S-1/A

As filed with the Securities and Exchange Commission on January 16, 2009

Registration No. 333-154274

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1 to

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Spheric Technologies, Inc.

(Exact name of registrant as specified in its charter)

Nevada	5084	20-0744312
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Spheric Technologies, Inc.

4708 East Van Buren Street

Phoenix, Arizona 85008

(602) 218-9292

(Address, including zip code, and telephone number, including area code, of principal executive offices)

With copies to:

Christian J. Hoffmann, III, Esq. Quarles & Brady LLP One Renaissance Square Two North Central Avenue Phoenix, Arizona 85004 Phone: (602) 229-5200 Fax: (602) 420-5008 Hank Gracin, Esq. Lehman & Eilen LLP Mission Bay Office Plaza 20283 State Route 7, Suite 300 Boca Raton, Florida 33498 Phone: (561) 237-0804 Fax: (561) 237-0803

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Approximate date of commencement of proposed sale to the public: From time to time after the registration statement becomes effective.

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, check the following box.    x    ¨

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.    ¨

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.    ¨

If this Form is a post-effective amendment filed pursuant to Rule 462(d) 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.    ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer    ¨		Accelerated filer    ¨
Non-accelerated filer    ¨	(Do not check if a smaller reporting company)	Smaller reporting company    x

Calculation of Registration Fee

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Share (1)	Proposed Maximum Aggregate Price(1)	Amount of Registration Fee (1)(2)(4)
Common stock, par value $0.001 per share	1,333,334	$6.00	$8,000,004	$314.40
Common stock, par value $0.001 per share, issuable upon exercise of Underwriter’s Warrants (3)	66,667	$9.00	$600,003	$23.58
Total Registration Fee				$337.98

(1) Estimated in accordance with Rule 457(c) solely for the purpose of computing the amount of the registration fee based on a bona fide estimate of the maximum offering price.

(2) Calculated under Section 6(b) of the Securities Act of 1933 as .00003930 of the aggregate offering price.

(3) The Company has agreed to sell to the Underwriter Warrants to purchase one share for each twenty shares sold in this offering, provided the Minimum Offering is sold. The Amount to be Registered is based upon the Maximum Offering being sold.

(4) A registration fee of $352.13 has been paid previously with respect to the shares.

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 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. We have filed a registration statement with the Securities and Exchange Commission relating to this prospectus. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is declared effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED             , 2009

PRELIMINARY PROSPECTUS

Spheric Technologies, Inc.

Minimum of 1,000,000 shares of common stock

Maximum of 1,333,334 shares of common stock

This is our initial public offering. We are offering 1,333,334 shares of our common stock, $0.001 par value per share, on a best efforts basis as to a minimum of 1,000,000 shares of our common stock (the “Minimum Offering”) and a maximum of 1,333,334 shares of our common stock (the “Maximum Offering”) at a price of $6.00 per share, through Midtown Partners & Co., LLC (the “Underwriter”). We are also registering the shares of common stock underlying the warrants received by the Underwriters in this offering. All funds received from subscribers will be deposited into a non-interest bearing escrow account (the “Escrow Account”) at Signature Bank, a New York State chartered bank (the “Escrow Agent”).

Prior to this offering, there has been no public market for our common stock. The offering price may not reflect the market price of our shares after the offering. There is no minimum purchase requirement for prospective stockholders.

Our common stock is not traded on any market or securities exchange. We intend to list our common stock on the AMEX under the proposed symbol “SPT.” The listing of our common stock on the AMEX is a condition to the completion of the offering. Our proposed AMEX listing, however, is not guaranteed and there is no assurance that our securities will ever trade on any exchange.

The shares being offered are highly speculative and they involve a high degree of risk and should be considered only by persons who can afford the loss of their entire investment. See “Risk Factors” beginning on page 3.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Price to Public		Underwriting Discounts and Commissions (1)(2)		Proceeds to Company (3)
Per Share	$	6.00	$	0.48	$	5.52
Total – Minimum of 1,000,000 shares	$	6,000,000	$	480,000	$	5,520,000
Total – Maximum of 1,333,334 shares	$	8,000,000	$	640,000	$	7,360,000

The date of this prospectus is             , 2009.

