# EXHIBIT 99.1

# RISK FACTORS

Readers
should carefully consider the risks and uncertainties described below before deciding
whether to invest in shares of our common stock.

Our
failure to successfully address the risks and uncertainties described below would have a
material adverse effect on our business, financial condition and/or results of operations,
and the trading price of our common stock may decline and investors may lose all or part
of their investment. We cannot assure you that we will successfully address these risks or
other unknown risks that may affect our business.

All of our revenues and
income are expected to be derived from the Bruce Hotel and Casino.

We
anticipate that all of our revenue and income, if any, will be derived from the operations
of the Bruce Hotel & Casino. We have no other source of operating revenue. We
anticipate that results of operations at the Bruce Hotel & Casino will be lower than
historical periods because the gaming casino has been closed for remodeling since March
2005 and is not expected to reopen until the fourth quarter of 2005.

We have no experience in
the hospitality industry

Prior
to our acquisition of Kubuk we were in the business of exploring mineral properties. We
have no prior experience in the hospitality or gaming industry. We will rely on the
experience and expertise of Tom Liu, our new Chief Executive Officer, and our newly
appointed board of directors in the management of the Bruce Hotel & Casino. Mr. Liu
has limited experience in managing a public company.

We are subject to
extensive regulation from gaming authorities that could adversely affect us.

As
owners and operators of gaming facilities, we are subject to extensive regulation.
Governmental authorities require us and our subsidiaries to demonstrate suitability to
obtain and retain various licenses and require that we have registrations, permits and
approvals to conduct gaming operations. The regulatory authorities in Peru may limit,
condition, suspend or revoke a license to conduct gaming operations or prevent us from
owning the securities of any of our gaming subsidiaries. We may also be deemed responsible
for the acts and conduct of our employees. Substantial fines or forfeiture of assets for
violations of gaming laws or regulations may be levied against us, our subsidiaries and
the persons involved. The suspension or revocation of any of our licenses or the levy on
us or our subsidiaries of a substantial fine would have a material adverse effect on our
business.

To
date, the Bruce Hotel & Casino has demonstrated suitability to obtain and have
obtained all governmental licenses, registrations, permits and approvals necessary for us
to operate our existing gaming facilities. However, like all gaming operators, we must
periodically apply to renew our gaming license. We cannot assure you that we will be able
to obtain such renewals. In addition, if we expand our gaming operations as planned to
increase the number of tables and slot machines, we will have to meet suitability
requirements and obtain additional licenses, registrations, permits and approvals from
gaming and non-gaming authorities. Accordingly, the regulation and timing of installation
and operation of gaming tables and machines may be delayed or restricted.

The availability and cost
of financing could have an adverse effect on business.

We
intend to finance our current and future expansion and renovation projects primarily with
cash flow from operations and equity or debt financings. If we are unable to finance our
current or future expansion projects, we will have to adopt one or more alternatives, such
as reducing or delaying planned expansion, development and renovation projects as well as
capital expenditures, selling assets, securing debt financing, or obtaining additional
equity financing or joint venture partners. These sources of funds may not be sufficient
to finance our expansion, and other financing may not be available on acceptable terms, in
a timely manner or at all. If we are unable to secure additional financing, we could be
forced to limit or suspend expansion, development and renovation projects, which may
adversely affect our business, financial condition and results of operations.

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Changes in the regulatory
environment could adversely impact our results of operation be restricting or preventing
parts or all of our operations.

From
time to time, legislators and special interest groups have proposed legislation that would
expand, restrict or prevent gaming operations. In addition, from time to time, certain
anti-gaming groups may propose referenda that, if adopted, would limit our ability to
continue to operate in those jurisdictions in which such referenda are adopted. Any
expansion of gaming or restriction on or prohibition of our gaming operations could have a
material adverse effect on our operating results.

We are subject to the
possibility of an increase in gaming taxes, which would increase our costs.

