Exhibit 99

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

This Prospectus relates to shares (the “Shares”) of common stock (the “Common Stock”) of Flexible Solutions International Inc. (the “Company”) which may be issued pursuant to Stock Option Plans approved by the Company. The Stock Option Plans provide for the grant, to selected employees of the Company and other persons, of options to purchase shares of the Company’s common stock. Persons who received shares pursuant to the Stock Option Plans and who are offering such shares to the public by means of this Prospectus are referred to as the “Selling Shareholders”.

The Selling Shareholders may offer the shares from time to time in negotiated transactions in the public market, at fixed prices which may be changed from time to time, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transactions by selling the Shares to or through securities broker/dealers, and such broker/dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of the Shares for whom such broker/dealers may act as agent or to whom they sell as principal, or both (which compensation as to a particular broker/dealer might be in excess of customary commissions). See "Selling Shareholders" and "Plan of Distribution".

None of the proceeds from the sale of the Shares by the Selling Shareholders will be received by the Company. The Company has agreed to bear all expenses (other than underwriting discounts, selling commissions and fees and expenses of counsel and other advisers to the Selling Shareholders). The Company has not agreed to indemnify the Selling Shareholders against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act").

The Company is subject to the information requirements of the Securities Exchange Act of 1934 (the "Exchange Act") and in accordance therewith, files reports and other information with the Securities and Exchange Commission (the "Commission"). Proxy statements, reports and other information concerning the Company can be inspected and copied at the Commission's office at 100 F Street, NE, Washington, D.C. 20549. Certain information concerning the Company is also available at the Internet Web Site maintained by the Securities and Exchange Commission at www.sec.gov. This Prospectus does not contain all information set forth in the Registration Statement of which this Prospectus forms a part and exhibits thereto which the Company has filed with the Commission under the Securities Act and to which reference is hereby made.

The Company will provide, without charge, to each person to whom a copy of this Prospectus is delivered, including any beneficial owner, upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference herein (other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into this Prospectus). Requests should be directed to:

All documents filed with the Commission by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to the termination of the offering registered hereby shall be deemed to be incorporated by reference into this Prospectus from the date of the filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference shall be deemed to be modified or superseded for the purposes of this Prospectus to the extent that a statement contained herein or in any subsequently filed document which also is or is deemed to be

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PROSPECTUS SUMMARY...........................………………………………………………	1

RISK FACTORS ................................……………………..……………………………..…	2

SELLING SHAREHOLDERS ........................................………………………………......	6

PLAN OF DISTRIBUTION .........................................……………………….…………...	7

DESCRIPTION OF COMMON STOCK ...................................……………………….….	8

GENERAL .........................................................……………………………………….…..	9

The Company is the parent holding company for Flexible Ltd., WaterSavr Global Solutions Inc. (“WaterSavr”), NanoChem Solutions Inc. (“NanoChem”), Nano Detect Technologies Inc. (hereinafter referred to as “Nano Detect”), and Seahorse Systems Inc. (hereinafter referred to as “Seahorse”). Unless otherwise indicated, all references to the Company include the operations of its subsidiaries.

In 2004 the Company formed NanoChem Solutions Inc. in order to acquire certain assets from Donlar Corporation, which owned a broad portfolio of environmentally friendly technologies and products. The principal products acquired from Donlar were water-soluble chemicals utilizing thermal polyaspartate biopolymers (“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 used in 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.

The Company’s principal executive offices are located at 615 Discovery Street, Victoria, British Columbia, Canada V8T 5G4. The Company’s telephone number is (250) 477-9969. The Company’s website is located at http://www.flexiblesolutions.com. The information found on the Company’s website is not a part of this prospectus.

By means of this prospectus a number of the Company’s shareholders are offering to sell shares of its common stock. The shares owned by the selling shareholders may be sold in the public market, or otherwise, at prices and terms then prevailing or at prices related to the then-current market price, or in negotiated transactions.

The purchase of the securities offered by this prospectus involves a high degree of risk. Risk factors include losses since the Company was incorporated, and the need for the Company to sell more of its common stock to raise additional capital. See “Risk Factors" below for additional information.

The securities being offered involve a high degree of risk. Prospective investors should consider the following risk factors which affect the Company’s business and this offering. If any of the risks discussed below materialize, the Company’s common stock could decline in value or become worthless.