(1) Provided that the Minimum Offering is sold, we have agreed to pay the Underwriter a commission of eight percent (8%) of the price of each share sold in the offering. Such commission does not include a non-accountable expense allowance of three percent (3%) of the gross offering proceeds, which we have also agreed to pay the Underwriter, for an amount of $180,000 if the Minimum Offering is sold and $240,000 if the Maximum Offering is sold. In addition, we have agreed to sell to the Underwriter, for nominal consideration, warrants (the “Underwriter’s Warrants”) to purchase one share for each twenty shares sold in this offering, again provided the Minimum Offering is sold. These items and other consideration, if any, payable to the Underwriter may be deemed to be additional compensation. See “Underwriting.”

(2) The money we raise from the subscriptions for shares will be deposited in the Escrow Account with the Escrow Agent until the Minimum Offering is sold, where the funds will be held for the benefit of the subscribers. All payments for the shares of common stock must be made payable to the Escrow Agent and mailed or delivered to the Underwriter. We expect that our shares of common stock will be ready for delivery in book-entry form through The Depository Trust Company on or about             , 2009. This offering will terminate on             , 2009, provided that the Underwriter, at its option, may extend such date until             , 2009. If we do not sell the Minimum Offering and AMEX does not confirm that the shares of common stock will be listed on the AMEX prior to the termination date, all money paid for the shares will be promptly returned to the purchasers, without interest and without deduction for expenses. Officers, directors and affiliates may purchase common stock in this offering and such purchases will count towards the Minimum Offering. Subscribers will not be able to withdraw their subscriptions from the Escrow Account during the offering period. If the Minimum Offering is sold within the offering period, the remaining 333,334 shares will be offered on a “best efforts” basis until all of the shares are sold, unless the offering is terminated earlier by agreement between the Underwriter and us. There can be no assurance that any or all of the shares being offered will be sold. See “Underwriting.”

(3) Before deducting expenses of this offering payable by us estimated to be a minimum of $150,000 and a maximum of $170,000, excluding the Underwriter’s unaccountable expense allowance referred to in footnote (1). See “Use of Proceeds.”

The shares are offered by the Underwriter subject to receipt and acceptance thereof. The Underwriter and Spheric reserve the right to reject any order in whole or in part. It is expected that the book-entry of these shares will be made against payment therefore after receipt of the proceeds from the sale of the Minimum Offering and release of such funds from the Escrow Account.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information that is different from that contained in this prospectus. We are offering to sell and seeking offers to buy shares of our common stock only in jurisdictions where offers and sales are permitted. This document may only be used where it is legal to sell the shares of our common stock. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.

TABLE OF CONTENTS

	Page No.
PRELIMINARY PROSPECTUS
AVAILABLE INFORMATION	i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS	i
PROSPECTUS SUMMARY	1
THE OFFERING	2
RISK FACTORS	3
USE OF PROCEEDS	17
DETERMINATION OF OFFERING PRICE	19
DILUTION	20
DESCRIPTION OF BUSINESS	21
DESCRIPTION OF PROPERTY	30
LEGAL PROCEEDINGS	30
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	31
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	32
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS	42
EXECUTIVE COMPENSATION	47
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS	50
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	51
UNDERWRITING	52
SHARES ELIGIBLE FOR FUTURE SALE	57
INTEREST OF NAMED EXPERTS AND COUNSEL	58
DESCRIPTION OF SECURITIES	59
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES	64
WHERE TO GET MORE INFORMATION	65
FINANCIAL STATEMENTS

AVAILABLE INFORMATION

This prospectus constitutes a part of a registration statement on Form S-1 (together with all amendments and exhibits thereto, the “Registration Statement”) filed by us with the SEC under the Securities Act of 1933, as amended (the “Securities Act”). As permitted by the rules and regulations of the SEC, this prospectus omits certain information contained in the Registration Statement, and reference is made to the Registration Statement and related exhibits for further information with respect to Spheric and the securities offered hereby. Any statements contained herein concerning the provisions of any document filed as an exhibit to the Registration Statement or otherwise filed with the SEC are not necessarily complete, and in each instance reference is made to the copy of such document so filed. Each such statement is qualified in its entirety by such reference.

