condition of the Company as of the Closing Date (and           assuming
that the Closing shall have occurred), (i) the Company&#146;s fair           saleable
value of its assets exceeds the amount that will be required to be paid           on or
in respect of the Company&#146;s existing debts and other liabilities
          (including known contingent liabilities) as they mature; (ii) the Company&#146;s
          assets do not constitute unreasonably small capital to carry on its business
for           the current fiscal year as now conducted and as proposed to be conducted
          including its capital needs taking into account the particular capital
          requirements of the business conducted by the Company, and projected capital
          requirements and capital availability thereof; and (iii) the current cash flow
          of the Company, together with the proceeds the Company would receive, were it
to           liquidate all of its assets, after taking into account all anticipated uses
of           the cash, would be sufficient to pay all amounts on or in respect of its
debt           when such amounts are required to be paid. The Company does not intend to
incur           debts beyond its ability to pay such debts as they mature (taking into
account           the timing and amounts of cash to be payable on or in respect of its
debt).  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Certain Fees</U>.&nbsp;&nbsp;Except as described in Schedule  3.1(u),  no brokerage or finder's  fees or
commissions are or will be payable by the Company to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person with respect
to the transactions contemplated by this Agreement. The Investors shall have no
obligation with respect to any fees or with respect to any claims (other than such fees
or commissions owed by an Investor pursuant to written agreements executed by such
Investor which fees or commissions shall be the sole responsibility of such Investor)
made by or on behalf of other Persons for fees of a type contemplated in this Section
that may be due in connection with the transactions contemplated by this Agreement.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Certain Registration Matters</U>.&nbsp;&nbsp;Assuming the accuracy of the Investors'  representations and warranties set
forth in Section 3.2(b)-(e), no registration under the Securities Act is required for the
offer and sale of the Shares, Warrants and Warrant Shares by the Company to the Investors
under the Transaction Documents. The Company is eligible to register the resale of its
Common Stock by the Investors <U>on</U> Form S-3 promulgated under the Securities Act.
Except as specified in <U>Schedule 3.1(v)</U>, the Company has not granted or agreed to
grant to any Person any rights (including &#147;piggy-back&#148; registration rights) to
have any securities of the Company registered with the Commission or any other
governmental authority that have not been satisfied or exercised.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Listing and Maintenance Requirements</U>.&nbsp;&nbsp;Except as  specified  in the SEC  Reports,  the Company has
not, in the two years preceding the date hereof, received notice from any Trading Market
to the effect that the Company is not in compliance with the listing or maintenance
requirements thereof. The Company is, and has no reason to believe that it will not in
the foreseeable future continue to be, in compliance with the listing and maintenance
requirements for continued listing of the Common Stock on the Trading Market on which the
Common Stock is currently listed or quoted. The issuance and sale of the Securities under
the Transaction Documents (including the issuance of Additional Shares) does not
contravene the rules and regulations of the Trading Market on which the Common Stock is
currently listed or quoted, and no approval of the shareholders of the Company thereunder
is required for the Company to issue and deliver to the Investors the Securities
contemplated by the Transaction Documents.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Investment Company</U>.&nbsp;&nbsp;The Company is not,  and is not an Affiliate  of, and  immediately following the Closing
will not have become, an &#147;investment company&#148; within the meaning of the
Investment Company Act of 1940, as amended.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Application of Takeover Protection</U>.&nbsp;&nbsp;The Company has taken all necessary  action,  if any, in order to
render inapplicable any control share acquisition, business combination, poison pill
(including any distribution under a rights agreement) or other similar anti-takeover
provision under the Company&#146;s Certificate of Incorporation (or similar charter
documents) or the laws of its state of incorporation that is or could become applicable
to the Investors or shareholders of the Company prior to the Closing Date as a result of
the Investors and the Company fulfilling their obligations or exercising their rights
under the Transaction Documents, including without limitation the Company&#146;s issuance
of the Securities and the Investors&#146; ownership of the Securities.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No Additional Agreements</U>.&nbsp;&nbsp;The Company does not have any  agreement  or  understanding with any
Investor with respect to the transactions contemplated by the Transaction Documents other
than as specified in the Transaction Documents.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Disclosure</U>.&nbsp;&nbsp;The
Company confirms that neither it nor any Person acting on its behalf has
          provided any Investor or its respective agents or counsel with any information
          that the Company believes constitutes material, non-public information except
          insofar as the existence and terms of the proposed transactions hereunder may
          constitute such information. The Company understands and confirms that the
          Investors will rely on the foregoing representations and covenants in effecting
          transactions in securities of the Company. All disclosure provided to the
          Investors regarding the Company, its business and the transactions contemplated
          hereby, furnished by or on behalf of the Company (including the Company&#146;s
          representations and warranties set forth in this Agreement) are true and
correct           and do not contain any untrue statement of a material fact or omit to
state any           material fact necessary in order to make the statements made therein,
in light           of the circumstances under which they were made, not misleading.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Representations
and Warranties of the Investors</U>. Each Investor hereby, for itself and for no other
Investor, represents and warrants to the Company as follows:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Organization; Authority</U>.&nbsp;&nbsp;Such Investor is an entity duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization with the requisite corporate or
partnership power and authority to enter into and to consummate the transactions
contemplated by the applicable Transaction Documents and otherwise to carry out its
obligations thereunder. The execution, delivery and performance by such Investor of the
transactions contemplated by this Agreement has been duly authorized by all necessary
corporate or, if such Investor is not a corporation, such partnership, limited liability
company or other applicable like action, on the part of such Investor. Each of this
Agreement and the Registration Rights Agreement has been duly executed by such Investor,
and when delivered by such Investor in accordance with terms hereof, will constitute the
valid and legally binding obligation of such Investor, enforceable against it in
accordance with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally the enforcement of, creditors&#146; rights and remedies or by
other equitable principles of general application.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Investment Intent</U>.&nbsp;&nbsp;Such Investor is acquiring the  Securities as principal for its own account for
investment purposes only and not with a view to or for distributing or reselling such
Securities or any part thereof, without prejudice, however, to such Investor&#146;s right
at all times to sell or otherwise dispose of all or any part of such Securities in
compliance with applicable federal and state securities laws. Subject to the immediately
preceding sentence, nothing contained herein shall be deemed a representation or warranty
by such Investor to hold the Securities for any period of time. Such Investor is
acquiring the Securities hereunder in the ordinary course of its business. Such Investor
does not have any agreement or understanding, directly or indirectly, with any Person to
distribute any of the Securities.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Investor Status</U>.&nbsp;&nbsp;At the time such Investor was offered the Securities,  it was, and at the date hereof it
is, an &#147;accredited investor&#148; as defined in Rule 501(a) under the Securities
Act. Such Investor is not a registered broker-dealer under Section 15 of the Exchange
Act.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13 </FONT></P>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>General Solicitation</U>.&nbsp;&nbsp;Such Investor is not  purchasing  the  Securities as a result of any
advertisement, article, notice or other communication regarding the Securities published
in any newspaper, magazine or similar media or broadcast over television or radio or
presented at any seminar or any other general solicitation or general advertisement.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Access to Information</U>.&nbsp;&nbsp;Such Investor  acknowledges  that it has reviewed the Disclosure
Materials and has been afforded (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares and the merits and
risks of investing in the Securities; (ii) access to information about the Company and
the Subsidiaries and their respective financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to evaluate its
investment; and (iii) the opportunity to obtain such additional information that the
Company possesses or can acquire without unreasonable effort or expense that is necessary
to make an informed investment decision with respect to the investment. Neither such
inquiries nor any other investigation conducted by or on behalf of such Investor or its
representatives or counsel shall modify, amend or affect such Investor&#146;s right to
rely on the truth, accuracy and completeness of the Disclosure Materials and the Company&#146;s
representations and warranties contained in the Transaction Documents.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Certain Trading Activities</U>.&nbsp;&nbsp;Such Investor has not directly or indirectly,  nor has any Person
acting on behalf of or pursuant to any understanding with such Investor, engaged in any
trading in any securities of the Company (including, without limitations, any Short Sales
involving the Company&#146;s securities) during the 20 Trading Days prior to the date of
this Agreement. As of the date of this Agreement, such Investor has no open short
position in the Common Stock, and covenants that neither it nor any Person acting on its
behalf or pursuant to any understanding with it will engage in any Short Sales prior to
the public disclosure of the material terms of this transaction by the Company.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Limited Ownership</U>.&nbsp;&nbsp;The purchase by such Investor of the  Securities  issuable to it at
the Closing will not result in such Investor (individually or together with other Person
with whom such Investor has identified, or will have identified, itself as part of a
&#147;group&#148; in a public filing made with the Commission involving the Company&#146;s
securities) acquiring, or obtaining the right to acquire, in excess of 19.999% of the
outstanding shares of Common Stock or the voting power of the Company immediately
following Closing. Such Investor does not presently intend to, alone or together with
others, make a public filing with the Commission to disclose that it has (or that it
together with such other Persons have) acquired, or obtained the right to acquire, as a
result of the Closing (when added to any other securities of the Company that it or they
then own or have the right to acquire), in excess of 19.999% of the outstanding shares of
Common Stock or the voting power of the Company on a post transaction basis that assumes
that the Closing shall have occurred.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Independent Investment Decision</U>.&nbsp;&nbsp;Such Investor has independently           evaluated the merits
of its decision to purchase Securities pursuant to this           Agreement, and such
Investor confirms that it has not relied on the advice of           any other Investor&#146;s
business and/or legal counsel in making such decision.           If such Investor is
other than SF Capital Partners Ltd., such Investor           represents and warrants that
Bryan Cave LLP has not acted as its legal counsel           in connection with the
transactions contemplated by this Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company acknowledges and agrees
that no Investor has made or makes any representations or warranties with respect to the
transactions contemplated hereby other than those specifically set forth in this Section
3.2. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE IV.<BR>OTHER AGREEMENTS OF THE PARTIES</FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
&nbsp;&nbsp;&nbsp;Securities may only be disposed of in compliance with state and federal securities laws.
In connection with any transfer of the Securities other than pursuant to an effective
registration statement, to the Company, to an Affiliate of an Investor or in connection
with a pledge as contemplated in Section 4.1(b), the Company may require the transferor
thereof to provide to the Company an opinion of counsel selected by the transferor, the
form and substance of which opinion shall be reasonably satisfactory to the Company, to
the effect that such transfer does not require registration of such transferred
Securities under the Securities Act.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;Certificates
evidencing the Securities will contain the following legend, until           such time as
they are not required under Section 4.1(c):  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
[NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN
REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE &#147;SECURITIES
ACT&#148;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL
OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE
REASONABLY ACCEPTABLE TO THE COMPANY. [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON
EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company acknowledges and agrees that an Investor may from time to time pledge, and/or
grant a security interest in some or all of the Securities pursuant to a bona fide margin
agreement in connection with a bona fide margin account and, if required under the terms
of such agreement or account, such Investor may transfer pledged or secured Securities to
the pledgees or secured parties. Such a pledge or transfer would not be subject to
approval or consent of the Company and no legal opinion of legal counsel to the pledgee,
secured party or pledgor shall be required in connection with the pledge, but such legal
opinion may be required in connection with a subsequent transfer following default by the
Investor transferee of the pledge. No notice shall be required of such pledge. At the
appropriate Investor&#146;s expense, the Company will execute and deliver such reasonable
documentation as a pledgee or secured party of Securities may reasonably request in
connection with a pledge or transfer of the Securities including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or
other applicable provision of the Securities Act to appropriately amend the list of
selling shareholders thereunder. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
          Certificates evidencing the Shares and Warrant Shares shall not contain any
          legend (including the legend set forth in Section 4.1(b)): (i) following a sale
          of such Securities pursuant to an effective registration statement (including
          the Registration Statement), (ii) following a sale of such Shares or Warrant
          Shares pursuant to Rule 144 (assuming the transferor is not an Affiliate of the
          Company), or (iii) while such Shares or Warrant Shares are eligible for sale
          under Rule 144(k). Following such time as restrictive legends are not required
          to be placed on certificates representing Shares or Warrant Shares pursuant to
          the preceding sentence, the Company will, no later than three Trading Days
          following the delivery by an Investor to the Company or the Company&#146;s
          transfer agent of a certificate representing Shares or Warrant Shares containing
          a restrictive legend, use its best efforts to deliver or cause to be delivered
          to such Investor a certificate representing such Shares or Warrant Shares that
          is free from all restrictive and other legends. The Company may not make any
          notation on its records or give instructions to any transfer agent of the
          Company that enlarge the restrictions on transfer set forth in this Section. If
          the Investor does not receive such certificates by the end of the seventh day
          following the delivery by an Investor to the Company or the Company&#146;s
          transfer agent of a certificate representing Shares or Warrant Shares containing
          a restrictive legend such seven day period, then the Company shall pay partial
          liquidated damages to the Investor in cash on demand, calculated at the rate of
          1% per month of the Investor&#146;s Investment Amount, for each day so long as
          the Company fails to provide such certificates. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Furnishing
of Information</U>. As long as any Investor owns the Securities, the Company covenants to
timely file (or obtain extensions in respect thereof and file within the applicable grace
period) all reports required to be filed by the Company after the date hereof pursuant to
the Exchange Act. As long as any Investor owns Securities, if the Company is not required
to file reports pursuant to such laws, it will prepare and furnish to the Investors and
make publicly available in accordance with Rule 144(c) such information as is required
for the Investors to sell the Shares and Warrant Shares under Rule 144. The Company
further covenants that it will take such further action as any holder of Securities may
reasonably request, all to the extent required from time to time to enable such Person to
sell the Shares and Warrant Shares without registration under the Securities Act within
the limitation of the exemptions provided by Rule 144.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>16 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Participation
Rights</U>. If at any time prior to the eighteen-month anniversary of the Closing Date,
the Company proposes to offer, issue, or sell any equity Common Stock or Common Stock
Equivalents (collectively, <B>&#147;New Issue Securities&#148;</B>), the Company shall
concurrently offer to the Investors up to such amount of New Issue Securities as would
enable the Investors to maintain their percentage ownership of the Company, in accordance
with the following provisions:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company
shall publicly disclose its intention to offer, issue, or sell (as the case may be) New
Issue Securities in a manner such that Investors will not be in possession of material
non-public information concerning the Company as a result of the provisions of this
Section (including receipt of a First Notice, and then give a written notice to each
Investor (the <B>&#147;First Notice&#148;</B>) stating (i) its intention to issue the New
Issue Securities, (ii) the number and description of the New Issue Securities proposed to
be issued and (iii) the purchase price (calculated as of the proposed issuance date) and
the other terms and conditions upon which the Company is offering the New Issue
Securities.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transmittal of
the First Notice to the  Investors by the Company  shall  constitute  an offer by the
Company to sell to each Investor (i) up to its pro rata portion (based upon such Investor&#146;s
percentage ownership of the outstanding Common Stock as of the date of receipt of the
First Notice) of the New Issue Securities (the <B>&#147;Basic Amount&#148;</B>) for the
price and upon the terms and conditions set forth in the First Notice and (ii) with
respect to each Investor that elects to purchase its Basic Amount, any additional portion
of the New Issue Securities attributable to the Basic Amounts of other Investors as such
Investor shall indicate it will purchase or acquire should the other Investors subscribe
for less than their Basic Amounts (the <B>&#147;Undersubscription Amount&#148;</B>). For
a period of ten (10) Business Days after receipt of the First Notice, each Investor shall
have the option, exercisable by written notice to the Company, to accept the Company&#146;s
offer as to all or any part of such Investor&#146;s Basic Amount and, if such Investor
shall elect to purchase all of its Basic Amount, the Undersubscription Amount, if any,
that such Investor elects to purchase (in either case, the <B>&#147;Notice of Acceptance&#148;</B>).
If the Basic Amounts subscribed for by all Investors are less than the total of all of
the Basic Amounts, then each Investor who has set forth an Undersubscription Amount in
its Notice of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; <U>provided</U>,
however, that if the Undersubscription Amounts subscribed for exceed the difference
between the total of all the Basic Amounts and the Basic Amounts subscribed for (the <B>&#147;Available
Undersubscription Amount&#148;</B>), each Investor who has subscribed for any
Undersubscription Amount shall be entitled to purchase that portion of the Available
Undersubscription Amount as the Basic Amount of such Investor bears to the total Basic
Amounts of all Investors that have subscribed for Undersubscription Amounts, subject to
rounding by the Board of Directors to the extent it deems reasonably necessary. If two or
more types of New Issue Securities are to be issued or New Issue Securities are to be
issued together with other types of securities, including, without limitation, debt
securities, in a single transaction or related transactions, the rights to purchase New
Issue Securities granted to the Investors under this Section must be exercised to
purchase all types of New Issue Securities and such other securities in the same
proportion as such New Issue Securities and other securities are to be issued by the
Company.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>17 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company
shall have ten (10) Trading Days from the expiration of the period set forth in Section
4.3(b) above to issue, sell or exchange all or any part of such New Issue Securities as
to which a Notice of Acceptance has not been given by the Investors (the <B>&#147;Refused
Securities&#148;</B>), but only upon terms and conditions (including, without limitation,
unit prices and interest rates) that are not more favorable to the acquiring Person or
Persons than those set forth in the First Notice.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the
event the Company shall propose to sell less than all the Refused Securities (any such
sale to be in the manner and on the terms specified in Section 4.3(c) above), then each
Investor may, at its sole option and in its sole discretion, reduce the number or amount
of the New Issue Securities specified in its Notice of Acceptance to an amount that shall
be not less than the number or amount of New Issue Securities that the Investor elected
to purchase pursuant to Section 4.3(b) above multiplied by a fraction, (i) the numerator
of which shall be the number or amount of New Issue Securities the Company actually
proposes to issue, sell or exchange (including prior to such reduction) and (ii) the
denominator of which shall be the original amount of the New Issue Securities. In the
event that any Investor so elects to reduce the number or amount of New Issue Securities
specified in its Notice of Acceptance, the Company may not issue, sell or exchange more
than the reduced number or amount of the New Issue Securities unless and until such
securities have again been offered to the Investors in accordance with Section 4.3(a)
above.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Upon &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the
 closing  of the  issuance,  sale or  exchange  of all or less  than all of the Refused
Securities, the Investors shall acquire from the Company, and the Company shall issue to
the Investors, the number or amount of New Issue Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 4.3(d) the Investors have so elected, upon the
terms and conditions specified in the First Notice. The purchase by the Investors of any
New Issue Securities is subject in all cases to the preparation, execution and delivery
by the Company and the Investors of a purchase agreement relating to such New Issue
Securities reasonably satisfactory in form and substance to the Investors and the Company
and their respective counsel.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
participation rights contained in this Section 4.3 shall not apply to the
          issuance and sale by the Company of shares of Common Stock issued as a result
          of: (i) the issuance of Warrant Shares, (ii) to the extent consistent with past
          practice, the grant of options or warrants, or the issuance of additional
          securities, under any duly authorized Company stock option, restricted stock
          plan or stock purchase plan whether now existing or approved by the Company and
          its shareholders in the future (but not as to any amendments or other
          modifications to the number of Common Stock issuable thereunder, the terms set
          forth therein, or the exercise price set forth therein, unless such amendments
          or other modifications are approved by the Company&#146;s shareholders), or
          (iii) the issuance and sale by the Company of shares of Common Stock issued as
          consideration for the acquisition of another company or business in which the
          shareholders of the Company do not have an ownership interest, which
acquisition           has been approved by the Board of Directors of the Company.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Integration</U>.
The Company shall not, and shall use its best efforts to ensure that no Affiliate of the
Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the Investors, or
that would be integrated with the offer or sale of the Securities for purposes of the
rules and regulations of any Trading Market in a manner that would require shareholder
approval of the sale of the Securities to the Investors.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Subsequent
Registrations</U>. Other than pursuant to the Registration Statement, prior to the
Effective Date, the Company may not file any registration statement (other than on Form
S-8) with the Commission with respect to any securities of the Company.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.6 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Securities
Laws Disclosure; Publicity</U>. By 9:30 a.m. (New York time) on the Trading Day following
the execution of this Agreement, and by 9:30 a.m. (New York time) on the Trading Day
following the Closing Date, the Company shall issue press releases in a form approved by
the Investors disclosing the transactions contemplated hereby and the Closing. On the
Trading Day following the execution of this Agreement the Company will file a Current
Report on Form 8-K disclosing the material terms of the Transaction Documents (and attach
as exhibits thereto the Transaction Documents), and on the Trading Day following the
Closing Date the Company will file an additional Current Report on Form 8-K to disclose
the Closing. In addition, the Company will make such other filings and notices in the
manner and time required by the Commission and the Trading Market on which the Common
Stock is listed. Notwithstanding the foregoing, the Company shall not publicly disclose
the name of any Investor, or include the name of any Investor in any filing with the
Commission (other than the Registration Statement and any exhibits to filings made in
respect of this transaction in accordance with periodic filing requirements under the
Exchange Act) or any regulatory agency or Trading Market, without the prior written
consent of such Investor, except to the extent such disclosure is required by law or
Trading Market regulations.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.7 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Additional
Shares</U>.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If,
prior to the one-year anniversary of the Closing Date, the Company issues           (or
agrees to issue) any shares of Common Stock or if the Company or any           Subsidiary
issues (or agrees to issue) any Common Stock Equivalents entitling           any Person
to acquire shares of Common Stock at a price per share less than the           Threshold
Price (if the holder of the Common Stock or Common Stock Equivalent so           issued
shall at any time, whether by operation of purchase price adjustments,           reset
provisions, floating conversion, exercise or exchange prices or otherwise,           or
due to warrants, options or rights issued in connection with such issuance,           be
entitled to receive shares of Common Stock at a price less than the Threshold
          Price, such issuance shall be deemed to have occurred for less than the
          Threshold Price), then, with each such issuance of Common Stock or Common Stock
          Equivalents for a purchase price that is less than the Threshold Price, the
          Company shall immediately issue additional shares of Common Stock (the
          &#147;<B>Additional Shares</B>&#148;) to each Investor for no additional
          consideration. The number of Additional Shares issuable to each Investor will
          equal: (a) the Threshold Price minus the lowest price per share of the Common
          Stock or Common Stock Equivalents offered or sold that trigger an obligation
          under this Section <B>(&#147;Subsequent Issue Price</B>&#148;) divided by (b)
          the Threshold Price, multiplied by (c) the total number of Shares issued or
          issuable to such Investor pursuant to Section 2.2(a)(i). The Company shall
          notify the Investors in writing, no later than the Trading Day following the
          issuance of any Common Stock or Common Stock Equivalent subject to this
section,           indicating therein the applicable issuance price. The Additional
Shares shall be           entitled to the registration and other rights set forth in the
Registration           Rights Agreement and any Additional Shares not registered for
resale shall also           be afforded general piggyback registration rights such that
such Additional           Shares may be included in any registration statement (other
than on Form S-8)           filed by the Company. Notwithstanding the foregoing, no
issuances of Additional           Shares will be made under this Section as a result of:
(i) the issuance of           Warrant Shares, (ii) to the extent consistent with past
practice, the grant of           options or warrants, or the issuance of additional
securities, under any duly           authorized Company stock option, restricted stock
plan or stock purchase plan           whether now existing or approved by the Company and
its shareholders in the           future (but not as to any amendments or other
modifications to the number of           Common Stock issuable thereunder, the terms set
forth therein, or the exercise           price set forth therein, unless such amendments
or other modifications are           approved by the Company&#146;s shareholders), or
(iii) the issuance and sale by           the Company of shares of Common Stock issued as
consideration for the           acquisition of another company or business in which the
shareholders of the           Company do not have an ownership interest, which
acquisition has been approved           by the Board of Directors of the Company. If
prior to the one-year anniversary           of the Closing Date, the Company enters into
any understanding or agreement to           issue or sell securities, or otherwise
engages in discussions with any Person in           connection with a potential issuance
or sale of securities, that would, if such           issuance or sale were to occur prior
to the one-year anniversary of the Closing           Date, trigger an obligation to issue
Additional Shares, then notwithstanding the           fact that such actual issuance of
Common Stock or Common Stock Equivalents           occurs after the one-year anniversary
of the Closing Date, such issuance will           obligate the Company to issue
Additional Shares under this Section.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Certain
Limitations</U>.  </FONT></P>