Taxing
authorities raise a significant amount of revenue through taxes and fees on gaming
activities. We believe that the prospect of significant revenue is one of the primary
reasons that jurisdictions permit legalized gaming. As a result, gaming companies are
typically subject to significant taxes and fees in addition to normal federal and local
income taxes, and such taxes and fees are subject to increase at any time. We pay
substantial taxes and fees with respect to our operations. From time to time, federal and
local legislators and officials have proposed changes in tax laws, or in the
administration of such laws, affecting the gaming industry. In addition, poor economic
conditions could intensify the efforts of state and local governments to raise revenues
through increases in gaming taxes. It is not possible to determine with certainty the
likelihood of changes in tax laws or in the administration of such laws. Such changes, if
adopted, could have a material adverse effect on our business, financial condition and
results of operations.

We are subject to
non-gaming regulation that could adversely affect us.

We
are subject to a variety of other local rules and regulations, including zoning,
environmental, construction and land-use laws and regulations governing the serving of
alcoholic beverages. We must maintain a hotel license to operate our hotel and a liquor
license to serve alcoholic beverages. The loss of these licenses would have a material
adverse impact on our revenues and results of operations. Penalties can be imposed against
us if we fail to comply with these regulations. The imposition of a substantial penalty or
the loss of service of a gaming facility for a significant period of time would have a
material adverse affect on our business.

We intend to make substantial
investments in renovating, expanding and improving the Bruce Hotel & Casino.

We
intend to raise approximately $25 million to fund the expansion, renovation and
modernization of the Bruce Hotel & Casino. The gaming casino in the Bruce Hotel &
Casino has been closed since March 2005 for remodeling and renovation, the first stage of
our renovation project. We estimate that we will be required to raise approximately $5
million to complete the renovation and reopen the gaming casino. Our ability to generate
sufficient revenue to earn a profit is dependent on our ability to raise the necessary
funds to complete the renovation and to open our casino. We are in the process of seeking
capital to complete the renovation, but have no firm commitments at this time.

Our
ability to benefit from our investments will depend on many factors, including:

| |  |  | our
ability to successfully complete the renovations;
| | - |  | -----------------------------------------------------

| |  |  | our
ability to successfully integrate the expanded operations;
| | - |  | --------------------------------------------------------------

| |  |  | our
ability to attract and retain competent management and employees;
| | - |  | ---------------------------------------------------------------------

| |  |  | our
ability to secure the licenses, permits and approvals; and
| | - |  | --------------------------------------------------------------

| |  |  | the
availability of adequate financing on acceptable terms.
| | - |  | -----------------------------------------------------------

Many
of these factors are beyond our control. Therefore, we cannot be sure that we will be able
to recover our investments in the expansion, renovation and modernization of the Bruce
Hotel & Casino.

We may experience construction
delays during our expansion project.

We
currently are engaged in a substantial renovation project to improve our gaming casino. We
also are evaluating other expansion opportunities at the Bruce Hotel & Casino. The
anticipated costs and construction periods are based upon budgets, conceptual design
documents and construction schedule estimates prepared by us in consultation with our
architects and contractors.

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Construction
projects entail significant risks, which can substantially increase costs or delay
completion of a project. Such risks include shortages of materials or skilled labor,
unforeseen engineering, environmental or geological problems, work stoppages, weather
interference and unanticipated cost increases. Most of these factors are beyond our
control. In addition, difficulties or delays in obtaining any of the requisite licenses,
permits or authorizations from regulatory authorities can increase the cost or delay the
completion of an expansion or development. Significant budget overruns or delays with
respect to expansion and development projects could adversely affect our results of
operations.

If our key personnel
leave us, our business will be significantly adversely affected.

Our
continued success will depend, among other things, on the efforts and skills of a few key
executive officers and the experience of our property managers as well as our ability to
attract and retain additional highly qualified personnel with gaming industry experience
and qualifications to obtain the requisite licenses. We do not maintain key
man life insurance for any of our employees. There is no assurance that we would be
able to attract and hire suitable replacements for any of our key employees. We need
qualified executives, managers and skilled employees with gaming industry experience to
continue to successfully operate our business. We believe a shortage of skilled labor in
the gaming industry may make it increasingly difficult and expensive to attract and retain
qualified employees. We expect that increased competition in the gaming industry will
intensify this problem.