You should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with information different from that which is contained in this prospectus. This prospectus may be used only where it is legal to sell these securities. The information in this prospectus may only be accurate on the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of securities.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this prospectus discuss future expectations, contain projections of results of operation or financial condition or state other “forward-looking” information. The words “believe,” “expect,” “anticipate,” “intend,” “estimate,” “may,” “should,” “could,” “will,” “plan,” “future,” “continue,” and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. These forward-looking statements are based largely on the expectations or forecasts of future events, can be affected by inaccurate assumptions, and are subject to various business risks and known and unknown uncertainties, a number of which are beyond the control of management. Therefore, the actual results could differ materially from the forward-looking statements contained in this prospectus.

Important factors that may cause the actual results to differ from the forward-looking statements, projections or other expectations include, for example, the following:

• our ability to implement our business plan;

• our ability to market our product and technology, commence revenue operations and then to achieve profitable results of operation;

• impairment of license, patent or other proprietary rights;

• competition from larger, more established companies with far greater economic and human resources than we have;

• our ability to attract and retain customers and quality employees;

• the effect of changing economic conditions; and

• changes in government regulations, tax rates and similar matters.

We do not promise to update forward-looking information to reflect actual results or changes in assumptions or other factors that could affect statements made in this prospectus.

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PART I—INFORMATION REQUIRED IN PROSPECTUS

PROSPECTUS SUMMARY

This summary highlights some information from this prospectus and it does not contain all the information necessary for your investment decision. The following summary is qualified in its entirety by reference to the more detailed information and financial statements appearing elsewhere in and incorporated by reference into this prospectus. The shares offered hereby are speculative and involve a high degree of risk. Each prospective investor should carefully review the entire prospectus, the financial statements and all exhibits and documents referred to therein. See “Risk Factors.” Except as otherwise required by the context, references in this prospectus to “we,” “our,” “us,” the “Company,” “Spheric Technologies” and “Spheric” refer to Spheric Technologies, Inc., a Nevada corporation.

Spheric Technologies

We are an operating stage company that plans to develop, market and distribute industrial microwave technology for the sintering of powdered metals and advanced ceramic powders in the United States and Canada. We will deliver our technology to our customers through the sale of high-temperature industrial microwave furnaces and the sublicense of certain intellectual property relating to the microwave sintering of such materials. Sintering is the binding without melting, at a microscopic level, of small particles of metal or ceramics and is generally used for the production of industrial parts or components.

We plan to derive our future revenue from several sources: (i) sales and servicing of microwave furnaces for high temperature microwave processing of powdered metals and ceramics to produce parts; (ii) fixed annual royalties on the sublicense of intellectual property associated with the microwave sintering of powdered metals and advanced ceramics; and (iii) royalties on sales of microwave sintered parts produced off-shore by third parties and sold in the United States under our sublicenses. Given sufficient capital and attractive commercial prospects, we intend to explore marketing our technology to the water treatment and mining equipment industries.

We have entered into a Sales Agency Agreement with Changsha Syno-Therm Co., Ltd., a manufacturer of microwave furnaces located in Changsha, Hunan, P.R.C. (“Syno-Therm”). We are the exclusive distributor for Syno-Therm microwave furnaces in North and South America. We also licensed an intellectual property portfolio of nine patents from the Pennsylvania State University Research Foundation (“Penn State”), which we plan to sublicense to the purchasers of the furnaces that we sell. Our licenses from Penn State are associated with the microwave processing of powdered metal and advanced ceramics, as well as other materials.