The Company has experienced operating losses and negative cash flow from operations since its inception. To the extent the Company’s revenues do not increase, its results of operations and liquidity will be materially and adversely affected. If the Company experiences slower than anticipated revenue growth or if its operating expenses exceed its expectations, the Company may never be profitable. Even if the Company becomes profitable, it may not continue to be profitable.

Given the nature of the markets in which the Company participates, it cannot reliably predict future revenues and profitability. Changes in competitive, market and economic conditions may cause the Company to adjust its operations. A high proportion of the Company’s costs are fixed, due in part to its sales, research and development and manufacturing costs. Thus, small declines in revenue could disproportionately affect the Company’s operating results.

The Company does not know what the terms of any future capital raising may be but any future sale of the Company’s equity securities would dilute the ownership of existing stockholders and could be at prices substantially below the price of the shares of common stock sold in this offering. The failure of the Company to obtain the capital which it requires will result in the slower implementation of the Company’s business plan or its inability of the Company to implement its business plan. There can be no assurance that the Company will be able to obtain any capital which it will need or how long the Company can remain in operation.

To enable the Company to continue in business the Company will eventually need to earn a profit or obtain additional financing until the Company is able to earn a profit. There can be no assurance that the Company can implement its business plan, that it will be profitable, or that the shares which may be sold in this offering will have any value.

Without the timely introduction of new products and enhancements, the Company’s products could become obsolete over time, in which case its revenue and operating results would suffer. The success of the Company’s new products will depend upon several factors, including its ability to:

·	develop new products and applications;

·	successfully commercialize new products in a timely manner;

·	price its products competitively and manufacture and deliver products in sufficient volumes and on time; and

·	differentiate its products from competitors’ products.

In developing any new product, the Company may be required to make a substantial investment before it can determine the commercial viability of a new product. If the Company fails to accurately foresee customers’ needs and future activities, it may invest heavily in the research and development of products that do not lead to significant revenues.

During the year ended December 31, 2005 revenues from shipments made outside of the United States accounted for approximately 80% of the Company’s revenues. Since the Company sells products worldwide, its business is subject to risks associated with doing business internationally. The Company anticipates that revenues from international operations will continue to represent a sizable portion of its total revenue. Accordingly, future results could be harmed by a variety of factors, including:

·	changes in foreign currency exchange rates;

·	changes in a country or region's political or economic conditions, particularly in developing or emerging markets;

·	longer payment cycles of foreign customers and difficulty of collecting receivables in foreign jurisdictions;

·	trade protection measures and import or export licensing requirements;

·	differing tax laws and changes in those laws;

·	difficulty in staffing and managing widespread operations;

·	differing protection of intellectual property and changes in that protection; and

·	differing regulatory requirements and changes in those requirements.

The Company’s business exposes it to potential product liability risks, particularly with respect to its consumer swimming pool and consumer TPA products. Some of the Company’s products are flammable and must be stored properly to avoid fire risk. Additionally, some of its products may cause irritation to a person’s eyes if they are exposed to the concentrated product. Although the Company labels its products to warn of such risks, its sales could be reduced if its products were to be viewed as being dangerous to use or if they are implicated in causing personal injury or property damage.

There are many factors beyond the Company’s control that could lead to liability claims, including the failure of its products to work properly and the chance that consumers will use its products incorrectly or for purposes for which they were not intended. There can be no assurance that the amount of product liability insurance that the Company carries will be sufficient to protect it from product liability claims. A product liability claim in excess of the amount of insurance the Company carries could have a material adverse effect on its business, financial condition and results of operations.

While the Company owns certain patents and trademarks, some aspects of its 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 its products, processes and technologies or from otherwise entering into operations in direct competition with the Company. In particular, the Company has been informed that its former exclusive agent for the sale of its products, Sun Solar, is now competing with it in the swimming pool and personal spa markets. As a former distributor, Sun Solar was given access to many of the Company’s sales, marketing and manufacturing techniques.

Third parties may seek to claim that the Company’s products and operations infringe their patent or other intellectual property rights. The Company may incur significant expense in any legal proceedings to protect its proprietary rights or to defend infringement claims by third parties. In addition, claims of third parties against the Company could result in awards of substantial damages or court orders that could effectively prevent it from making, using or selling its products in the United States or abroad.