<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Notwithstanding
anything to the contrary contained herein, the number of           Additional Shares that
may be acquired by an Investor pursuant to this Section           shall be limited to the
extent necessary to insure that, following such           issuance, the total number of
shares of Common Stock then beneficially owned by           such Investor and its
Affiliates and any other Persons whose beneficial           ownership of Common Stock
would be aggregated with the Holder&#146;s for           purposes of Section 13(d) of the
Exchange Act, does not exceed 4.999% of the           total number of issued and
outstanding shares of Common Stock (including for           such purpose the issuance of
Additional Shares). For such purposes, beneficial           ownership shall be determined
in accordance with Section 13(d) of the Exchange           Act and the rules and
regulations promulgated thereunder. By written notice to           the Company, an
Investor may waive the provisions of this Section 4.7(b) as to           itself but any
such waiver will not be effective until the 61<SUP>st</SUP> day           after delivery
thereof and such waiver shall have no effect on any other           Investor.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Notwithstanding
anything to the contrary contained herein, the number of           Additional Shares that
may be acquired by an Investor pursuant to this Section           shall be limited to the
extent necessary to insure that, following such           issuance, the total number of
shares of Common Stock then beneficially owned by           such Investor and its
Affiliates and any other Persons whose beneficial           ownership of Common Stock
would be aggregated with the Holder&#146;s for           purposes of Section 13(d) of the
Exchange Act, does not exceed 9.999% of the           total number of issued and
outstanding shares of Common Stock (including for           such purpose the issuance of
Additional Shares). For such purposes, beneficial           ownership shall be determined
in accordance with Section 13(d) of the Exchange           Act and the rules and
regulations promulgated thereunder. This restriction may           not be waived.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
Company and each&nbsp;Investor agree that, if and to the           extent&nbsp;Sections
4.7(b)(i)-(ii) would restrict the ability of an Investor to           receive any
Additional Shares, then&nbsp;notwithstanding anything to the           contrary set forth
herein, the Company shall deliver those Additional Shares as           may be acquired by
such Investor in accordance with Sections           4.7(b)(i)-(ii).&nbsp; An Investor
will promptly notify the Company in writing           if&nbsp;the issuance of Additional
Shares would be restricted by Sections           4.7(b)(i)-(ii), specifying therein the
Additional Shares so restricted. Such           Investor shall deliver a notice to the
Company when it is able to acquire any           remaining Additional Shares not
previously deliverable to such Investor due to           the applicability of Sections
4.7(b)(i)-(ii), however, such notice shall not           take effect until the 61<SUP>st</SUP> day
following delivery thereof. (iv)           Notwithstanding anything to the contrary in
this Agreement, if the Company has           not previously obtained Stockholder
Approval, then the Company may not issue           Additional Shares in excess of the
Issuable Maximum pursuant to this Section.           The &#147;Issuable Maximum&#148; means,
as of any date, a number of shares of           Common Stock equal to <U>2,354,551, which
is 19.9% of the issued and outstanding           Common Stock of the Company, based on
11,831,916 shares of Common Stock           outstanding on April 1, 2005.</U> Each
Investor shall be entitled to a portion           of the Issuable Maximum equal to the
quotient obtained by dividing: (x) the           number of Shares issued and sold to such
Investor on the Closing Date plus any           Additional Shares previously issued to
such Investor by (y) the aggregate number           of Shares issued and sold by the
Company on the Closing Date plus any Additional           Shares previously issued to
Investors. If any Investor shall no longer hold           Shares, then such Investor&#146;s
remaining portion of the Issuable Maximum           shall be allocated pro-rata among the
remaining Investors, giving effect to the           Company&#146;s desire to allocate
this limitation among the class of securities           known as Shares. If on any date
Additional Shares are issuable to Investors, or           at such time as an Investor
shall notify the Company that the condition in (A)           following this clause shall
be in effect: (A) the aggregate number of Additional           Shares would exceed the
Issuable Maximum on such date, and (B) the Company shall           not have previously
obtained the vote of shareholders, as may be required by the           applicable rules
and regulations of the American Stock Exchange (or any           successor entity or any
other Trading Market on which the Company&#146;s           securities then trade),
applicable to approve the issuance of shares of Common           Stock in excess of the
Issuable Maximum pursuant to the terms hereof (the <B>&#147;Stockholder Approval&#148;</B>),
then, the Company shall issue to the           Investor a number of Additional Shares
equal to the Issuable Maximum and, with           respect to the remainder of Additional
Shares issuable to the Investors which           would result in an issuance of shares of
Common Stock in excess of the Issuable           Maximum, the Company must use its best
efforts to seek and obtain Stockholder           Approval as soon as possible, but in any
event not later than the           90<SUP>th</SUP> day following such Exercise Date or
the date of such request.           The Company and the Investors understand and agree
that Additional Shares issued           to and then held by the Investors shall not be
entitled to cast votes on any           resolution to obtain Stockholder Approval
pursuant hereto.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          For
purposes of this Section 4.7, the following subsections (c)(i) to (c)(vi)           shall
also be applicable:  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Issuance
of Rights or Options</U>. In case at any time the Company shall in           any manner
grant (directly and not by assumption in a merger or otherwise) any           warrants or
other rights to subscribe for or to purchase, or any options for the           purchase
of, Common Stock or any stock or security convertible into or           exchangeable for
Common Stock (such warrants, rights or options being called <B>&#147;Options&#148;</B> and
such convertible or exchangeable stock or           securities being called <B>&#147;Convertible
Securities&#148;</B>) whether or           not such Options or the right to convert or
exchange any such Convertible           Securities are immediately exercisable, and the
price per share for which Common           Stock is issuable upon the exercise of such
Options or upon the conversion or           exchange of such Convertible Securities
(determined by dividing (i) the sum           (which sum shall constitute the applicable
consideration) of (x) the total           amount, if any, received or receivable by the
Company as consideration for the           granting of such Options, plus (y) the
aggregate amount of additional           consideration payable to the Company upon the
exercise of all such Options, plus           (z), in the case of such Options which
relate to Convertible Securities, the           aggregate amount of additional
consideration, if any, payable upon the issue or           sale of such Convertible
Securities and upon the conversion or exchange thereof,           by (ii) the total
maximum number of shares of Common Stock issuable upon the           exercise of such
Options or upon the conversion or exchange of all such           Convertible Securities
issuable upon the exercise of such Options) shall be less           than the Threshold
Price in effect immediately prior to the time of the granting           of such Options,
then the total number of shares of Common Stock issuable upon           the exercise of
such Options or upon conversion or exchange of the total amount           of such
Convertible Securities issuable upon the exercise of such Options shall           be
deemed to have been issued for such price per share as of the date of           granting
of such Options or the issuance of such Convertible Securities and           thereafter
shall be deemed to be outstanding for purposes of adjusting the           Subsequent
Issue Price. Except as otherwise provided in subsection 4.7(c)(iii),           no
adjustment of the Subsequent Issue Price shall be made upon the actual issue           of
such Common Stock or of such Convertible Securities upon exercise of such
          Options or upon the actual issue of such Common Stock upon conversion or
          exchange of such Convertible Securities.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Issuance
of Convertible Securities</U>. In case the Company shall in any           manner issue
(directly and not by assumption in a merger or otherwise) or sell           any
Convertible Securities, whether or not the rights to exchange or convert any
          such Convertible Securities are immediately exercisable, and the price per
share           for which Common Stock is issuable upon such conversion or exchange
(determined           by dividing (i) the sum (which sum shall constitute the applicable
          consideration) of (x) the total amount received or receivable by the Company as
          consideration for the issue or sale of such Convertible Securities, plus (y)
the           aggregate amount of additional consideration, if any, payable to the
Company           upon the conversion or exchange thereof, by (ii) the total number of
shares of           Common Stock issuable upon the conversion or exchange of all such
Convertible           Securities) shall be less than the Threshold Price in effect
immediately prior           to the time of such issue or sale, then the total maximum
number of shares of           Common Stock issuable upon conversion or exchange of all
such Convertible           Securities shall be deemed to have been issued for such price
per share as of           the date of the issue or sale of such Convertible Securities
and thereafter           shall be deemed to be outstanding for purposes of adjusting the
Subsequent Issue           Price, provided that (a) except as otherwise provided in
subsection 4.7(c)(iii),           no adjustment of the Subsequent Issue Price shall be
made upon the actual           issuance of such Common Stock upon conversion or exchange
of such Convertible           Securities and (b) no further adjustment of the Subsequent
Issue Price shall be           made by reason of the issue or sale of Convertible
Securities upon exercise of           any Options to purchase any such Convertible
Securities for which adjustments of           the Subsequent Issue Price have been made
pursuant to the other provisions of           subsection 4.7(c).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Change
in Option Price or Conversion Rate</U>. Upon the happening of any of           the
following events, namely, if the purchase price provided for in any Option
          referred to in subsection 4.7(c)(i) hereof, the additional consideration, if
          any, payable upon the conversion or exchange of any Convertible Securities
          referred to in subsections 4.7(c)(i) or 4.7(c)(ii), or the rate at which
          Convertible Securities referred to in subsections 4.7(c)(i) or 4.7(c)(ii) are
          convertible into or exchangeable for Common Stock shall change at any time
          (including, but not limited to, changes under or by reason of provisions
          designed to protect against dilution), the Subsequent Issue Price in effect at
          the time of such event shall forthwith be readjusted to the Subsequent Issue
          Price which would have been in effect at such time had such Options or
          Convertible Securities still outstanding provided for such changed purchase
          price, additional consideration or conversion rate, as the case may be, at the
          time initially granted, issued or sold. On the termination of any Option for
          which any adjustment was made pursuant to this subsection 4.7(c) or any right
to           convert or exchange Convertible Securities for which any adjustment was made
          pursuant to this subsection 4.7(c) (including without limitation upon the
          redemption or purchase for consideration of such Convertible Securities by the
          Company), the Subsequent Issue Price then in effect hereunder shall forthwith
be           changed to the Subsequent Issue Price which would have been in effect at the
          time of such termination had such Option or Convertible Securities, to the
          extent outstanding immediately prior to such termination, never been issued.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Stock
Dividends</U>. Subject to the provisions of this Section 4.7(c), in           case the
Company shall declare a dividend or make any other distribution upon           any stock
of the Company (other than the Common Stock) payable in Common Stock,           Options
or Convertible Securities, then any Common Stock, Options or Convertible
          Securities, as the case may be, issuable in payment of such dividend or
          distribution shall be deemed to have been issued or sold without consideration.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Consideration
for Stock</U>. In case any shares of Common Stock, Options or           Convertible
Securities shall be issued or sold for cash, the consideration           received
therefor shall be deemed to be the net amount received by the Company           therefor,
after deduction therefrom of any expenses incurred or any underwriting
          commissions or concessions paid or allowed by the Company in connection
          therewith. In case any shares of Common Stock, Options or Convertible
Securities           shall be issued or sold for a consideration other than cash, the
amount of the           consideration other than cash received by the Company shall be
deemed to be the           fair value of such consideration as determined in good faith
by the Board of           Directors of the Company, after deduction of any expenses
incurred or any           underwriting commissions or concessions paid or allowed by the
Company in           connection therewith. In case any Options shall be issued in
connection with the           issue and sale of other securities of the Company, together
comprising one           integral transaction in which no specific consideration is
allocated to such           Options by the parties thereto, such Options shall be deemed
to have been issued           for such consideration as determined in good faith by the
Board of Directors of           the Company. If Common Stock, Options or Convertible
Securities shall be issued           or sold by the Company and, in connection therewith,
other Options or           Convertible Securities (the <B>&#147;Additional Rights&#148;</B>)
are issued,           then the consideration received or deemed to be received by the
Company shall be           reduced by the fair market value of the Additional Rights (as
determined using           the Black-Scholes option pricing model or another method
mutually agreed to by           the Company and the Investors). The Board of Directors of
the Company shall           respond promptly, in writing, to an inquiry by the Investors
as to the fair           market value of the Additional Rights. In the event that the
Board of Directors           of the Company and the Investors are unable to agree upon
the fair market value           of the Additional Rights, the Company and the Investors
shall jointly select an           appraiser, who is experienced in such matters. The
decision of such appraiser           shall be final and conclusive, and the cost of such
appraiser shall be borne           evenly by the Company and the Investors.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Record
Date</U>. In case the Company shall take a record of the holders of           its Common
Stock for the purpose of entitling them (i) to receive a dividend or           other
distribution payable in Common Stock, Options or Convertible Securities or           (ii)
to subscribe for or purchase Common Stock, Options or Convertible           Securities,
then such record date shall be deemed to be the date of the issue or           sale of
the shares of Common Stock deemed to have been issued or sold upon the
          declaration of such dividend or the making of such other distribution or the
          date of the granting of such right of subscription or purchase, as the case may
          be.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Limitation
on Issuance of Future Priced Securities</U>. During the six months following the Closing
Date, the Company shall not issue any &#147;Future Priced Securities&#148; as such term
is described by NASD IM-4350-1.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>24 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.9 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Indemnification
of Investors</U>. In addition to the indemnity provided in the Registration Rights
Agreement, the Company will indemnify and hold the Investors and their directors,
officers, shareholders, partners, employees and agents (each, an <B>&#147;Investor Party&#148;</B>)
harmless from any and all losses, liabilities, obligations, claims, contingencies,
damages, costs and expenses, including all judgments, amounts paid in settlements, court
costs and reasonable attorneys&#146; fees and costs of investigation (collectively, <B>&#147;Losses&#148;</B>)
that any such Investor Party may suffer or incur as a result of or relating to any
misrepresentation, breach or inaccuracy of any representation, warranty, covenant or
agreement made by the Company in any Transaction Document. In addition to the indemnity
contained herein, the Company will reimburse each Investor Party for its reasonable legal
and other expenses (including the cost of any investigation, preparation and travel in
connection therewith) incurred in connection therewith, as such expenses are incurred.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.10 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Non-Public
Information</U>. The Company covenants and agrees that neither it nor any other Person
acting on its behalf will provide any Investor or its agents or counsel with any
information that the Company believes constitutes material non-public information, unless
prior thereto such Investor shall have executed a written agreement regarding the
confidentiality and use of such information. The Company understands and confirms that
each Investor shall be relying on the foregoing representations in effecting transactions
in securities of the Company. In the event that in order to comply with its obligations
under Section 4.3, the Company in writing requests an Investor to enter into a written
confidentiality agreement regarding information which the Company desires to disclose to
such Investor and which the Company believes is material and non-public (the parties
agreeing that the information to be disclosed pursuant to such an agreement shall only be
material and non-public for up to 10 days from the date of such agreement) and such
Investor informs the Company that it would not be willing to enter into such
confidentiality agreement, then such Investor shall be deemed to have waived its
pre-emptive rights under Section 4.3 for a period of 20 days from the date of such
Investor&#146;s refusal (or the 20th day following the third Business Day on which the
Company shall have requested such agreement in writing in the event such Investor fails
to respond).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.11 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Listing
of Securities</U>. The Company agrees, (i) if the Company applies to have the Common
Stock traded on any other Trading Market, it will include in such application the Shares
and Warrant Shares, and will take such other action as is necessary or desirable to cause
the Shares and Warrant Shares to be listed on such other Trading Market as promptly as
possible, and (ii) it will take all action reasonably necessary to continue the listing
and trading of its Common Stock on a Trading Market and will comply in all material
respects with the Company&#146;s reporting, filing and other obligations under the bylaws
or rules of the Trading Market.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.12 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Use
of Proceeds</U>. The Company will use the net proceeds from the sale of the Securities
hereunder to retire a note, in an amount not exceeding $3,150,000, secured by the Company&#146;s
Peru, IL factory, and for working capital purposes, and not for the purpose of redeeming
any Common Stock or Common Stock Equivalents.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>25 </FONT></P>