We were incorporated in 2004 in Arizona to focus on the commercialization of production of various materials. In July 2008, we transferred the domicile of our corporation from Arizona to Nevada. The address of the executive office of Spheric Technologies, Inc. is 4708 East Van Buren Street, Phoenix, Arizona 85008 and its telephone number is (602) 218-9292.

We intend to use a portion, up to $810,000, of the funds received from this offering to repay loans advanced by three of our shareholders, including $500,000 to one of our founders and our President, Mr. Joseph Hines, $300,000 to a principal shareholder, Joseph C. Koch, and $10,000 to a minority shareholder. After this repayment, Mr. Hines will still hold $127,600 in debt from the Company, at no interest and payable at June 30, 2009, while Mr. Koch and the minority shareholder will hold no further debt.

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THE OFFERING

Common Stock Offered:	1,000,000 shares (Minimum Offering) on a “best efforts, all-or-none” basis 1,333,334 shares (Maximum Offering) on a “best efforts” basis (1)
Common Stock Outstanding
Prior to this offering:	4,877,850 shares (2)
After this offering:	5,877,850 shares (3) (Minimum Offering) 6,211,184 shares (3) (Maximum Offering)
Terms of the Offering:	90 days from the date of this prospectus, unless extended for up to an additional 90 days at the sole discretion of the Underwriter.
Public Trading Market for Securities Offered:	Our common stock is not currently traded on any public securities exchange.
Proposed AMEX Symbol:	“SPT”(4)
Form:	The common stock will be issued and maintained in book-entry form registered in the name of the nominee of The Depository Trust Company, except under limited circumstances.
Use of Proceeds:	We will use the net proceeds, after expenses, estimated at $5,190,000 if the Minimum Offering is sold and $6,950,000 if the Maximum Offering is sold, for the purchase of microwave furnaces and other equipment, furniture and fixtures, marketing, research and development, repayment of shareholder loans, potential acquisitions and general working capital. See “Use of Proceeds.”
Risk Factors:	This offering involves a high degree of risk. You should not consider purchase of the shares unless you can afford to lose your entire investment. See “Risk Factors,” as well as other cautionary statements throughout this prospectus, before investing in shares of our common stock.

(1) Does not include the shares of common stock underlying the warrants to be received by the Underwriters in this offering.

(2) Indicates shares of common stock outstanding at December 31, 2008.

(3) Does not include: (i) 1,936,860 shares, assuming exercise of all outstanding warrants, (ii) 66,667 shares underlying the Underwriter’s Warrants, and (iii) 64,000 shares, assuming exercise of all outstanding options.

(4) We intend to apply for listing on the AMEX. The symbol “SPT” may not be available with the AMEX.

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RISK FACTORS

Investment in our common stock involves a number of risks and you should be able to bear the complete loss of your investment. In addition to the risks and investment considerations discussed elsewhere in this prospectus, the following factors should be carefully considered by anyone purchasing the securities offered by this prospectus. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations. If any of the following risks actually occur, our business could be harmed. In such case, the trading price of our common stock could decline and investors could lose all or a part of the money paid to buy our common stock.

Risks Related to Our Business

We have minimal operations.

We have had limited commercial operations and require the capital to be obtained from this offering in order to continue with the implementation of our business plan. To date, we have generated revenue of $104,764 from the sale of one furnace in 2007. We expect to incur operating deficits as we implement our business plan. Even if we obtain the funding in this offering, we may not be profitable.

Our management has limited direct experience in our proposed business.