The Company’s business would be adversely affected if the services of Daniel B. O’Brien ceased to be available because the Company currently does not have any other employee with an equivalent level of expertise in its industry. If Mr. O’Brien no longer served as the Company’s President and Chief Executive Officer, the Company would need to recruit one or more new executives, with no real assurance that it 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 the Company operates. While the Company’s compensation programs are intended to attract and retain the employees required for it to be successful, there can be no assurance that it will be able to retain the services of all of its key employees or a sufficient number to execute on its plans, nor can there be any assurances that the Company will be able to continue to attract new employees as required.

As of December 15, 2006 the Company had 12,998,427 outstanding shares of common stock. A significant number of these shares, including the shares owned by the Company’s officers and directors, can be sold in the public market. By means of this prospectus up to 652,000 additional shares of common stock, which are issuable upon the exercise of options, could be sold in the public market. The market price of the Company’s common stock could decline as a result of sales of a large number of these shares in the public market or due to the perception that these sales could occur. Any decline in the price of the Company’s common stock could also make it more difficult for the Company to raise funds through future offerings of its equity securities.

The Company’s Stock Option Plans provide for the grant of options to purchase shares of the Company’s common stock. Persons who received shares pursuant to the Stock Option Plans and who are offering such shares to the public by means of this Prospectus are referred to as the “Selling Shareholders”.

Shares Issuable Upon Exercise Of Stock Options	Exercise Price of Options	Expiration Date

100,000 107,000 221,000 5,000 5,000 47,000 30,000 5,000 5,000 8,000 25,000 5,000 2,000 25,000 12,000 20,000 10,000 20,000 652,000	$2.76 $3.00 $3.25 $3.50 $3.58 $3.60 $3.60 $3.60 $3.85 $3.92 $4.25 $4.25 $4.25 $4.25 $4.30 $4.40 $4.50 $4.55	05-26-06 11-26-09 01-05-11 04-05-11 11-24-09 10-01-08 11-26-08 09-24-09 05-01-10 03-15-09 12-31-07 04-23-08 09-18-08 05-24-05 04-02-09 01-28-07 06-14-09 05-21-09

Shares issuable upon the exercise of options granted to the Company’s officers and directors pursuant to the Stock Option Plans are being offered by means of this Prospectus. The following table lists the shareholdings of the Company’s officers and directors and the shares offered by means of this Prospectus as of December 15, 2006.

Name of Selling Shareholder	Number of Shares Owned	Number of Shares Being Offered (1)	Number of Shares to be Owned on Completion of Offering	Percent of Class

John H. Bientjes	25,000	15,000	25,000	Nil
Dale Friend	--	15,000	--	--
Eric Hodges	--	10,000	--	--

The Company has filed with the Commission under the Securities Act of 1933 a Form S-8 registration statement, of which this Prospectus forms a part, with respect to the resale of the shares owned by the Selling Shareholders from time to time in the public market or in privately negotiated transactions.

The Selling Shareholders may sell the shares offered by this Prospectus from time to time in negotiated transactions in the public market at fixed prices which may be changed from time to time, at market prices prevailing at the time of sale, at prices related to such prevailing market prices or at negotiated prices. The Selling Shareholders may effect such transactions by selling the shares to or through broker/dealers, and such broker/dealers may receive compensation in the form of discounts, concessions, or commissions from the Selling Shareholders and/or the purchasers of the shares for which such broker/dealers may act as agent or to whom they may sell, as principal, or both (which compensation as to a particular broker/dealer may be in excess of customary compensation).

The Selling Shareholders and any broker/dealers who act in connection with the sale of the shares hereunder may be deemed to be "underwriters" within the meaning of §2(11) of the Securities Acts of 1933, and any commissions received by them and profit on any resale of the shares as principal might be deemed to be underwriting discounts and commissions under the Securities Act. The Company has not agreed to indemnify the Selling Shareholders and any securities broker/dealers who may be deemed to be underwriters against certain liabilities, including liabilities under the Securities Act as underwriters or otherwise.

The Company has advised the Selling Shareholders that they and any securities broker/dealers or others who may be deemed to be statutory underwriters will be subject to the Prospectus delivery requirements under the Securities Act of 1933. The Company has also

advised each Selling Shareholder that in the event of a "distribution" of the shares owned by the Selling Shareholder, such Selling Shareholder, any "affiliated purchasers", and any broker/ dealer or other person who participates in such distribution may be subject to Rule 102 under the Securities Exchange Act of 1934 ("1934 Act") until their participation in that distribution is completed. A "distribution" is defined in Rule 102 as an offering of securities "that is distinguished from ordinary trading transactions by the magnitude of the offering and the presence of special selling efforts and selling methods". The Company has also advised the Selling Shareholders that Rule 101 under the 1934 Act prohibits any "stabilizing bid" or "stabilizing purchase" for the purpose of pegging, fixing or stabilizing the price of the Common Stock in connection with this offering.