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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE V.<BR> CONDITIONS PRECEDENT TO CLOSINGS</FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conditions
Precedent to the Obligations of the Investors to Purchase Securities</U>. The obligation
of each Investor to acquire Securities at the Closing is subject to the satisfaction or
waiver by such Investor, at or before such Closing, of each of the following conditions:  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Representations
and Warranties</U>.&nbsp;&nbsp;The representations and warranties of the Company
contained herein shall be true and correct in all material respects as of the date when
made and as of such Closing as though made on and as of such date;  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Performance</U>.&nbsp;&nbsp;The
Company shall have performed, satisfied and complied in all material           respects
with all covenants, agreements and conditions required by the           Transaction
Documents to be performed, satisfied or complied with by it at or           prior to such
Closing;  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No
Injunction</U>.&nbsp;&nbsp;No  statute,  rule,  regulation,  executive  order,  decree,
 ruling or injunction shall have been enacted, entered, promulgated or endorsed by any
court or governmental authority of competent jurisdiction that prohibits the consummation
of any of the transactions contemplated by the Transaction Documents;  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Adverse
Changes</U>.&nbsp;&nbsp;Since the date of execution of this Agreement,  no event or
series of events shall have occurred that reasonably could have or result in a Material
Adverse Effect;  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No
Suspensions of Trading in Common Stock; Listing</U>.&nbsp;&nbsp;Trading in the Common
Stock shall not have been suspended by the Commission or any Trading Market (except for
any suspensions of trading of not more than one Trading Day solely to permit
dissemination of material information regarding the Company) at any time since the date
of execution of this Agreement, and the Common Stock shall have been at all times since
such date listed for trading on a Trading Market;  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Company Deliverables</U>.
 The Company  shall have  delivered the Company  Deliverables  in accordance with Section
2.2(a);  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Closing Officer's Certificate</U>.&nbsp;&nbsp;At the Closing,  the Company  shall have  delivered to each Investor an
officer&#146;s certificate to the effect that each of the conditions specified in
Sections 5.1(a) &#151;5.1(e) is satisfied in all respects;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Minimum Subscriptions</U>.&nbsp;&nbsp;The aggregate of all  Investors'  Investment  Amounts shall not be less than $3,000,000;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Maximum Subscriptions</U>.&nbsp;&nbsp;The aggregate of all  Investors'  Investment  Amounts shall not be greater than
$3,750,000;  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Threshold Price</U>.&nbsp;&nbsp;On the Trading  Day  immediately  preceding  the  Closing  Date,  the closing  price of
the Common Stock as reported on the Trading  Market shall not be less than the  Threshold
 Price; and </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>AMEX Listing</U>.&nbsp;&nbsp;The  American   Stock   Exchange  shall  have  approved  the  Company's application for
the listing of the Shares and shall not have objected to the transactions contemplated by
this Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Conditions
Precedent to the Obligations of the Company to sell Securities</U>. The obligation of the
Company to sell Securities at the Closing is subject to the satisfaction or waiver by the
Company, at or before such Closing, of each of the following conditions:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Representations and Warranties</U>.&nbsp;&nbsp;The representations and warranties of each Investor contained herein
shall be true and correct in all material respects as of the date when made and as of
such Closing as though made on and as of such date;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Performance</U>.&nbsp;&nbsp;Investor shall have performed, satisfied and complied in all material           respects
with all covenants, agreements and conditions required by the           Transaction
Documents to be performed, satisfied or complied with by such           Investor at or
prior to such Closing;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No Injunction</U>.&nbsp;&nbsp;No  statute,  rule,  regulation,  executive  order,  decree,  ruling or injunction shall
have been enacted, entered, promulgated or endorsed by any court or governmental
authority of competent jurisdiction that prohibits the consummation of any of the
transactions contemplated by the Transaction Documents;  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Investors Deliverables</U>.&nbsp;&nbsp;Each Investor shall have delivered its Investors  Deliverables in accordance with
Section 2.2(b); and  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>AMEX Listing</U>.&nbsp;&nbsp;The  American   Stock   Exchange  shall  have  approved  the  Company's application for
the listing of the Shares and shall not have objected to the transactions contemplated by
this Agreement.  </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ARTICLE VI.<BR>MISCELLANEOUS</FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.1 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Fees
and Expenses</U>. At the Closing, the Company shall reimburse SF Capital Partners Ltd.
$15,000 in connection with its legal fees concerning the transactions contemplated by the
Transaction Documents (SF Capital Partners Ltd. may deduct such amount from the portion
of its Investment Amount deliverable to the Company at the Closing), it being understood
that Bryan Cave LLP has only rendered legal advice to SF Capital Partners Ltd., and not
to the Company or any Investor in connection with the transactions contemplated hereby,
and that each of the Company and each Investor has relied for such matters on the advice
of its own respective counsel. Except as specified in the immediately preceding sentence
and in the Registration Rights Agreement, each party shall pay the fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by such party incident to the negotiation, preparation, execution, delivery and
performance of the Transaction Documents. The Company shall pay all stamp and other taxes
and duties levied in connection with the sale of the Securities.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.2 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Entire
Agreement</U>. The Transaction Documents, together with the Schedules thereto, contain
the entire understanding of the parties with respect to the subject matter hereof and
supersede all prior agreements, understandings, discussions and representations, oral or
written, with respect to such matters, which the parties acknowledge have been merged
into such documents, exhibits and schedules.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.3 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notices</U>.
Any and all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective on the
earliest of (a) the date of transmission, if such notice or communication is delivered
via facsimile (provided the sender receives a machine-generated confirmation of
successful transmission) at the facsimile number specified in this Section prior to 6:30
p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section on a day that is not a Trading Day or later than 6:30
p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of
mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon
actual receipt by the party to whom such notice is required to be given. The address for
such notices and communications shall be as follows:  </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=40% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If to the Company:</FONT></TD>
     <TD WIDTH=60% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Flexible Solutions International, Inc.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>615 Discovery Street</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Victoria, B.C.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>V8T 5G4, Canada</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Facsimile: (250) 477-9912</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attn.: Dan O'Brien</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If to an Investor:</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>To the address set forth under such Investor's name</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>on the signature pages hereof; or such other address as may be</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>designated in writing hereafter, in the same manner, by such Person.</FONT></TD></TR>
</TABLE>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.4 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Amendments;
Waivers; No Additional Consideration</U>. No provision of this Agreement may be waived or
amended except in a written instrument signed by the Company and the Investors holding a
majority of the Shares. No waiver of any default with respect to any provision, condition
or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or
requirement hereof, nor shall any delay or omission of either party to exercise any right
hereunder in any manner impair the exercise of any such right. No consideration shall be
offered or paid to any Investor to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also offered to
all Investors who then hold Shares.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>28 </FONT></P>