Our estimates of capital, personnel, equipment and facilities required for our proposed operations are based on the experience of our management and businesses they are familiar with in other industries. While we have conducted investigations regarding the potential market for our products, we have not retained any independent third party to verify our conclusions concerning such demand. We believe that our estimates are reasonable, but until our operations are more established, it is not possible to determine the accuracy of such estimates. We have had limited direct operating experience and have conducted preliminary test marketing of our products over the past twelve months. However, we have no reliable basis for our estimates of possible revenues. In formulating our business plan, we have relied on the judgment of our officers and their research on the powdered metal industry. Even with the financing from this offering, there can be no assurance that we will be able to operate our business on a profitable basis. Our plans are based upon the assumptions that present market conditions in the business that we plan to operate will continue, that the proceeds of this offering will be applied efficiently and that the risks described in this prospectus will be dealt with successfully. There can be no assurance that such plans will be realized or that any of the assumptions will prove to be correct.

We may continue to generate operating losses and experience negative cash flow and it is uncertain whether we will achieve future profitability.

For the years ended December 31, 2007 and December 31, 2006, we incurred a net loss from operations of $(598,339) and $(537,560), respectively. For the nine months ended September 30, 2008 and September 30, 2007, we incurred a net loss from operations of $(777,175) and $(451,716), respectively. We may continue to incur operating losses until such time, if ever, as we are able to achieve sufficient levels of revenue from operations. Our ability to achieve profitability will depend on the market acceptance of our product offerings and our capacity to develop, introduce and sell our products to our targeted markets. There can be no assurance that we will ever generate significant sales or achieve profitability. Accordingly, the extent of future losses and the time required to achieve profitability, if ever, cannot be predicted at this point.

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Our auditors have expressed a going concern opinion.

We have incurred recurring losses and had a working capital deficit of $733,641 at December 31, 2007, primarily as a result of our progress through the development stage to early operating stage and lack of revenue. Accordingly, the opinion of our independent auditors for the years ended December 31, 2007 and December 31, 2006 is qualified subject to uncertainty as to whether we will be able to continue as a going concern. This may negatively impact our ability to obtain additional funding that we may require or to do so on terms attractive to us and may negatively impact the market price of our stock.

As shown in the accompanying financial statements, while we had sales in 2007, these sales were insufficient to support operations and we have previously suffered recurring losses during our development stage. As a result, there are uncertainties that raise substantial doubt as to whether we will be able to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts or the amounts or classification of recorded liabilities that may result if we are unable to continue as a going concern.

We depend on a single certain manufacturing source whose inability to perform its obligations would harm our business.

We currently rely on Syno-Therm as our sole supplier of the microwave furnaces we distribute. We purchase, and will continue to purchase our microwave furnaces from such manufacturer. We do not intend to directly manufacture any of the equipment or parts to be used in our microwave products. We have a three-year term exclusive sales agreement with this supplier that expires in December 2010. Syno-Therm may not be able to continue to perform any or all of its obligations to us. Syno-Therm’s equipment manufacturing facility is located in Changsha, Hunan, P.R.C., and its ability to supply us with furnaces may be affected by Syno-Therm’s manufacturing capacities and quality controls and regional or worldwide economic, political or governmental conditions. Disruptions in international trade and finance, or in transportation may have a material adverse effect on our business, financial condition and results of operation.

Our reliance upon one manufacturer for our furnaces is expected to continue and involves several risks, including limited control over the availability of components, delivery schedules, pricing and product quality. We may experience delays, additional expenses and lost sales because of our dependency on a single manufacturer and supplier. If Syno-Therm could not supply us with adequate equipment in a timely manner, or if we could not locate a suitable alternative supplier or at all or negotiate favorable terms with such supplier in a timely manner, it would have a material adverse effect on our business. Industry standards and our market research indicate that lead times are common throughout the industry in furnace sales, but changes in our vendor relationship might create lead times that could be unacceptably long to some customers.

If supplies of components or materials by Syno-Therm are delayed or interrupted for any reason, our ability to produce and supply our products on a timely basis could be impaired. While we believe that alternative suppliers exist for most of our components and materials, we have not specifically identified any alternative suppliers for our microwave furnaces and we may be unable to replace Syno-Therm in a timely manner. Although we will attempt to match our furnace inventory to estimates of marketplace demand to the extent product orders materially vary from our estimates, we may experience constraints in our product delivery capacity. In addition, if we do not meet the minimum purchase amount required under our license with Syno-Therm, we could lose our exclusivity and Syno-Therm could cancel the Sales Agency Agreement.