The Company is authorized to issue 50,000,000 shares of common stock. As of December 15, 2006 the Company had 12,998,427 outstanding shares of common stock. Holders of common stock are each entitled to cast one vote for each share held of record on all matters presented to shareholders. Cumulative voting is not allowed; hence, the holders of a majority of the outstanding common stock can elect all directors.

Holders of common stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available for dividends and, in the event of liquidation, to share pro rata in any distribution of the Company’s assets after payment of liabilities. The Board of Directors is not obligated to declare a dividend and it is not anticipated that dividends will ever be paid.

Holders of common stock do not have preemptive rights to subscribe to additional shares if issued by the Company. There are no conversion, redemption, sinking fund or similar provisions regarding the common stock. All of the outstanding shares of common stock are fully paid and non-assessable and all of the shares of common stock offered by this prospectus will be, upon issuance, fully paid and non-assessable.

The Company is authorized to issue 1,000,000 shares of preferred stock. Shares of preferred stock may be issued from time to time in one or more series as may be determined by the Company’s Board of Directors. The voting powers and preferences, the relative rights of each such series and the qualifications, limitations and restrictions of each series will be established by the Board of Directors. The Company’s directors may issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of the Company’s common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in transactions such as mergers or tender offers if these transactions are not favored

The Company’s Bylaws provide that the Company will indemnify its directors and officers against expense and liabilities they incur to defend, settle or satisfy any civil or criminal action brought against them as a result of their being or having been the Company directors or officers unless, in any such action, they have acted with gross negligence or willful misconduct. Officers and Directors are not entitled to be indemnified for claims or losses resulting from a breach of their duty of loyalty to the Company, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or a transaction from which the director derived an improper personal benefit. Insofar as indemnification for liabilities arising under the Securities Act of l933 may be permitted to the Company’s directors and officers, the Company has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of l933, and is, therefore, unenforceable.

No dealer, salesman, or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus in connection with this offering and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or the selling shareholders. This prospectus does not constitute an offer to sell, or a solicitation of any offer to buy, the securities offered in any jurisdiction to any person to whom it is unlawful to make an offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has not been any change in the affairs of the Company since the date hereof or that any information contained herein is correct as to any time subsequent to its date.

All dealers effecting transactions in the registered securities, whether or not participating in this distribution, may be required to deliver a prospectus. This is an addition to the obligation of dealers to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

This Prospectus relates to shares of the Common Stock of Flexible Solutions International, Inc. (“the Company”) issuable upon the exercise of options. The options were granted by means of Stock Option Plans. The Stock Option Plans benefit the Company by giving selected employees and other persons having a business relationship with the Company a greater personal interest in the success of the Company.

The Company’s Stock Option Plans are sometimes collectively referred to in this Prospectus as "the Plans". The terms and conditions of any stock grant and the terms and conditions of any options, including the price of the shares of Common Stock issuable on the exercise of options, are governed by the provisions of the respective Plans.

No person has been authorized to give any information, or to make any representations, other than those contained in this Prospectus, in connection with the shares offered by this Prospectus, and if given or made, such information or representations must not be relied upon. This Prospectus does not constitute an offering in any state or jurisdiction to any person to whom it is unlawful to make such offer in such state or jurisdiction.

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AVAILABLE INFORMATION…………………………………………………….	3

DOCUMENTS INCORPORATED BY REFERENCE…………………………….	3

GENERAL INFORMATION……………………………………………………….	3

STOCK OPTION PLANS ………………………………………………………….	4

OTHER INFORMATION REGARDING THE PLANS……………………………	6

ADMINISTRATION OF THE PLANS……………………………………………..	6

RESALE OF SHARES BY AFFILIATES………………………………………….	7

AMENDMENT, SUSPENSION OR TERMINATION OF THE PLANS………….	7

DESCRIPTION OF COMMON STOCK……………………………………………	7

The Company is subject to the informational requirements of the Securities Exchange Act of l934 and in accordance therewith files reports, proxy statements, and other information with the Securities and Exchange Commission. Such reports, proxy statements, and other information concerning the Company can be inspected at the Commission's office at 100 F Street, NE, Washington, D.C. 20549. Copies of such material can be obtained from the Public Reference Section of the Commission, Washington, D.C. 20549 at prescribed rates. Certain information concerning the Company is also available at the Internet Web Site maintained by the Securities and Exchange Commission at www.sec.gov.