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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.5 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Termination</U>.
 This Agreement may be terminated prior to Closing: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;by written
agreement of the Investors and the Company; </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;by the
Company or an Investor (as to itself but no other Investor) upon written notice to the
other, if the Closing shall not have taken place by 6:30 p.m. Eastern time on the Outside
Date; <U>provided</U>, that the right to terminate this Agreement under this Section&nbsp;6.5(b)
shall not be available to any Person whose failure to comply with its obligations under
this Agreement has been the cause of or resulted in the failure of the Closing to occur
on or before such time; or  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;by an
Investor (as to itself but no other Investor) if it concludes in good faith that any of
the conditions precedent contained in Section 5.1(c), (d) or (e) shall have been breached
or shall not be capable of being satisfied by the Outside Date despite the assumed best
efforts of the Company.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
the event of a termination pursuant to this Section, the Company shall promptly notify all
non-terminating Investors and shall pay to SF Capital Partners Ltd. up to $15,000 of the
fees and expenses incurred by SF Capital Partners Ltd. (including reasonable legal fees
and expenses) in connection with this Agreement and the transactions contemplated by this
Agreement through the termination date. Other than as to the foregoing fees and expenses,
upon a termination in accordance with this Section 6.5, the Company and the terminating
Investor(s) shall not have any further obligation or liability (including as arising from
such termination) to the other and no Investor will have any liability to any other
Investor under the Transaction Documents as a result therefrom. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.6&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Construction</U>.
The headings herein are for convenience only, do not constitute a part of this Agreement
and shall not be deemed to limit or affect any of the provisions hereof. The language
used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any
party. This Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by virtue of
the authorship of any provisions of this Agreement or any of the Transaction Documents.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.7 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Successors
and Assigns</U>. This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the
Investors. Any Investor may assign any or all of its rights under this Agreement to any
Person to whom such Investor assigns or transfers any Securities, provided such
transferee agrees in writing to be bound, with respect to the transferred Securities, by
the provisions hereof that apply to the &#147;Investors.&#148; </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>29 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.8 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No
Third-Party Beneficiaries</U>. This Agreement is intended for the benefit of the parties
hereto and their respective successors and permitted assigns and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth in Section 4.8 (as to each Investor Party).  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.9 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Governing
Law</U>. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all Actions concerning the
interpretations, enforcement and defense of the transactions contemplated by this
Agreement and any other Transaction Documents (whether brought against a party hereto or
its respective Affiliates, employees or agents) shall be commenced exclusively in the New
York Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the New York Courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein (including with
respect to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Action, any claim that it is not
personally subject to the jurisdiction of any such New York Court, or that such Action
has been commenced in an improper or inconvenient forum. Each party hereto hereby
irrevocably waives personal service of process and consents to process being served in
any such Action by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices
to it under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby. If either party
shall commence an Action to enforce any provisions of a Transaction Document, then the
prevailing party in such Action shall be reimbursed by the other party for its reasonable
attorneys&#146; fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Action.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.10 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Survival</U>.
The representations, warranties, agreements and covenants contained herein shall survive
the Closing and the delivery of the Securities.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.11 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Execution</U>.
This Agreement may be executed in two or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any
signature is delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile signature page were an original
thereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.12 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Severability</U>.
If any provision of this Agreement is held to be invalid or unenforceable in any respect,
the validity and enforceability of the remaining terms and provisions of this Agreement
shall not in any way be affected or impaired thereby and the parties will attempt to
agree upon a valid and enforceable provision that is a reasonable substitute therefor,
and upon so agreeing, shall incorporate such substitute provision in this Agreement.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>30 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.13 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Rescission
and Withdrawal Right</U>. Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever any
Investor exercises a right, election, demand or option under a Transaction Document and
the Company does not timely perform its related obligations within the periods therein
provided, then such Investor may rescind or withdraw, in its sole discretion from time to
time upon written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.14 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Replacement
of Securities</U>. If any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in
exchange and substitution for and upon cancellation thereof, or in lieu of and
substitution therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and customary
and reasonable indemnity, if requested. The applicants for a new certificate or
instrument under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities. If a replacement certificate
or instrument evidencing any Securities is requested due to a mutilation thereof, the
Company may require delivery of such mutilated certificate or instrument as a condition
precedent to any issuance of a replacement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.15 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Remedies</U>.
In addition to being entitled to exercise all rights provided herein or granted by law,
including recovery of damages, each of the Investors and the Company will be entitled to
specific performance under the Transaction Documents. The parties agree that monetary
damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in any action
for specific performance of any such obligation the defense that a remedy at law would be
adequate.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.16 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Payment
Set Aside</U>. To the extent that the Company makes a payment or payments to any Investor
pursuant to any Transaction Document or an Investor enforces or exercises its rights
thereunder, and such payment or payments or the proceeds of such enforcement or exercise
or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, recovered from, disgorged by or are required to be refunded,
repaid or otherwise restored to the Company, a trustee, receiver or any other person
under any law (including, without limitation, any bankruptcy law, state or federal law,
common law or equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.17 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Independent
Nature of Investors&#146; Obligations and Rights</U>. The obligations of each Investor
under any Transaction Document are several and not joint with the obligations of any
other Investor, and no Investor shall be responsible in any way for the performance of
the obligations of any other Investor under any Transaction Document. The decision of
each Investor to purchase Securities pursuant to the Transaction Documents has been made
by such Investor independently of any other Investor. Nothing contained herein or in any
Transaction Document, and no action taken by any Investor pursuant thereto, shall be
deemed to constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any way
acting in concert or as a group with respect to such obligations or the transactions
contemplated by the Transaction Documents. Each Investor acknowledges that no other
Investor has acted as agent for such Investor in connection with making its investment
hereunder and that no Investor will be acting as agent of such Investor in connection
with monitoring its investment in the Securities or enforcing its rights under the
Transaction Documents. Each Investor shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this Agreement
or out of the other Transaction Documents, and it shall not be necessary for any other
Investor to be joined as an additional party in any proceeding for such purpose. The
Company acknowledges that each of the Investors has been provided with the same
Transaction Documents for the purpose of closing a transaction with multiple Investors
and not because it was required or requested to do so by any Investor.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.18 &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Limitation
of Liability</U>. Notwithstanding anything herein to the contrary, the Company
acknowledges and agrees that the liability of an Investor arising directly or indirectly,
under any Transaction Document of any and every nature whatsoever shall be satisfied
solely out of the assets of such Investor, and that no trustee, officer, other investment
vehicle or any other Affiliate of such Investor or any investor, shareholder or holder of
shares of beneficial interest of such a Investor shall be personally liable for any
liabilities of such Investor.  </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK<BR>SIGNATURE PAGES
FOLLOW] </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>32 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated
above. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FLEXIBLE SOLUTIONS INTERNATIONAL, INC.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By: <U>/s/ Daniel B. O'Brien&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Daniel B. O'Brien</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: President and Chief Executive Officer</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK <BR>SIGNATURE PAGES FOR INVESTORS FOLLOW] </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>33 </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the parties have executed this Security Purchase Agreement as of the date
first written above. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NAME OF INVESTOR:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SF Capital Partners Ltd.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/ Michael A. Roth&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: Name: Michael A. Roth</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Authorized Person</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment Amount: $ 1, 500,000</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tax ID No.: 98-0363554</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>ADDRESS FOR NOTICE:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: Stark Offshore Management, LLC</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: 3600 South Lake Drive</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: St. Francis, WI 53235</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: Brian H. Davidson</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel: 414-294-7000</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fax: 414-294-7700</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DELIVERY INSTRUCTIONS:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(if different from above)</I></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel:</FONT></TD></TR>
</TABLE>