Inclement weather and
other conditions could seriously disrupt our business, financial condition and results of
operations.

Our
business is seasonal and inclement weather conditions could affect the number of visitors
to our hotel and casino. Our facilities are subject to risks including loss of service due
to casualty, mechanical failure, extended or extraordinary maintenance, flood, hurricane
or other severe weather.

Reduced
patronage and the loss of service for any period of time could adversely affect our
results of operations. We do not maintain business interruption insurance to compensate us
if our hotel and casino experience a closure.

Access
to a number of our facilities may also be affected by road conditions, such as
construction and traffic.

Energy and fuel price
increases may adversely affect our costs of operations and our revenues

Our
casino properties use significant amounts of electricity, natural gas and other forms of
energy. While no shortages of energy have been experienced, substantial increases in the
cost of electricity in the Peru will negatively affect our results of operations. In
addition, energy and fuel price increases in cities that constitute a significant source
of customers for our properties could result in a decline in disposable income of
potential customers and a corresponding decrease in visitation to our properties, which
would negatively impact our revenues. The extent of the impact is subject to the magnitude
and duration of the energy and fuel price increases, but this impact could be material.

A downturn in general
economic conditions may adversely affect our results of operations.

Our
business operations are subject to changes in international, national and local economic
conditions, including changes in the economy related to future security alerts in
connection with threatened or actual terrorist attacks in the United States, Spain and
London, and related to the war with Iraq, which may affect our customers willingness
to travel. A recession or downturn in the general economy, or in a region constituting a
significant source of customers for our properties, could result in fewer customers
visiting our properties, which would adversely affect our results of operations.

Our success depends on
visitors from the Peoples Republic of China and changes to regulations related to
tourism may adversely affect our results of operations.

Approximately
70% of the guests at the Bruce Hotel & Casino during the year ended December 31, 2004,
were tourist from the Peoples Republic of China. We target tourist from the
Peoples Republic of China through our marketing programs. In 2003 the government of
the Peoples Republic of China ceased issuing work passports to its citizens and in
doing so made it a requirement to secure a visa to travel to the Republic of Peru. The
visa requirement significantly curtailed the number of travelers from the Peoples
Republic of China to the Republic of Peru and the financial results of the Bruce Hotel and
Casino suffered from reduced hotel occupancy and reduced casino gaming revenues. In 2004,
the Chinese government signed an agreement with the Republic of Peru adding Peru to its
list of Approved Destination Status, permitting Chinese to travel more easily in Peru in
organized group. If the Chinese government should change this policy and restrict travel
to the Republic of Peru or the Republic of Peru should impose restrictions on entry, these
changes would likely have a material adverse affect on our results of operations.

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Our results of operations
are subject to foreign currency exchange fluctuations between the U.S. dollar and nuevo
sol (PEN), the currency of Peru.

Our
functional currency is the U.S. dollar. All of our expected revenue and expenses from the
operation of the Bruce Hotel & Casino are expected to be in nuevo sol (PEN), the
currency of Peru.Recently, the value of the U.S. dollar has declined
compared to the PEN, and we expect that the exchange rate will fluctuate in the future. As
a result, we may experience losses or declines in our gross profit margins as a result of
fluctuations in the foreign currency exchange rates. At the present time, we do not hedge
our foreign currency exchange risks.

Risks
Related to Peru

Our
ownership of Peruvian companies and operation involves certain considerations not
typically associated with ownership of U.S. companies, including those discussed below,
and therefore should be considered more speculative than investment in the U.S.

Political and economic
situation has historically been unstable

During
the past several decades, Peru has had a history of political instability that included
military coups d tat and different governmental regimes with changing policies. Past
governments have frequently played an interventionist role in the nations economy
and social structure. Among other things, past governments have imposed controls on
prices, exchange rates, local and foreign investment and international trade, have
restricted the ability of companies to dismiss employees and have expropriated private
sector assets.