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Accordingly, our reliance on outside vendors generally and Syno-Therm in particular, involves a number of risks, including:

• the possibility that one or more of our suppliers with whom we do not have supply agreements could terminate their services at any time without penalty;

• the potential obsolescence of the furnaces and/or inability of our suppliers to obtain required components;

• potential delays and expenses of seeking alternate sources of supply;

• reduced control over pricing, quality and timely delivery; and

• increases in prices of raw materials and key components.

We may not be successful in the implementation of our business plan.

If we raise the Minimum Offering, we should have sufficient working capital to implement our business plan as described in this prospectus. Our ability to fully implement such plan will depend upon our ability to execute our business plan efficiently and to obtain additional financing in the future, if our estimates prove to be wrong. No assurance can be given that we will be able to obtain additional capital or, if available, that such capital will be available on terms acceptable to us or at all, or that we will be able to generate profits from operations, or if profits are generated, that they will be sufficient to carry out our business plan, or that the plan will not be modified.

Our ability to successfully market our products to the intended range of customers depends on our products functioning as we plan, acceptance by our prospective customers, our ability to attract and retain employees with strong industry contacts and knowledge of our products. Individuals with specialized industry skills are in short supply and competition for qualified engineers and sales persons is intense. The loss of the services of our president, vice president, and/or secretary or the failure to attract new qualified personnel could adversely affect our business and growth prospects.

It is uncertain what our actual costs and profitability will be.

Our actual costs of distributing and marketing of our microwave furnaces and technologies for microwave processing systems and the costs of production of sintered products are unknown at this time.

In addition, even if our initial costs are as anticipated, our microwave furnaces may break down, prove unreliable or prove inefficient in a commercial setting. If so, related costs, delays and related problems may cause production of our products and technologies to be unprofitable. While we have the microwave furnaces, they may not perform as expected in a commercial production environment. We may experience cost and technical difficulties in having our products do so.

It is uncertain whether we will need additional financing.

Our cash requirements may vary materially from those now planned depending on numerous factors, including the scope and results of our marketing and business development activities, the results of future research and development and competition. We believe that the net proceeds from this offering will be sufficient to fund our working and other capital requirements for the next twelve months if the Minimum Offering is raised and for eighteen months if the Maximum Offering is raised. Thereafter, we may need to raise additional funds to finance our working capital requirements through private or public financings depending upon our ability to achieve a profitable level of operations. Such financing could include equity financing, which may be dilutive to stockholders, or debt financing, which would likely restrict our ability to borrow from other sources. In addition, such securities may contain rights, preferences or privileges senior to those of the rights of our current shareholders. We do not currently have any

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commitments for additional financing. There can be no assurance that additional funds will be available on terms attractive to us or at all. If adequate funds are not available, we may be required to curtail our planned production, sales and research and development activities and/or otherwise materially reduce our operations. Any inability to raise adequate funds could have a material adverse effect on our business, results of operation and financial condition.

There is uncertainty as to market acceptance of our technology and products and our sales cycle may be long.

Our principal target markets are the powdered metal and ceramics sintering industries. We have conducted our own research into the markets for our products; however, because we will be a new entrant into the market and have conducted limited preliminary test marketing, we have somewhat limited information on which to estimate our levels of sales, the amount of revenue our planned operations will generate and our operating and other expenses.

Our products will require our customers to adopt new production methods and invest new capital in their businesses. Manufacturers in these markets traditionally have substantial capital investments in their plant and equipment, including in their furnaces. In this market, the sale of our technologies will be subject to budget constraints and resistance to change of long-established production techniques and processes, which could result in significant reduction in our anticipated revenues. We cannot assure investors that customers will have the necessary funds to purchase our technology and products even though they may want to do so. Further, even if such customers have the necessary funds, we may experience delays and relatively long sales cycles due to their internal decision making policies and procedures and reticence to change. There can be no assurance that we will be successful in our efforts to market our products or to develop markets in the manner we contemplate.