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<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NAME OF INVESTOR:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Catalina Valve + Fund, L.P.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/ Michael B. Baum&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: Name: Michael B. Baum</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title:&nbsp;President, General Partner</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment Amount: $525,000</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tax ID No.: 91-2148797</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>ADDRESS FOR NOTICE:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: Catalina Capital Mgmt, Inc.</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: 1300 Bristol St. North, #160</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: Newport Beach, CA 92660</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: Mike Baum</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel: 949 261 6650</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fax: 949 261 6645</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DELIVERY INSTRUCTIONS:</B></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(if different from above)</I></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: UNX, Inc.</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: 125 E. Olive 2nd Floor</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: Burbank, CA 91502</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: Kim Benson</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel.: 818 333 3336</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>35 </FONT></P>

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<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NAME OF INVESTOR:</B></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Gesico International SA</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/ [signature illegible]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: Name:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment Amount: $ 375,000.--</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tax ID No.:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>ADDRESS FOR NOTICE:</B></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: P.O. Box 7412</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: Panama 5, Rep. of Panama</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fax:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DELIVERY INSTRUCTIONS:</B></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(if different from above)</I></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: By separate mail</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel.:</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>36 </FONT></P>


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<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NAME OF INVESTOR:</B></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Perritt Emerging Opportunities</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/ Michael J. Corbett&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: Name: Michael J. Corbett</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: President</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment Amount: $ 375,000 (100,000 units)</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tax ID No.: 043788572</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>ADDRESS FOR NOTICE:</B></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: Perritt Capital Management</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: 300 S. Wacker</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: Chicago, IL 60606</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: Robert Laetz</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel: 312-669-1650</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fax: 312-669-1235</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DELIVERY INSTRUCTIONS:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(if different from above)</I></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: US Bancorp.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: 425 Walnut St.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: Cincinnati, OH 45202</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: Mark Schlader</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel.: 513-632-4127</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>38 </FONT></P>

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<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NAME OF INVESTOR:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Nite Capital LP</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/ Keith A. Goodman&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: Name: Keith A. Goodman</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Manager of the General Partner</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment Amount: $</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tax ID No.: 20-1487251</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>ADDRESS FOR NOTICE:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: Nite Capital LP</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: 100 East Cook Ave. #201</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: Libertyville, IL 60048</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: Keith Goodman</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel: 847-968-2655</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fax: 847-968-2648</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DELIVERY INSTRUCTIONS:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(if different from above)</I></FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel.:</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>38 </FONT></P>


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<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NAME OF INVESTOR:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bluegrass Growth Fund LP</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/ Deborah Solomon&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: Name: Deborah Solomon</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: Managing Member</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bluegrass Growth Fund Partners LLC</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment Amount: $127,500</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tax ID No.: 11-3701751</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>ADDRESS FOR NOTICE:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: 122 East 42nd Street Suite 2606</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: New York NY 10168</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: Deborah Solomon</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel: 212-682-3252</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fax: 212-202-9624</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DELIVERY INSTRUCTIONS:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(if different from above)</I></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention:</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel.:</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>39 </FONT></P>

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<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>NAME OF INVESTOR:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Alexander Klinkmann</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>/s/ Alexander Klinkmann&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By: Name:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Investment Amount: $ *82,500. --* net</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tax ID No.: N/A Swiss Citizen</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>ADDRESS FOR NOTICE:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: Alexander Klinkmann</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: Moritzbergstrasse 7</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: CH - 8713 Uerikon</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: N/A</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel: 0041 44 926 48 47</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Fax: 0041 44 926 48 47</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>DELIVERY INSTRUCTIONS:</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>(if different from above)</I></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
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     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>c/o: VP Bank (Switzerland) Ltd.</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Street: Bleicherweg 50</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>City/State/Zip: CH - 8039 Zurich</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Attention: Mr. Jurg Bamert</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tel.: 0041 44 226 24 60</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>40 </FONT></P>


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<TYPE>EX-10
<SEQUENCE>5
<FILENAME>sks147b.htm
<DESCRIPTION>10.2 WARRANT
<TEXT>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXHIBIT 10.2 </FONT></P>