Following
the resignation of the former president, Alberto Fujimori (1990-2000), after revelations
of corruption, the president of Congress, Valentin Paniagua, became interim president in
November 2000. In 2001 Mr Paniagua oversaw free and fair presidential and
congressional elections, and transferred power to the newly elected president, Alejandro
Toledo of Peru Posible, on July 28, 2005. Since 2001, under President Toledo, Peru has
pursued an ambitious program to re-establish democracy, following a decade of increasingly
authoritarian rule and rampant corruption under the former Fujimori government, and is
promoting a market-based economy that will benefit all citizens. Toledo is also devolving
more power to the provinces. A weak congressional position and extremely low levels of
popularity since 2002 have ensured that Mr Toledos position as president has been
fragile throughout, and his leadership of government ineffectual at times.

Inflation
as measured by the Lima consumer price index has decreased from 7,650% in 1990 to 39.5% in
1993 to 1.79% in the period from January to May 2005, which is lower than the inflation
rate for the same period in the previous year (3.18%). Perus gross domestic product,
or GDP, grew by 4.8% during 2004, compared to 4.0% in 2003. In April 2005, GDP increased
by 6.4%, as compared to the GDP in April 2004, which grew 3.4% as compared to the GDP in
April 2003. This rise in GDP growth was largely a result of growth in the non-primary
sector, mainly the non-primary manufacturing and construction sectors, which increased
9.3% and 10.6%, respectively, between May 2004 and April 2005.

Notwithstanding
the progress achieved in restructuring Perus political institutions and revitalizing
the economy, there can be no assurance that President Toledos government, or any
successor government, can sustain the progress achieved. In addition, it is possible that
Toledos support could be eroded as a result of certain effects of current programs.
For example, privatizations may result in layoffs due to the reduction in the work force
of privatized companies. As in the case of all foreign investments, our investments in
Peru could in the future be adversely affected by increases in taxes or by political,
economic or diplomatic developments.

Our business and the
tourism industry may be subject to terrorism and other threats

Peru
experienced significant terrorist activity in the 1980s and early 1990s, during which
period anti-government groups escalated their acts of violence against the government, the
private sector and Peruvian residents. The Companys operations have not been
directly affected by the terrorist activity.

There
has been substantial progress in suppressing terrorist activity since 1990, in part as a
result of the arrest of the leaders and approximately 2,000 members of the two principal
terrorist groups. Notwithstanding the success achieved during Fujimoris regime, Peru
during President Toledos rule has been swamped with a wave of social protests
coupled with an increase in domestic guerilla terrorism activities. In June 2003,
President Toledo was forced to declare a state of emergency to handle these issues. There
can be no assurance that the progress achieved in combating terrorist activity can be
sustained.

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Currency fluctuations may
have a negative impact on our results of operations

Our
income in Peru is denominated in Nuevos Soles, and substantially all of our income from
casino and gaming operation will be received or realized in Nuevos Soles. However, we will
be required to compute and distribute our income in U.S. dollars, and the computation of
income will be made on the date of our receipt at the currency exchange rate in effect on
that date. Accordingly, changes in the value of the Nuevo Sol against the U.S. dollar will
result in corresponding changes in the U.S. dollar value of our assets denominated in
Nuevos Soles and will change the U.S. dollar value of income and gains derived in Nuevos
Soles. It is possible that the value of the Nuevo Sol could fall relative to the U.S.
dollar between receipt of income and our distributions or date of accounting. In addition,
assuming new proceeds are raised from future offerings, if the value of the Nuevo Sol
falls relative to the U.S. dollar between the time we incurs expenses in U.S. dollars
(i.e., contracting for capital improvements or purchase of equipment) and the time
expenses are paid, the amount of Nuevos Soles required to be converted into U.S. dollars
in order to pay expenses will be greater than the equivalent amount in Nuevos Soles of
such expenses at the time they were incurred.

In
September 1991, the Nuevo Sol replaced the inti as the official currency of Peru. In
February 1985, the inti had replaced the original Sol. Between 1978 and 1985, the Sol was
gradually devalued through a crawling-peg system of mini-devaluations. Multiple exchange
rates were utilized in the late 1980s in an attempt to favor manufacturing exports but
were abandoned in 1990 in favor of a single-rate system.