Our industry is susceptible to technological advancements in production methods and our competitive advantage may be reduced if we fail to keep up with changes in the technological processes. Our services are subject to significant technological change and innovation. Technological developments are occurring and while the effects of such developments are uncertain, they may have a material adverse effect on the demand for our products and services. Additionally, we may not be able to match any technological changes in needs of our target customers, which will reduce demand for our products.

The sales cycles for our microwave furnaces and services are lengthy and unpredictable, and we may expend substantial funds and management effort with no assurance of sales.

Our sales efforts require the effective demonstration of the benefits, value, differentiation and validation of our products and services, and training of personnel and departments within a potential customer organization. Accordingly, the sales cycles for our microwave furnaces and services are typically lengthy and unpredictable. The process begins with the identification of potential customers in selected markets. If the customer is interested, the customer will usually send samples to us for initial analysis and testing. We then test run the product through our microwave furnace. Provided we are able to demonstrate the efficacy of our technology on the application sample to the customer, it may then perform extended durability and other testing. In most cases, we are unable to exert any control or influence over such testing. Upon conclusion of the customer testing, we are able to determine whether the customer will place an order with us or not. Often, the customer will need to adapt its product to work with our processes. We expect that the customer’s resistance to change, costs, access to capital and payback on investment will be factors in its decision to adopt and utilize our technology.

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We may also be required to negotiate agreements containing terms unique to each prospective customer, which further lengthen the sales cycle. Furthermore, the capital spending policies of potential customers may have a significant effect on the timing of demand for our products. These policies are based on a wide variety of factors outside of our control, including the requirements of government grants, the resources available for purchasing research equipment and services, the spending priorities among various types of equipment and services and the policies regarding capital expenditures during recessionary periods, all of which can lengthen the sales cycles for our products and services. As a result, we may expend substantial funds and management effort in connection with our sales efforts with no assurance that we will sell our products or services. These lengthy sales cycles make it more difficult for us to accurately forecast revenue in future periods and may cause revenue and operating results to vary significantly from period to period.

If we are unable to compete in our market, you may lose all or part of your investment.

There are numerous other companies, including Centorr Vacuum Industries, Ipsen, Inc. and Nabertherm LLC that are engaged in the business of manufacturing conventional furnaces involved in the sintering of powdered metals or ceramics. All of these companies have substantially greater resources than we do and enjoy well established production facilities and processes, market presence, distribution networks and market share. It is likely that any or all of these other companies are in the process of, and have allocated substantially more resources than we have, in developing their own products that are or would be competitive with our products. Their ability to produce economies of scale may put us at a disadvantage.

Although U.S. production of microwave furnaces for our target industries does not exist, microwave furnaces are being produced in other countries that would provide significant competition to our expected microwave offerings if they were imported. However, we believe that the use of foreign-made microwave furnaces for sintering of powdered metals within the U.S. would potentially infringe upon our intellectual property rights. Increased competition or our failure to compete successfully is likely to result in price reductions, fewer customer orders, reduced gross margins, increased marketing costs, failure to acquire or retain market share, or any combination of these. There can be no assurance that we will be able to compete successfully against currently anticipated or future competitors or that competitive pressures will not have a material adverse effect on our business, operating results and financial condition. If we are not successful in competing against our current and future competitors, you could lose your entire investment. See “Description of Business-Competition.”

There are economic and general risks relating to our business.

The success of our activities is subject to risks inherent in our business generally, including demand for products and services; general economic conditions; changes in taxes and tax laws; and changes in government regulations and policies.

Electrical power is integral to our production processes.

While our microwave technology uses significantly less power than conventional high temperature processes, we do expect to use significant amounts of electrical power in our and our customers’ operations. Electrical power prices have been relatively stable, but they may not remain so. Any significant increase in the price of power sources will increase our costs of production.