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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>EXHIBIT A</B></FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>NEITHER THESE SECURITIES NOR THE
SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED WITH THE
SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
&#147;SECURITIES ACT&#148;), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT
TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS
AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE
OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE
SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FLEXIBLE SOLUTIONS INTERNATIONAL, INC. </FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WARRANT </FONT></H1>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=36% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Warrant No. F-__</FONT></TD>
     <TD WIDTH=64% ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Original Issue Date:  April 8, 2005&nbsp;</FONT></TD></TR>
</TABLE>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Flexible
Solutions International, Inc.</B>, a Nevada corporation (the <B>"Company"</B>), hereby certifies
that, for value received,                      or its registered assigns (the <B>"Holder"</B>),
is entitled to purchase from the Company up to a total of _______________<SUP>1</SUP> shares
   of Common Stock (each such share, a <B>&#147;Warrant Share&#148;</B> and all such
shares, the <B>&#147;Warrant Shares&#148;</B>), at any time and from time to time from
and after the Original Issue Date and through and including April 8, 2009 (the <B>&#147;Expiration
Date&#148;</B>), and subject to the following terms and conditions:  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Definitions</U>.
As used in this Warrant, the following terms shall have the           respective
definitions set forth in this Section 1. Capitalized terms that are           used and
not defined in this Warrant that are defined in the Purchase Agreement           (as
defined below) shall have the respective definitions set forth in the           Purchase
Agreement.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=1><SUP>1&nbsp;&nbsp;&nbsp;&nbsp;</SUP>A
number of shares equal to 100% of the number of shares of Common Stock           issued
or issuable to the Holder at Closing in accordance with Section 2.2(a)(i)           of
the Purchase Agreement (without regard to any conversion caps or other
          limitations thereunder).  </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Business
Day&#148;</B> means any day except Saturday, Sunday and any day which is a federal legal
holiday or a day on which banking institutions in the State of New York or Victoria,
British Columbia are authorized or required by law or other governmental action to close. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Common
Stock&#148;</B> means the common stock of the Company, par value $.001 per share, and any
securities into which such common stock may hereafter be reclassified. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Exercise
Price&#148; </B>means $4.50, subject to adjustment in accordance with Section 9. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Fundamental
Transaction&#148;</B> means any of the following: (1) the Company effects any merger or
consolidation of the Company with or into another Person, (2) the Company effects any sale
of all or substantially all of its assets in one or a series of related transactions, (3)
any tender offer or exchange offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to tender or exchange their shares
for other securities, cash or property, or (4) the Company effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Original
Issue Date&#148;</B> means the Original Issue Date first set forth on the first page of
this Warrant. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;New
York Courts&#148;</B> means the state and federal courts sitting in the City of New York,
Borough of Manhattan. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Purchase
Agreement&#148;</B> means the Securities Purchase Agreement, dated April 8, 2005, to which
the Company and the original Holder are parties. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&#147;Trading
Day&#148;</B> means (i) a day on which the Common Stock is traded on a Trading Market
(other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a
Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is
traded in the over-the-counter market, as reported by the OTC Bulletin Board, or (iii) if
the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is
quoted in the over-the-counter market as reported by the National Quotation Bureau
Incorporated (or any similar organization or agency succeeding to its functions of
reporting prices); provided, that in the event that the Common Stock is not listed or
quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business
Day. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration
of Warrant</U>. The Company shall register this Warrant upon           records to be
maintained by the Company for that purpose (the <B>&#147;Warrant           Register&#148;</B>),
in the name of the record Holder hereof from time to time.           The Company may deem
and treat the registered Holder of this Warrant as the           absolute owner hereof
for the purpose of any exercise hereof or any distribution           to the Holder, and
for all other purposes, absent actual notice to the contrary.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Registration
of Transfers</U>. The Company shall register the transfer of any           portion of
this Warrant in the Warrant Register, upon surrender of this Warrant,           with the
Form of Assignment attached hereto duly completed and signed, to the           Company at
its address specified herein. Upon any such registration or transfer,           a new
Warrant to purchase Common Stock, in substantially the form of this           Warrant
(any such new Warrant, a <B>&#147;New Warrant&#148;</B>), evidencing the
          portion of this Warrant so transferred shall be issued to the transferee and a
          New Warrant evidencing the remaining portion of this Warrant not so
transferred,           if any, shall be issued to the transferring Holder. The acceptance
of the New           Warrant by the transferee thereof shall be deemed the acceptance by
such           transferee of all of the rights and obligations of a holder of a Warrant.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Exercise
and Duration of Warrants</U>. This Warrant shall be exercisable by           the
registered Holder at any time and from time to time on or after the Original
          Issue Date and through and including the Expiration Date. At 6:30 p.m., New
York           City time on the Expiration Date, the portion of this Warrant not
exercised           prior thereto shall be and become void and of no value. The Company
may not call           or redeem any portion of this Warrant without the prior written
consent of the           affected Holder.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Delivery
of Warrant Shares</U>.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          To
effect exercises hereunder, the Holder shall not be required to physically
          surrender this Warrant unless the aggregate Warrant Shares represented by this
          Warrant is being exercised. Upon delivery of the Exercise Notice (in the form
          attached hereto) to the Company (with the attached Warrant Shares Exercise Log)
          at its address for notice set forth herein and upon payment of the Exercise
          Price multiplied by the number of Warrant Shares that the Holder intends to
          purchase hereunder, the Company shall promptly (but in no event later than
three           Trading Days after the Date of Exercise (as defined herein)) issue and
deliver           to the Holder, a certificate for the Warrant Shares issuable upon such
exercise,           which, unless otherwise required by the Purchase Agreement, shall be
free of           restrictive legends. The Company shall, upon request of the Holder and
          subsequent to the date on which a registration statement covering the resale of
          the Warrant Shares has been declared effective by the Securities and Exchange
          Commission, use its reasonable best efforts to deliver Warrant Shares hereunder
          electronically through the Depository Trust Corporation or another established
          clearing corporation performing similar functions, if available, <U>provided</U>,
that, the Company may, but will not be required to, change its           procedures now
in effect. A <B>&#147;Date of Exercise&#148;</B> means the date           on which the
Holder shall have delivered to the Company: (i) the Exercise Notice           (with the
Warrant Exercise Log attached to it), appropriately completed and duly           signed
and (ii) if such Holder is not utilizing the cashless exercise provisions           set
forth in this Warrant, payment of the Exercise Price for the number of           Warrant
Shares so indicated by the Holder to be purchased.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          If
by the third Trading Day after a Date of Exercise the Company fails to           deliver
the required number of Warrant Shares in the manner required pursuant to
          Section 5(a), then the Holder will have the right to rescind such exercise.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          If
by the seventh Trading Day after a Date of Exercise the Company fails to
          deliver the required number of Warrant Shares in the manner required pursuant
to           Section 5(a), and if after such seventh Trading Day and prior to the receipt
of           such Warrant Shares, the Holder purchases (in an open market transaction or
          otherwise) shares of Common Stock to deliver in satisfaction of a sale by the
          Holder of the Warrant Shares which the Holder anticipated receiving upon such
          exercise (a <B>&#147;Buy-In&#148;</B>), then the Company shall (1) pay in cash
          to the Holder the amount by which (x) the Holder&#146;s total purchase price
          (including brokerage commissions, if any) for the shares of Common Stock so
          purchased exceeds (y) the amount obtained by multiplying (A) the number of
          Warrant Shares that the Company was required to deliver to the Holder in
          connection with the exercise at issue by (B) the closing bid price of the
Common           Stock on the Date of Exercise and (2) at the option of the Holder,
either           reinstate the portion of the Warrant and equivalent number of Warrant
Shares for           which such exercise was not honored or deliver to the Holder the
number of           shares of Common Stock that would have been issued had the Company
timely           complied with its exercise and delivery obligations hereunder. The
Holder shall           provide the Company written notice indicating the amounts payable
to the Holder           in respect of the Buy-In.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          If
this Warrant is exercised in accordance with Section 10(a), upon receipt of
          immediately available funds from the Holder, the Company&#146;s obligations to
          issue and deliver Warrant Shares in accordance with the terms hereof are
          absolute and unconditional, irrespective of any action or inaction by the
Holder           to enforce the same, any waiver or consent with respect to any provision
hereof,           the recovery of any judgment against any Person or any action to
enforce the           same, or any setoff, counterclaim, recoupment, limitation or
termination, or any           breach or alleged breach by the Holder or any other Person
of any obligation to           the Company or any violation or alleged violation of law
by the Holder or any           other Person, and irrespective of any other circumstance
which might otherwise           limit such obligation of the Company to the Holder in
connection with the           issuance of Warrant Shares. Nothing herein shall limit a
Holder&#146;s right to           pursue any other remedies available to it hereunder, at
law or in equity           including, without limitation, a decree of specific
performance and/or           injunctive relief with respect to the Company&#146;s failure
to timely deliver           certificates representing Warrant Shares upon exercise of the
Warrant as           required pursuant to the terms hereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Charges,
Taxes and Expenses</U>. Issuance and delivery of Warrant Shares upon           exercise
of this Warrant shall be made without charge to the Holder for any           issue or
transfer tax, withholding tax, transfer agent fee or other incidental           tax or
expense in respect of the issuance of such certificates, all of which           taxes and
expenses shall be paid by the Company; provided, however, that the           Company
shall not be required to pay any tax which may be payable in respect of           any
transfer involved in the registration of any certificates for Warrant Shares           or
Warrants in a name other than that of the Holder. The Holder shall be
          responsible for all other tax liability that may arise as a result of holding
or           transferring this Warrant or receiving Warrant Shares upon exercise hereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Replacement
of Warrant</U>. If this Warrant is mutilated, lost, stolen or           destroyed, the
Company shall issue or cause to be issued in exchange and           substitution for and
upon cancellation hereof, or in lieu of and substitution           for this Warrant, a
New Warrant, but only upon receipt of evidence reasonably           satisfactory to the
Company of such loss, theft or destruction and customary and           reasonable
indemnity (which shall not include a surety bond), if requested.           Applicants for
a New Warrant under such circumstances shall also comply with           such other
reasonable regulations and procedures and pay such other reasonable           third-party
costs as the Company may prescribe. If a New Warrant is requested as           a result
of a mutilation of this Warrant, then the Holder shall deliver such           mutilated
Warrant to the Company as a condition precedent to the Company&#146;s
          obligation to issue the New Warrant.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Reservation
of Warrant Shares</U>. The Company covenants that it will at all           times reserve
and keep available out of the aggregate of its authorized but           unissued and
otherwise unreserved Common Stock, solely for the purpose of           enabling it to
issue Warrant Shares upon exercise of this Warrant as herein           provided, the
number of Warrant Shares which are then issuable and deliverable           upon the
exercise of this entire Warrant, free from preemptive rights or any           other
contingent purchase rights of Persons other than the Holder (taking into
          account the adjustments and restrictions of <U>Section 9</U>). The Company
          covenants that all Warrant Shares so issuable and deliverable shall, upon
          issuance and the payment of the applicable Exercise Price in accordance with
the           terms hereof, be duly and validly authorized, issued and fully paid and
          nonassessable.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Certain
Adjustments</U>. The Exercise Price and number of Warrant Shares           issuable upon
exercise of this Warrant are subject to adjustment from time to           time as set
forth in this <U>Section 9</U>.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Stock
Dividends and Splits</U>. If the Company, at any time while this           Warrant is
outstanding, (i) pays a stock dividend on its Common Stock or           otherwise makes a
distribution on any class of capital stock that is payable in           shares of Common
Stock, (ii) subdivides outstanding shares of Common Stock into           a larger number
of shares, or (iii) combines outstanding shares of Common Stock           into a smaller
number of shares, then in each such case the Exercise Price shall           be multiplied
by a fraction of which the numerator shall be the number of shares           of Common
Stock outstanding immediately before such event and of which the           denominator
shall be the number of shares of Common Stock outstanding           immediately after
such event. Any adjustment made pursuant to clause (i) of this           paragraph shall
become effective immediately after the record date for the           determination of
stockholders entitled to receive such dividend or distribution,           and any
adjustment pursuant to clause (ii) or (iii) of this paragraph shall           become
effective immediately after the effective date of such subdivision or
          combination.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Fundamental
Transactions</U>. If, at any time while this Warrant is           outstanding there is a
Fundamental Transaction, then the Holder shall have the           right thereafter to
receive, upon exercise of this Warrant, the same amount and           kind of securities,
cash or property as it would have been entitled to receive           upon the occurrence
of such Fundamental Transaction if it had been, immediately           prior to such
Fundamental Transaction, the holder of the number of Warrant           Shares then
issuable upon exercise in full of this Warrant (the <B>&#147;Alternate Consideration&#148;</B>).
For purposes of any such exercise,           the determination of the Exercise Price
shall be appropriately adjusted to apply           to such Alternate Consideration based
on the amount of Alternate Consideration           issuable in respect of one share of
Common Stock in such Fundamental           Transaction, and the Company shall apportion
the Exercise Price among the           Alternate Consideration in a reasonable manner
reflecting the relative value of           any different components of the Alternate
Consideration. If holders of Common           Stock are given any choice as to the
securities, cash or property to be received           in a Fundamental Transaction, then
the Holder shall be given the same choice as           to the Alternate Consideration it
receives upon any exercise of this Warrant           following such Fundamental
Transaction. At the Holder&#146;s option and request,           any successor to the
Company or surviving entity in such Fundamental Transaction           shall, either (1)
issue to the Holder a new warrant substantially in the form of           this Warrant and
consistent with the foregoing provisions and evidencing the           Holder&#146;s right
to purchase the Alternate Consideration for the aggregate           Exercise Price upon
exercise thereof, or (2) purchase the Warrant from the           Holder for a purchase
price, payable in cash within five Trading Days after such           request (or, if
later, on the effective date of the Fundamental Transaction),           equal to the
Black Scholes value of the remaining unexercised portion of this           Warrant on the
date of such request. The terms of any agreement pursuant to           which a
Fundamental Transaction is effected shall include terms requiring any           such
successor or surviving entity to comply with the provisions of this           paragraph
(c) and insuring that the Warrant (or any such replacement security)           will be
similarly adjusted upon any subsequent transaction analogous to a           Fundamental
Transaction.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Subsequent
Equity Sales</U>.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          If
the Company or any subsidiary thereof, as applicable, shall at any time issue
          shares of Common Stock or Common Stock Equivalents entitling any Person to
          acquire shares of Common Stock, at a price per share less than the Threshold
          Price (if the holder of the Common Stock or Common Stock Equivalent so issued
          shall at any time, whether by operation of purchase price adjustments, reset
          provisions, floating conversion, exercise or exchange prices or otherwise, or
          due to warrants, options or rights issued in connection with such issuance, be
          entitled to receive shares of Common Stock at a price less than the Threshold
          Price, such issuance shall be deemed to have occurred for less than the
          Threshold Price), then, (A) if such issuance occurs prior to the one-year
          anniversary of the Closing Date, the Exercise Price shall be reduced to equal
          such lower price, and (B) if such issuance occurs subsequent to the one year
          anniversary of the Closing Date, the Exercise Price shall be multiplied by a
          fraction, the numerator of which shall be the number of shares of Common Stock
          outstanding immediately prior to the issuance of such shares of Common Stock or
          such Common Stock Equivalents plus the number of shares of Common Stock which
          the offering price for such shares of Common Stock or Common Stock Equivalents
          would purchase at the closing price of the Common Stock on the Closing Date,
and           the denominator of which shall be the sum of the number of shares of Common
          Stock outstanding immediately prior to such issuance plus the number of shares
          of Common Stock so issued or issuable. Such adjustment shall be made whenever
          such Common Stock or Common Stock Equivalents are issued. The Company shall
          notify the Holder in writing, no later than the Trading Day following the
          issuance of any Common Stock or Common Stock Equivalent subject to this
section,           indicating therein the applicable issuance price, or of applicable
reset price,           exchange price, conversion price and other pricing terms. If prior
to the           one-year anniversary of the Closing Date, the Company enters into any
          understanding or agreement to issue or sell securities, or otherwise engages in
          discussions with any Person in connection with a potential issuance or sale of
          securities that would trigger an adjustment to the Exercise Price, then
          notwithstanding the fact that such actual issuance of Common Stock or Common
          Stock Equivalents occurs after the one-year anniversary of the Closing Date,
          such issuance will be treated as if it had occurred prior to the one-year
          anniversary of the Closing Date.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          For
purposes of this subsection 9(c), the following subsections (c)(ii)(l) to
          (c)(ii)(6) shall also be applicable:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Issuance
of Rights or Options</U>. In case at any time the Company shall in           any manner
grant (directly and not by assumption in a merger or otherwise) any           warrants or
other rights to subscribe for or to purchase, or any options for the           purchase
of, Common Stock or any stock or security convertible into or           exchangeable for
Common Stock (such warrants, rights or options being called <B>&#147;Options&#148;</B>and
such convertible or exchangeable stock or           securities being called <B>&#147;Convertible
Securities&#148;</B>) whether or           not such Options or the right to convert or
exchange any such Convertible           Securities are immediately exercisable, and the
price per share for which Common           Stock is issuable upon the exercise of such
Options or upon the conversion or           exchange of such Convertible Securities
(determined by dividing (i) the sum           (which sum shall constitute the applicable
consideration) of (x) the total           amount, if any, received or receivable by the
Company as consideration for the           granting of such Options, plus (y) the
aggregate amount of additional           consideration payable to the Company upon the
exercise of all such Options, plus           (z), in the case of such Options which
relate to Convertible Securities, the           aggregate amount of additional
consideration, if any, payable upon the issue or           sale of such Convertible
Securities and upon the conversion or exchange thereof,           by (ii) the total
maximum number of shares of Common Stock issuable upon the           exercise of such
Options or upon the conversion or exchange of all such           Convertible Securities
issuable upon the exercise of such Options) shall be less           than the Threshold
Price in effect immediately prior to the time of the granting           of such Options,
then the total number of shares of Common Stock issuable upon           the exercise of
such Options or upon conversion or exchange of the total amount           of such
Convertible Securities issuable upon the exercise of such Options shall           be
deemed to have been issued for such price per share as of the date of           granting
of such Options or the issuance of such Convertible Securities and           thereafter
shall be deemed to be outstanding for purposes of adjusting the           Exercise Price.
Except as otherwise provided in subsection 9(c)(ii)(3), no           adjustment of the
Exercise Price shall be made upon the actual issue of such           Common Stock or of
such Convertible Securities upon exercise of such Options or           upon the actual
issue of such Common Stock upon conversion or exchange of such           Convertible
Securities.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Issuance
of Convertible Securities</U>. In case the Company shall in any           manner issue
(directly and not by assumption in a merger or otherwise) or sell           any
Convertible Securities, whether or not the rights to exchange or convert any
          such Convertible Securities are immediately exercisable, and the price per
share           for which Common Stock is issuable upon such conversion or exchange
(determined           by dividing (i) the sum (which sum shall constitute the applicable
          consideration) of (x) the total amount received or receivable by the Company as
          consideration for the issue or sale of such Convertible Securities, plus (y)
the           aggregate amount of additional consideration, if any, payable to the
Company           upon the conversion or exchange thereof, by (ii) the total number of
shares of           Common Stock issuable upon the conversion or exchange of all such
Convertible           Securities) shall be less than the Threshold Price in effect
immediately prior           to the time of such issue or sale, then the total maximum
number of shares of           Common Stock issuable upon conversion or exchange of all
such Convertible           Securities shall be deemed to have been issued for such price
per share as of           the date of the issue or sale of such Convertible Securities
and thereafter           shall be deemed to be outstanding for purposes of adjusting the
Exercise Price,           provided that (a) except as otherwise provided in subsection
9(c)(ii)(3), no           adjustment of the Exercise Price shall be made upon the actual
issuance of such           Common Stock upon conversion or exchange of such Convertible
Securities and (b)           no further adjustment of the Exercise Price shall be made by
reason of the issue           or sale of Convertible Securities upon exercise of any
Options to purchase any           such Convertible Securities for which adjustments of
the Exercise Price have           been made pursuant to the other provisions of
subsection 9(c).  </FONT></P>