The following table shows the nuevo
sol/U.S. dollar exchange rate for the dates and periods indicated.

|Exchange Rates
(S/. per US$)
|----------------------------
|
|                            
|
|                            
|                            
|2001                        
|2002                        
|2003                        
|2004                        
|2005                        
|January                     
|February                    
|March                       
|April                       
|May                         

_________________

|(1) |  | Official
rates offered by banks.
|--- |  | --------------------------------

|(2) |  | Average
from the first day of the month indicated to the end of the month indicated.
|--- |  | ------------------------------------------------------------------------------------

Source:Peru Central Bank.

The
Central Bank of Peru has a history of adopting a policy of non-intervention in the
exchange rate market, however, Since 2003, the Central Bank has conducted regular
interventions in the foreign exchange market in order to reduce volatility in the value of
Perus currency against the U.S. dollar and to meet the demand for Nuevo Soles caused
by pension funds and commercial banks restructuring their portfolio to include more assets
denominated in Nuevo Soles as compared to foreign currency. The reduced volatility has
enabled the Central Bank to increase its international reserves.

Peru has been subject to high levels
of inflation in the past

Peru
historically has experienced very substantial, and in some periods extremely high and
variable, rates of inflation. Annual inflation, as measured by consumer price index
(CPI), averaged 29.2% during the 1970s, accelerated in the 1980s and reached
7,500% in 1990. The economic and monetary program that the government implemented during
the early 1990s achieved a drastic reduction in inflation. CPI during 2003 demonstrated
relative stability, with an average inflation rate of 2.3%, as compared to 0.2% for 2002
and 2.0% for 2001. This record has served to foster confidence in the stability of the
Peruvian currency.

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The consumer
price index, or CPI, increased 3.5% during 2004. This rise in prices reflected supply
shocks, including significant increases in the international prices of petroleum, wheat
and soya oil as well as in the prices of some domestic foodstuffs such as rice and sugar,
caused by the drought in the northern coast of Peru and restrictions of imports; these
factors together account for 2.5 percentage points of annual inflation. These factors were
partially attenuated by an appreciation of Perus currency. In the period from
January to May 2005, the annual inflation rate was 1.79%, lower than the inflation rate
for the same period in the previous year (3.18%).

Inflation
and rapid changes in inflation rates have had and may continue to have significant effects
both on the Peruvian economy and on the Peruvian securities and foreign exchange markets.
There can be no assurance that the governments economic and monetary reform measures
will be any more successful than previous programs in reducing inflation in the long term.

Since
we operate our primary business in Peru, we may be adversely affected by high inflation
levels.

Exchange controls implemented by Peru
may affect our ability to exchange Nuevo Sol for U.S. dollars

Prior
to 1991, Peru exercised control over the foreign exchange markets by imposing multiple
exchange rates and placing restrictions on the possession and use of foreign currencies.
In 1991, the Fujimori administration eliminated all foreign exchange controls and the
exchange rates were unified. Currently, foreign exchange rates are determined by market
conditions, with regular operations by the Central Bank in the foreign exchange market in
order to reduce volatility in the value of Perus currency against the U.S. dollar.
There can be no guarantee, however, that limits on our ability to remit profits will not
be imposed in the future. Furthermore, if Peru were to reinstitute exchange control and if
we were to issue promissory notes to raise or borrow funds, our ability to service debt
could be adversely affected. There can be no assurance that the Peruvian government will
continue its current policy of permitting currency transfers and conversions without
restriction.

Availability of information on our
competitors in Peru

Although
Peruvian generally accepted accounting, auditing and financial reporting standards and
practices are similar in some respects to those employed in the United States, they are
not equivalent and differ significantly in certain fundamental areas, most notably the
treatment of inflation accounting. Moreover, equity research and public information on
businesses and individuals is not as common in Peru as it is in the United States. As a
consequence, fewer research reports are available on Peruvian hospitality and gaming
operation than on similar U.S. operation.