All documents incorporated by reference, as well as a copy of the Plan relating to the particular option holder, other than exhibits to such reports and documents, are available, free of charge to holders of shares or options granted pursuant to the Plans, upon written or oral request directed to: the (Attention: Employee Plan Administrator), 615 Discovery Street, Victoria, British Columbia, CANADA V8T 5G4, (250) 477-9969

This Prospectus does not contain all information set forth in the Registration Statement, of which this Prospectus is a part, which the Company has filed with the Commission under the Securities Act of l933 and to which reference is hereby made. Each statement contained in this Prospectus is qualified in its entirety by such reference.

The following documents filed by the Company with the Securities and Exchange Commission are incorporated by reference in this Registration Statement: report on Form 10-KSB for the year ended December 31, 2006, report on Form 10-QSB for the quarter ended September 30, 2006, proxy statement relating to the Company’s June 15, 2006 Annual Meeting of Shareholders and the Company’s prospectus filed pursuant to Rule 424(b) on May 31, 2006. All reports and documents subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, prior to the filing of a post-effective amendment to this Registration Statement of which this Prospectus is a part which indicates that all securities offered hereby have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Prospectus and to be a part thereof from the date of filing of such reports or documents.

The Company has approved a number of Stock Option Plans. In some cases these plans are collectively referred to as the “Plans”. The terms and conditions of any options, including the price of the shares of Common Stock issuable on the exercise of options, are governed by the provisions of each Plan.

Shares Issuable Upon Exercise Of Stock Options	Exercise Price of Options	Expiration Date

100,000 107,000 221,000 5,000 5,000 47,000 30,000 5,000 5,000 8,000 25,000 5,000 2,000 25,000 12,000 20,000 10,000 20,000 652,000	$2.76 $3.00 $3.25 $3.50 $3.58 $3.60 $3.60 $3.60 $3.85 $3.92 $4.25 $4.25 $4.25 $4.25 $4.30 $4.40 $4.50 $4.55	05-26-06 11-26-09 01-05-11 04-05-11 11-24-09 10-01-08 11-26-08 09-24-09 05-01-10 03-15-09 12-31-07 04-23-08 09-18-08 05-24-05 04-02-09 01-28-07 06-14-09 05-21-09

Securities to be Offered and Persons Who May Receive Options

The Company’s employees, directors and officers, and consultants or advisors to the Company are eligible to be granted options as may be determined by the Company’s Board of Directors which administers the Plans, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with the offer or sale of securities in a capital-raising transaction.

In the discretion of the Board of Directors options granted pursuant to the Plans may include installment exercise terms for any option such that the option becomes fully exercisable in a series of cumulating portions. The Board of Directors may also accelerate the date upon which any option (or any part of any option) is first exercisable.

The purchase price per share of common stock purchasable under an option is determined by the Board of Directors. An option may be exercised, in whole or in part, at any time, or in part, from time to time, during the option period, by giving written notice of exercise to the Board of Directors at the Company's offices specifying the number of shares to be purchased, such notice to be accompanied by payment in full of the purchase price either by a payment of cash, bank draft or money order payable to the Company. At the discretion of the Board of Directors payment of the purchase price for shares of Common Stock underlying options may be paid through the delivery of shares of the Company's Common Stock having an aggregate fair market value equal to the option price, provided such shares have been owned by the option holder for at least one year prior to such exercise. A combination of cash and shares of Common Stock may also be used at the discretion of the Board of Directors. No shares shall be issued until full payment has been made. An optionee shall have the rights of a stockholder only with respect to shares of stock for which certificates have been issued. Under no circumstances may an option be exercised after the expiration of the option.

Following the option holder’s death, the person designated in writing by the option holder or, if no such person has been designated, by the option holder’s executor or administrator, may exercise the option at any time prior to the expiration of the option.