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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Change
in Option Price or Conversion Rate</U>. Upon the happening of any of           the
following events, namely, if the purchase price provided for in any Option
          referred to in subsection 9(c)(ii)(l) hereof, the additional consideration, if
          any, payable upon the conversion or exchange of any Convertible Securities
          referred to in subsections 9(c)(ii)(l) or 9(c)(ii)(2), or the rate at which
          Convertible Securities referred to in subsections 9(c)(ii)(l) or 9(c)(ii)(2)
are           convertible into or exchangeable for Common Stock shall change at any time
          (including, but not limited to, changes under or by reason of provisions
          designed to protect against dilution), the Exercise Price in effect at the time
          of such event shall forthwith be readjusted to the Exercise Price which would
          have been in effect at such time had such Options or Convertible Securities
          still outstanding provided for such changed purchase price, additional
          consideration or conversion rate, as the case may be, at the time initially
          granted, issued or sold. On the termination of any Option for which any
          adjustment was made pursuant to this subsection 9(c) or any right to convert or
          exchange Convertible Securities for which any adjustment was made pursuant to
          this subsection 9(c) (including without limitation upon the redemption or
          purchase for consideration of such Convertible Securities by the Company), the
          Exercise Price then in effect hereunder shall forthwith be changed to the
          Exercise Price which would have been in effect at the time of such termination
          had such Option or Convertible Securities, to the extent outstanding
immediately           prior to such termination, never been issued.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(4)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Stock
Dividends</U>. Subject to the provisions of this Section 9(c), in case           the
Company shall declare a dividend or make any other distribution upon any           stock
of the Company (other than the Common Stock) payable in Common Stock,           Options
or Convertible Securities, then any Common Stock, Options or Convertible
          Securities, as the case may be, issuable in payment of such dividend or
          distribution shall be deemed to have been issued or sold without consideration.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(5)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Consideration
for Stock</U>. In case any shares of Common Stock, Options or           Convertible
Securities shall be issued or sold for cash, the consideration           received
therefor shall be deemed to be the net amount received by the Company           therefor,
after deduction therefrom of any expenses incurred or any underwriting
          commissions or concessions paid or allowed by the Company in connection
          therewith. In case any shares of Common Stock, Options or Convertible
Securities           shall be issued or sold for a consideration other than cash, the
amount of the           consideration other than cash received by the Company shall be
deemed to be the           fair value of such consideration as determined in good faith
by the Board of           Directors of the Company, after deduction of any expenses
incurred or any           underwriting commissions or concessions paid or allowed by the
Company in           connection therewith. In case any Options shall be issued in
connection with the           issue and sale of other securities of the Company, together
comprising one           integral transaction in which no specific consideration is
allocated to such           Options by the parties thereto, such Options shall be deemed
to have been issued           for such consideration as determined in good faith by the
Board of Directors of           the Company. If Common Stock, Options or Convertible
Securities shall be issued           or sold by the Company and, in connection therewith,
other Options or           Convertible Securities (the <B>&#147;Additional Rights&#148;</B>)
are issued,           then the consideration received or deemed to be received by the
Company shall be           reduced by the fair market value of the Additional Rights (as
determined using           the Black-Scholes option pricing model or another method
mutually agreed to by           the Company and the Holder). The Board of Directors of
the Company shall respond           promptly, in writing, to an inquiry by the Holders as
to the fair market value           of the Additional Rights. In the event that the Board
of Directors of the           Company and the Holders are unable to agree upon the fair
market value of the           Additional Rights, the Company and the Holders shall
jointly select an           appraiser, who is experienced in such matters. The decision
of such appraiser           shall be final and conclusive, and the cost of such appraiser
shall be borne           evenly by the Company and the Holder.  </FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(6)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Record
Date</U>. In case the Company shall take a record of the holders of           its Common
Stock for the purpose of entitling them (i) to receive a dividend or           other
distribution payable in Common Stock, Options or Convertible Securities or           (ii)
to subscribe for or purchase Common Stock, Options or Convertible           Securities,
then such record date shall be deemed to be the date of the issue or           sale of
the shares of Common Stock deemed to have been issued or sold upon the
          declaration of such dividend or the making of such other distribution or the
          date of the granting of such right of subscription or purchase, as the case may
          be.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Notwithstanding
the foregoing, no adjustment will be made under this paragraph           (c) in respect
of: (i) the issuance of securities upon the exercise or           conversion of any
Common Stock or Common Stock Equivalents issued by the Company           prior to the
date hereof (but will apply to any amendments, modifications and           reissuances
thereof), (ii) the grant of options, warrants or other Common Stock           Equivalents
under any duly authorized Company stock option, restricted stock           plan or stock
purchase plan whether now existing or hereafter approved by the           Company and its
stockholders in the future (but not as to any amendments or           other modifications
to the amount of Common Stock issuable thereunder, the terms           set forth therein,
or the exercise price set forth therein) and the issuance of           Common Stock in
respect thereof, or (iii) up to an aggregate of [20% of the           outstanding Common
Stock prior to such acquisition] shares of Common Stock           issued as consideration
for the acquisition of another company or business in           which the shareholders of
the Company do not have an ownership interest, which           acquisition has been
approved by the Board of Directors of the Company.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Number
of Warrant Shares</U>. Simultaneously with any adjustment to the           Exercise Price
pursuant to this Section 9, the number of Warrant Shares that may           be purchased
upon exercise of this Warrant shall be increased or decreased           proportionately,
so that after such adjustment the aggregate Exercise Price           payable hereunder
for the adjusted number of Warrant Shares shall be the same as           the aggregate
Exercise Price in effect immediately prior to such adjustment.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Calculations</U>.
All calculations under this <U>Section 9</U> shall be made           to the nearest cent
or the nearest 1/100<SUP>th</SUP> of a share, as applicable.           The number of
shares of Common Stock outstanding at any given time shall not           include shares
owned or held by or for the account of the Company, and the           disposition of any
such shares shall be considered an issue or sale of Common           Stock.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notice
of Adjustments</U>. Upon the occurrence of each adjustment pursuant to           this <U>Section
9</U>, the Company at its expense will promptly compute such           adjustment in
accordance with the terms of this Warrant and prepare a           certificate setting
forth such adjustment, including a statement of the adjusted           Exercise Price and
adjusted number or type of Warrant Shares or other securities           issuable upon
exercise of this Warrant (as applicable), describing the           transactions giving
rise to such adjustments and showing in detail the facts           upon which such
adjustment is based. Upon written request, the Company will           promptly deliver a
copy of each such certificate to the Holder and to the           Company&#146;s Transfer
Agent.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>9 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notice
of Corporate Events</U>. If the Company (i) declares a dividend or any           other
distribution of cash, securities or other property in respect of its           Common
Stock, including without limitation any granting of rights or warrants to
          subscribe for or purchase any capital stock of the Company or any Subsidiary,
          (ii) authorizes or approves, enters into any agreement contemplating or
solicits           stockholder approval for any Fundamental Transaction or (iii)
authorizes the           voluntary dissolution, liquidation or winding up of the affairs
of the Company,           then the Company shall deliver to the Holder a notice
describing the material           terms and conditions of such transaction (but only to
the extent such disclosure           would not result in the dissemination of material,
non-public information to the           Holder) at least 10 calendar days prior to the
applicable record or effective           date on which a Person would need to hold Common
Stock in order to participate           in or vote with respect to such transaction, and
the Company will take all steps           reasonably necessary in order to insure that
the Holder is given the practical           opportunity to exercise this Warrant prior to
such time so as to participate in           or vote with respect to such transaction;
provided, however, that the failure to           deliver such notice or any defect
therein shall not affect the validity of the           corporate action required to be
described in such notice.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Payment
of Exercise Price</U>. The Holder may pay the Exercise Price in one           of the
following manners:  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Cash
Exercise</U>. The Holder may deliver immediately available funds; or  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Cashless
Exercise</U>. After the earlier to occur of (i) 90 days following           the Closing
Date and (ii) the Effectiveness Date (as defined in the Registration           Rights
Agreement) of the Registration Statement, if an Exercise Notice is           delivered at
a time when a registration statement permitting the Holder to           resell the
Warrant Shares is not then effective or the prospectus forming a part           thereof
is not then available to the Holder for the resale of the Warrant           Shares, then
the Holder may notify the Company in an Exercise Notice of its           election to
utilize cashless exercise, in which event the Company shall issue to           the Holder
the number of Warrant Shares determined as follows:  </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X = Y [(A-B)/A]  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=5%>&nbsp;</TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
where:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;X = the number of Warrant Shares to be issued to
the Holder.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Y = the number of Warrant Shares with respect to
which this Warrant is being exercised.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A = the average of the closing prices for the
five Trading Days immediately prior to (but not including) the Exercise Date.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=10%>&nbsp;</TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B = the Exercise Price.</FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For purposes
of Rule 144 promulgated under the Securities Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be
deemed to have been acquired by the Holder, and the holding period for the Warrant Shares
shall be deemed to have commenced, on the date this Warrant was originally issued.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Limitations
on Exercise</U>.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Notwithstanding
anything to the contrary contained herein, the number of Warrant           Shares that
may be acquired by the Holder upon any exercise of this Warrant (or           otherwise
in respect hereof) shall be limited to the extent necessary to insure           that,
following such exercise (or other issuance), the total number of shares of
          Common Stock then beneficially owned by such Holder and its Affiliates and any
          other Persons whose beneficial ownership of Common Stock would be aggregated
          with the Holder&#146;s for purposes of Section 13(d) of the Exchange Act, does
          not exceed 4.999% of the total number of issued and outstanding shares of
Common           Stock (including for such purpose the shares of Common Stock issuable
upon such           exercise). For such purposes, beneficial ownership shall be
determined in           accordance with Section 13(d) of the Exchange Act and the rules
and regulations           promulgated thereunder. This provision shall not restrict the
number of shares           of Common Stock which a Holder may receive or beneficially own
in order to           determine the amount of securities or other consideration that such
Holder may           receive in the event of a Fundamental Transaction as contemplated in
Section 9           of this Warrant. By written notice to the Company, an Investor may
waive the           provisions of this Section 11(a) as to itself but any such waiver
will not be           effective until the 61<SUP>st</SUP> day after delivery thereof and
such waiver           shall have no effect on any other Investor.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Notwithstanding
anything to the contrary contained herein, the number of Warrant           Shares that
may be acquired by the Holder upon any exercise of this Warrant (or           otherwise
in respect hereof) shall be limited to the extent necessary to insure           that,
following such exercise (or other issuance), the total number of shares of
          Common Stock then beneficially owned by such Holder and its Affiliates and any
          other Persons whose beneficial ownership of Common Stock would be aggregated
          with the Holder&#146;s for purposes of Section 13(d) of the Exchange Act, does
          not exceed 9.999% of the total number of issued and outstanding shares of
Common           Stock (including for such purpose the shares of Common Stock issuable
upon such           exercise). For such purposes, beneficial ownership shall be
determined in           accordance with Section 13(d) of the Exchange Act and the rules
and regulations           promulgated thereunder. This provision shall not restrict the
number of shares           of Common Stock which a Holder may receive or beneficially own
in order to           determine the amount of securities or other consideration that such
Holder may           receive in the event of a Fundamental Transaction as contemplated in
Section 9           of this Warrant. This restriction may not be waived.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Notwithstanding
anything to the contrary in this Warrant, if the Company has not           previously
obtained Stockholder Approval, then the Company may not issue shares           of Common
Stock in excess of the Issuable Maximum upon exercises of this           Warrant. The
&#147;Issuable Maximum&#148; means, as of any date, a number of           shares of
Common Stock equal to [20% of the issued and outstanding Common           Stock]. Each
Investor shall be entitled to a portion of the Issuable Maximum           equal to the
quotient obtained by dividing: (x) the number of Shares issued and           sold to such
Investor on the Closing Date plus any Additional Shares issued to           such Investor
thereafter by (y) the aggregate number of Shares issued and sold           by the Company
on the Closing Date plus any Additional Shares issued to any           Investor
thereafter. If any Investor shall no longer hold Warrants, then such           Investor&#146;s
remaining portion of the Issuable Maximum shall be allocated           pro-rata among the
remaining Investors, giving effect to the Company&#146;s           desire to allocate
this limitation among the class of securities known as the           Warrants. If on any
Exercise Date, or at such time as an Investor shall notify           the Company that the
condition in (A) following this clause shall be in effect:           (A) the aggregate
number of shares of Common Stock that would then be issuable           upon exercise in
full of all then outstanding Warrants would exceed the Issuable           Maximum on such
date, and (B) the Company shall not have previously obtained the           vote of
shareholders, as may be required by the applicable rules and regulations           of the
American Stock Exchange (or any successor entity or any other Trading           Market on
which the Company&#146;s securities then trade), applicable to approve           the
issuance of shares of Common Stock in excess of the Issuable Maximum           pursuant
to the terms hereof (the <B>&#147;Stockholder Approval&#148;</B>),           then, the
Company shall issue to the Investor a number of shares of Common Stock           equal to
the Issuable Maximum and, with respect to the remainder of the           aggregate
Warrants then held by the Investors for which an exercise would result           in an
issuance of shares of Common Stock in excess of the Issuable Maximum, the
          Company must use its best efforts to seek and obtain Stockholder Approval as
          soon as possible, but in any event not later than the 90<SUP>th</SUP> day
          following such Exercise Date or the date of such request. The Company and the
          Holder understand and agree that Warrant Shares issued to and then held by the
          Holder as a result of exercises of Warrants shall not be entitled to cast votes
          on any resolution to obtain Stockholder Approval pursuant hereto.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>11 </FONT></P>