Enforceability of judgments under
Peruvian law may be difficult

Substantially
all of our assets are located in Peru and are held by the subsidiaries in Peru. In the
event that investors were to obtain a judgment in the United States against us, Kubuk
International Inc., Kubuk Investment SAC or Kubuk Gaming SAC and seek to enforce such
judgment in Peru, the investors ability to enforce the judgment in Peru would be
subject to Peruvian laws regarding enforcement of foreign judgments. In general, Peruvian
law provides that a judgment of a competent court outside of Peru would be recognized and
could be enforced against the assets of the debtor in Peru, subject to the following
statutory limitations set forth in the Peruvian civil code: (i) the judgment must not
resolve matters for which exclusive jurisdiction of Peruvian courts applies (i.e.,
disputes relating to real estate located in Peru); (ii) the competence of the foreign
court which issued the judgment must be recognized by Peruvian conflict of laws rules;
(iii) the party against whom the judgment was obtained must have been properly served in
connection with the foreign proceedings; (iv) the judgment of the foreign court must be a
final judgment, not subject to any further appeal; (v) no pending proceedings may exist in
Peru among the same parties and on the same subject; (vi) the judgment by the foreign
court cannot be in violation of public policy; and (vii) the foreign court must grant
reciprocal treatment to judgments issued by Peruvian courts. Moreover, there can be no
assurance that a judgment rendered against us in the United States in a bankruptcy-related
action would be enforceable against the assets of our subsidiaries in Peru or that a
Peruvian court would not assert jurisdiction in a bankruptcy proceeding.

Risks Related to
Securities

New
legislation, including the Sarbanes-Oxley Act of 2002, may make it difficult for us to
retain or attract officers and directors.

We
may be unable to attract and retain qualified officers, directors and members of board
committees required to provide for our effective management as a result of the recent and
currently proposed changes in the rules and regulations which govern publicly-held
companies. Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by
the Securities and Exchange Commission that increase responsibilities and liabilities of
directors and executive officers. The perceived increased personal risk associated with
these recent changes may deter qualified individuals from accepting these roles.

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While we believe we have adequate
internal control over financial reporting, we are required to evaluate our internal
controls under Section 404 of the Sarbanes-Oxley Act of 2002. Any adverse results from
such evaluation could result in a loss of investor confidence in our financial reports and
have an adverse effect on the price of our shares of common stock.

Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, we expect that beginning with our annual
report on Form 10-KSB for the fiscal year ended December 31, 2006, we will be required to
furnish a report by management on our internal control over financial reporting. Such
report will contain among other matters, an assessment of the effectiveness of our
internal control over financial reporting, including a statement as to whether or not our
internal control over financial reporting is effective. This assessment must include
disclosure of any material weaknesses in our internal control over financial reporting
identified by our management. Such report must also contain a statement that our auditors
have issued an attestation report on our managements assessment of such internal
controls. Public Company Accounting Oversight Board Auditing Standard No. 2 provides the
professional standards and related performance guidance for auditors to attest to, and
report on, our managements assessment of the effectiveness of internal control over
financial reporting under Section 404.

While
we believe our internal control over financial reporting is effective, we are still
compiling the system and processing documentation and performing the evaluation needed to
comply with Section 404, which is both costly and challenging. We cannot be certain that
we will be able to complete our evaluation, testing and any required remediation in a
timely fashion. During the evaluation and testing process, if we identify one or more
material weaknesses in our internal control over financial reporting, we will be unable to
assert that such internal control is effective. If we are unable to assert that our
internal control over financial reporting is effective as of December 31, 2006 (or if our
auditors are unable to attest that our managements report is fairly stated or they
are unable to express an opinion on the effectiveness of our internal controls), we could
lose investor confidence in the accuracy and completeness of our financial reports, which
would have a material adverse effect on our stock price.

Failure
to comply with the new rules may make it more difficult for us to obtain certain types of
insurance, including director and officer liability insurance, and we may be forced to
accept reduced policy limits and coverage and/or incur substantially higher costs to
obtain the same or similar coverage. The impact of these events could also make it more
difficult for us to attract and retain qualified persons to serve on our board of
directors, on committees of our board of directors, or as executive officers.