U.S. Shareholders. The difference between the option price and the market value of the shares on the date the option is exercised is taxable as ordinary income to an Optionee at the time of exercise and to the extent such difference does not constitute unreasonable compensation is deductible by the Company at that time. Gain or loss on any subsequent sale of shares received through the exercise of an option will be treated as capital gain or loss.

Canadian Shareholders. Half of the difference between the option price and the market value of the shares on the date the option is exercised is taxable as ordinary income to an Optionee at the time of exercise and to the extent such difference does not constitute unreasonable compensation is deductible by the Company at that time. Gain or loss on any subsequent sale of shares received through the exercise of an option will be treated as capital gain or loss.

Since the amount of income realized by an Optionee on the exercise of an option under the Plan represents compensation for services provided to the Company, the Company may be required to withhold income taxes from the Optionee's income even though the compensation is not paid in cash. To withhold the appropriate tax on the transfer of the shares, the Company may (i) reduce the number of shares issued or distributed to reflect the necessary withholding, (ii) withhold the appropriate tax from other compensation due to the Optionee, or (iii) condition the transfer of any shares to the Optionee on the payment to the Company of an amount equal to the taxes required to be withheld.

Any options granted pursuant to the Stock Option Plans will be forfeited if the “vesting” schedule established by the Company’s directors at the time of the grant is not met. In general, vesting means the period during which the employee must remain an employee of the Company or the period of time a non-employee must provide services to the Company. At the time an employee ceases working for the Company (or at the time a non-employee ceases to perform services for the Company), any shares or options not fully vested will be forfeited and cancelled. If specified in the applicable Stock Option Plan, the options may also be terminated for cause.

If during the period the option is exercisable the Company declares a stock dividend then the option holder, upon the exercise of the option, will receive the shares of the Company’s common stock which he would have entitled had he exercised the option immediately prior to the record date established for the stock dividend.

Employment by the Company does not include a right to receive or options pursuant to the Plans. Only the Board of Directors has the authority to determine which persons shall be granted options and, subject to the limitations described elsewhere in this Prospectus and in the Plans, the number of shares of Common Stock issuable upon the exercise of any options.

The description of the tax consequences as set forth in this Prospectus is intended merely as an aid for such persons eligible to participate in the Plans, and the Company assumes no responsibility in connection with the income tax liability of any person receiving shares or options pursuant to the Plans. Persons receiving shares or options pursuant to the Plans are urged to obtain competent professional advice regarding the applicability of federal, state and local tax laws.

As of the date of this Prospectus, and except with respect to options which have not yet vested, no terms of any Plans or any contract in connection therewith creates in any person a lien on any of the securities issuable by the Company pursuant to the Plans.

The Plans are administered by the Company’s Board of Directors. All directors serve for a one-year term or until their successors are elected. Any director may be removed at any time by a majority vote of the Company’s shareholders present at any meeting called for the purpose of removing a director. Any vacancies which may occur on the Board of Directors will be filled by the remaining Directors. The Board of Directors is vested with the authority to interpret the

provisions of the Plans and supervise the administration of the Plans. In addition, the Board of Directors is empowered to select eligible employees of the Company to whom options are to be granted, to determine the number of shares subject to each grant of an option and to determine when, and upon what conditions, options granted will vest or otherwise be subject to forfeiture and cancellation.

Shares of Common Stock acquired pursuant to the Plans may be resold freely, except as may be limited by agreement between the Company and the Plans participant and except that any person deemed to be an "affiliate" of the Company, within the meaning of the Securities Act of l933 (the "Act") and the rules and regulations promulgated thereunder, may not sell shares acquired by virtue of the Plans unless such shares are sold by means of a special Prospectus, are otherwise registered by the Company under the Securities Act for resale by such person or an exemption from registration under the Act is available. In any event, the sale of shares by affiliates will be limited in amount to the number of shares which can be sold by Rule 144(e). An employee who is not an officer or director of the Company generally would not be deemed an "affiliate" of the Company.

The Common Stock issuable upon the exercise of any options granted pursuant to the Plans entitles holders to receive such dividends, if any, as the Board of Directors declares from time to time; to cast one vote per share on all matters to be voted upon by stockholders; and to share ratably in all assets remaining after the payment of liabilities in the event of liquidation, dissolution or winding up of the Company. The shares carry no preemptive rights. All shares offered under the Plans will, upon issuance by the Company, and against receipt of the exercise price, be fully paid and non-assessable.