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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>No
Fractional Shares</U>. No fractional shares of Warrant Shares will be           issued in
connection with any exercise of this Warrant. In lieu of any           fractional shares
which would, otherwise be issuable, the Company shall pay cash           equal to the
product of such fraction multiplied by the closing price of one           Warrant Share
as reported by the applicable Trading Market on the date of           exercise.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;13.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Notices</U>.
Any and all notices or other communications or deliveries           hereunder (including,
without limitation, any Exercise Notice) shall be in           writing and shall be
deemed given and effective on the earliest of (i) the date           of transmission, if
such notice or communication is delivered via facsimile at           the facsimile number
specified in this Section prior to 5:30 p.m. (New York City           time) on a Trading
Day, (ii) the next Trading Day after the date of           transmission, if such notice
or communication is delivered via facsimile at the           facsimile number specified
in this Section on a day that is not a Trading Day or           later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the Trading           Day following the date of
mailing, if sent by nationally recognized overnight           courier service, or (iv)
upon actual receipt by the party to whom such notice is           required to be given.
The addresses for such communications shall be: (i) if to           the Company, to
Flexible Solutions International, Inc., 615 Discovery Street,           Victoria, B.C.,
V8T 5G4, Canada, Attn: Dan O&#146;Brien, or to <B>Facsimile No.:           250.477.9912</B> (or
such other address as the Company shall indicate in writing           in accordance with
this Section), or (ii) if to the Holder, to the address or           facsimile number
appearing on the Warrant Register or such other address or           facsimile number as
the Holder may provide to the Company in accordance with           this Section.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Warrant
Agent</U>. The Company shall serve as warrant agent under this           Warrant. Upon 10
days&#146; notice to the Holder, the Company may appoint a new           warrant agent.
Any corporation into which the Company or any new warrant agent           may be merged
or any corporation resulting from any consolidation to which the           Company or any
new warrant agent shall be a party or any corporation to which           the Company or
any new warrant agent transfers substantially all of its           corporate trust or
shareholders services business shall be a successor warrant           agent under this
Warrant without any further act. Any such successor warrant           agent shall
promptly cause notice of its succession as warrant agent to be           mailed (by first
class mail, postage prepaid) to the Holder at the Holder&#146;s           last address as
shown on the Warrant Register.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>12 </FONT></P>





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<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;15.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>Miscellaneous</U>.  </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Indent Lv 0- TNR" FSL="Workstation" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          This
Warrant shall be binding on and inure to the benefit of the parties hereto           and
their respective successors and assigns. Subject to the preceding sentence,
          nothing in this Warrant shall be construed to give to any Person other than the
          Company and the Holder any legal or equitable right, remedy or cause of action
          under this Warrant. This Warrant may be amended only in writing signed by the
          Company and the Holder and their successors and assigns.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          All
questions concerning the construction, validity, enforcement and           interpretation
of this Warrant shall be governed by and construed and enforced           in accordance
with the internal laws of the State of New York (except for           matters governed by
corporate law in the State of Nevada), without regard to the           principles of
conflicts of law thereof. Each party agrees that all legal           proceedings
concerning the interpretations, enforcement and defense of this           Warrant and the
transactions herein contemplated           (<B>&#147;Proceedings&#148;</B>) (whether
brought against a party hereto or its           respective Affiliates, employees or
agents) shall be commenced exclusively in           the New York Courts. Each party
hereto hereby irrevocably submits to the           exclusive jurisdiction of the New York
Courts for the adjudication of any           dispute hereunder or in connection herewith
or with any transaction contemplated           hereby or discussed herein, and hereby
irrevocably waives, and agrees not to           assert in any Proceeding, any claim that
it is not personally subject to the           jurisdiction of any New York Court, or that
such Proceeding has been commenced           in an improper or inconvenient forum. Each
party hereto hereby irrevocably           waives personal service of process and consents
to process being served in any           such Proceeding by mailing a copy thereof via
registered or certified mail or           overnight delivery (with evidence of delivery)
to such party at the address in           effect for notices to it under this Warrant and
agrees that such service shall           constitute good and sufficient service of
process and notice thereof. Nothing           contained herein shall be deemed to limit
in any way any right to serve process           in any manner permitted by law. Each
party hereto hereby irrevocably waives, to           the fullest extent permitted by
applicable law, any and all right to trial by           jury in any legal proceeding
arising out of or relating to this Warrant or the           transactions contemplated
hereby. If either party shall commence a Proceeding to           enforce any provisions
of this Warrant, then the prevailing party in such           Proceeding shall be
reimbursed by the other party for its attorney&#146;s fees           and other costs and
expenses incurred with the investigation, preparation and           prosecution of such
Proceeding.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          The
headings herein are for convenience only, do not constitute a part of this
          Warrant and shall not be deemed to limit or affect any of the provisions
hereof.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          In
case any one or more of the provisions of this Warrant shall be invalid or
          unenforceable in any respect, the validity and enforceability of the remaining
          terms and provisions of this Warrant shall not in any way be affected or
          impaired thereby and the parties will attempt in good faith to agree upon a
          valid and enforceable provision which shall be a commercially reasonable
          substitute therefor, and upon so agreeing, shall incorporate such substitute
          provision in this Warrant.  </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;          Prior
to exercise of this Warrant, the Holder hereof shall not, by reason of           being a
Holder, be entitled to any rights of a stockholder with respect to the           Warrant
Shares.  </FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized
officer as of the date first indicated above. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>FLEXIBLE SOLUTIONS INTERNATIONAL, INC.</B></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By: <U>/s/ Daniel B. O'Brien&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name: Daniel B. O'Brien</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Title: President and Chief Executive Officer</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14 </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>EXERCISE NOTICE<BR>
FLEXIBLE SOLUTIONS INTERNATIONAL, INC.<BR>
WARRANT DATED APRIL 8, 2005 </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The undersigned Holder hereby
irrevocably elects to purchase _____________ shares of Common Stock pursuant to the above
referenced Warrant. Capitalized terms used herein and not otherwise defined have the
respective meanings set forth in the Warrant. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(1)&nbsp;&nbsp;&nbsp;&nbsp;
          The undersigned Holder hereby exercises its right to purchase _________________
          Warrant Shares pursuant to the Warrant. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(2)&nbsp;&nbsp;&nbsp;&nbsp;
          The Holder intends that payment of the Exercise Price shall be made as (check
          one): </FONT></P>


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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%>&nbsp;</TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____"Cash Exercise" under Section 10 </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=15%>&nbsp;</TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
____"Cashless
Exercise" under Section 10 </FONT></TD>
</TR>
</TABLE>
<BR>


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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(3)&nbsp;&nbsp;&nbsp;&nbsp;
          If the holder has elected a Cash Exercise, the holder shall pay the sum of
          $____________ to the Company in accordance with the terms of the Warrant. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(4)&nbsp;&nbsp;&nbsp;&nbsp;
          Pursuant to this Exercise Notice, the Company shall deliver to the holder
          _______________ Warrant Shares in accordance with the terms of the Warrant. </FONT></P>

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     <P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(5)&nbsp;&nbsp;&nbsp;&nbsp;
          By its delivery of this Exercise Notice, the undersigned represents and warrants
          to the Company that in giving effect to the exercise evidenced hereby the Holder
          will not beneficially own in excess of the number of shares of Common Stock
          (determined in accordance with Section 13(d) of the Securities Exchange Act of
          1934) permitted to be owned under Section 11 of this Warrant to which this
          notice relates. </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: ____________________, ______</FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name of Holder:</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>By:       _______________________________________________</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Name:     _____________________________________________</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Title:    ______________________________________________</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(Signature must conform in all respects to name of</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>holder as specified on the face of the Warrant)</FONT></TD></TR>
</TABLE>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Warrant Shares Exercise Log </U></FONT></P>



<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR VALIGN=Bottom>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Number of Warrant Shares<BR>
Available to be Exercised</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Number of Warrant Shares<BR>
Exercised</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Number of Warrant<BR>
Shares Remaining to<BR>
be Exercised</FONT></TD></TR>
<TR>
     <TD COLSPAN=4>&nbsp;</TD></TR>
</TABLE>


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<HR SIZE=5 COLOR=GRAY NOSHADE>



<!-- MARKER FORMAT-SHEET="Head Minor Center-TNR" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FLEXIBLE SOLUTIONS INTERNATIONAL, INC.<BR>
WARRANT ORIGINALLY ISSUED APRIL 8, 2005<BR>WARRANT NO. F-__</FONT></P>


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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM OF ASSIGNMENT </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[To
be completed and signed only upon transfer of Warrant] </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FOR VALUE
RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________ the right represented by the above-captioned Warrant to
purchase ____________ shares of Common Stock to which such Warrant relates and appoints
________________ attorney to transfer said right on the books of the Company with full
power of substitution in the premises. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dated: _______________,
____ </FONT></P>


<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 WIDTH=100%>
<TR>
     <TD COLSPAN=2>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=50% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>___________________________________________________<BR>
(Signature must conform in all respects to name of holder as </FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>specified on the face of the Warrant)</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=2>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>___________________________________________________<BR>Address of Transferee</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>___________________________________________________<BR></FONT></TD></TR>
<TR>
     <TD COLSPAN=2>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>___________________________________________________<BR></FONT></TD></TR>
<TR>
     <TD COLSPAN=2>&nbsp;</TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In the presence of:</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>______________________________________________<BR></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=2>&nbsp;</TD></TR>
</TABLE>





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<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>sks147e.htm
<DESCRIPTION>23.3 CONSENT OF PUBLIC ACCOUNTING FIRM
<TEXT>
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Exhibit 23.3 </FONT></P>


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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CONSENT OF INDEPENDENT
REGISTERED PUBLIC <BR>ACCOUNTING FIRM </FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
consent to the reference to our firm under the caption &#147;Experts&#148; in the
Registration Statement on Form S-3 and related prospectus of Flexible Solutions
International, Inc. and its subsidiaries for the registration of 1,800,000 shares of its
common stock and to the incorporation by reference therein of our report, dated March 12,
2003, with respect to the consolidated financial statements of Flexible Solutions
International, Inc. included in its Annual Report on Form 10-KSB for the year ended
December 31, 2004, filed with the Securities and Exchange Commission on June 24, 2005. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Right-TNR" FSL="Workstation" -->
<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/S/ PANNELL KERR FORSTER<BR>
Chartered Accountants </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left-TNR" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Vancouver, Canada<BR>
June 23, 2005 </FONT></P>



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