You may lose your entire investment
in our shares.

An
investment in our common stock is highly speculative and may result in the loss of your
entire investment. Only investors who are experienced investors in high risk investments
and who can afford to lose their entire investment should consider an investment in us.

There is only a limited trading
market for our securities.

Our
common stock is quoted for trading on the National Association of Securities Dealers
over-the-counter bulletin board, and there is currently only a limited trading market for
our common stock. There can be no assurance that an active market will develop or be
sustained. The lack of an active public market for our common stock could have a material
adverse effect on the price and liquidity of the common shares.

Our officers and directors
beneficially own approximately 65.7% of our issued and outstanding common stock, which may
limit your ability to influence corporate matters.

As
of July 31, 2005, Tom Liu, our Chief Executive Officer, beneficially owned 7,213,439
shares of our common stock (approximately 33.6%); David Liu, Tom Lius father,
beneficially owned 4,823,121 shares of our common stock (approximately 22.4%); Guo Xiu
Yan, Tom Lius mother, owned 1,807,913 shares of common stock (approximately 8.43%);
and our other officers and directors, collectively, as a group, beneficially owned
5,405,525 shares of our common stock (approximately 25.19%). These shareholders could
control the outcome of any corporate transaction or other matter submitted to our
shareholders for approval, including mergers, consolidations and the sale of all or
substantially all of our assets, and also could prevent or cause a change in control. The
interests of these shareholders may conflict with the interests of our other shareholders.

Third
parties may be discouraged from making a tender offer or bid to acquire us because of this
concentration of ownership.

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Broker-dealers
may be discouraged from effecting transactions in our common shares because they are
considered a penny stock and are subject to the penny stock rules.

Rules
15g-1 through 15g-9 promulgated under the Exchange Act impose sales practice and
disclosure requirements on certain brokers-dealers who engage in certain transactions
involving a penny stock. Subject to certain exceptions, a penny stock
generally includes any non-NASDAQ equity security that has a market price of less than
$5.00 per share. Our shares are considered penny stock. The additional sales practice and
disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from
effecting transactions in our shares, which could severely limit the market liquidity of
the shares and impede the sale of our shares in the secondary market.

A
broker-dealer selling penny stock to anyone other than an established customer or
accredited investor, generally, an individual with net worth in excess of
$1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her
spouse, must make a special suitability determination for the purchaser and must receive
the purchasers written consent to the transaction prior to sale, unless the
broker-dealer or the transaction is otherwise exempt. In addition, the penny stock
regulations require the broker-dealer to deliver, prior to any transaction involving a
penny stock, a disclosure schedule prepared by the United States Securities and Exchange
Commission relating to the penny stock market, unless the broker-dealer or the transaction
is otherwise exempt. A broker-dealer is also required to disclose commissions payable to
the broker-dealer and the registered representative and current quotations for the
securities. Finally, a broker-dealer is required to send monthly statements disclosing
recent price information with respect to the penny stock held in a customers account
and information with respect to the limited market in penny stocks.

Trading
on the OTC Bulletin Board may be sporadic because it is not a stock exchange, and
stockholders may have difficulty reselling their shares.

Our
common stock is quoted on the OTC Bulletin Board. Trading in stock quoted on the OTC
Bulletin Board is often thin and characterized by wide fluctuations in trading prices, due
to many factors that may have little to do with the companys operations or business
prospects. Moreover, the OTC Bulletin Board is not a stock exchange, and trading of
securities on the OTC Bulletin Board is often more sporadic than the trading of securities
listed on a quotation system like Nasdaq or a stock exchange like AMEX. Accordingly, you
may have difficulty reselling any of the stock you purchase.

In the event that your investment in
our shares is for the purpose of deriving dividend income or in expectation of an increase
in market price of our shares from the declaration and payment of dividends, your
investment will be compromised because we do not intend to pay dividends.

We
have never paid a dividend to our shareholders, and we intend to retain our cash for the
continued development of our business. We do not intend to pay cash dividends on our
common stock in the foreseeable future. As a result, your return on investment will be
solely determined by your ability to sell your shares in a secondary market.

8

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