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Our products and production processes could subject us to possible environmental liability.

Metal processing and sintering technologies, such as those used by our competitors, as well as our microwave sintering systems, are subject to federal, state and local environmental laws. Under such laws, we may be liable for the treatment, cleanup, remediation and/or removal of any hazardous substances discovered at any property we use for our operations, despite the fact that our technology does not utilize the same potential environmentally impactive processes as our competitors. In addition, courts or government agencies may impose liability for, among other things, the improper release, discharge, storage, use, disposal or transportation of hazardous substances. We might use hazardous substances and, if we do, we will be subject to substantial risks that environmental remediation will be required.

Because the industry is highly regulated in environmental matters, there is a risk that we may incur costs despite our ability to avoid most of the environmental hazards that affect the industry. While we have not found that our processes discharge any harmful effluents and will continue to follow every safety and environmental regulation required, we will utilize high intensity electrical power and produce products that may be considered toxic or carcinogenic if handled improperly.

Defects in our products could impair our ability to sell our products or could result in litigation and other significant costs.

Detection of any significant defects in our metal processing and sintering systems may result in, among other things, delay in time-to-market, loss of market acceptance and sales of our products, diversion of development resources, injury to our reputation, or increased warranty costs. Because our products are technologically complex, they may contain defects that cannot be detected prior to shipment. These defects could harm our reputation and impair our ability to sell our products. The costs we may incur in correcting any product defects may be substantial and could decrease our profit margins. Additionally, errors, defects or other performance problems could result in financial or other damages to our customers, which could result in litigation. Product liability litigation, even if we prevail, would be time consuming and costly to defend. Our product liability insurance may not be adequate to cover claims. Our product liability insurance coverage per occurrence is $1,000,000 with a $2,000,000 aggregate for our general business liability coverage, with an additional $1,000,000 per occurrence. Our excess or umbrella liability coverage per occurrence is $1,000,000, with an aggregate of $1,000,000.

Product defects in our microwave furnaces can be caused by production processes or defects in component parts of Syno-Therm or raw materials that they use. Further, products manufactured by our customers using our products and technologies will be subject to their own sets of production defection or risks. This is common to every product manufactured which is based on modern powdered metal processing or sintering technology. The microwave furnaces we utilize come from one source. We will attempt to mitigate the possibility of shipping defective microwave furnaces product by fully testing them as they come in and thoroughly testing them before they are shipped out to our customers. While we believe that Syno-Therm is reliable and has good quality controls, we can make no assurances because we are not the manufacturer.

We are dependent on key personnel.

Our success will be largely dependent upon the efforts of our executive officers and certain key employees, Mr. Joseph Hines, Mr. Michael Kirksey, Mr. Robert Desberg and Dr. Kuruvilla Cherian. We have entered into employment agreements with Mr. Hines and Mr. Kirksey, that became effective October 1, 2008. Each such agreement has a term of three years, expiring in 2011. The loss of the services of these individuals could have a material adverse effect on our business and prospects. There can be no assurance that we will be able to retain the

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services of such individuals in the future. We are also dependent to a substantial degree on our technical and development staff. Our success will be dependent upon our ability to hire and retain additional qualified technical, research, management, marketing and financial personnel. We will compete with other companies with greater financial and other resources for such personnel. Although we have not to date experienced difficulty in attracting qualified personnel, there can be no assurance that we will be able to retain our present personnel or acquire additional qualified personnel as and when needed. If we are unable to attract and retain such personnel, we may not be successful in the implementation of our business plan. See “We may not be successful in the implementation of our business plan.”

We have limited marketing capability and may not successfully market our products.

We have limited marketing capabilities and resources. In order to achieve market penetration we will have to undertake significant efforts and expenditures to create awareness of, and demand for, our powdered metal processing technology and products. Our ability to penetrate the market and build our customer base will be substantially dependent on our marketing efforts, including our ability to establish strategic marketing arrangements with manufacturers and suppliers in the powdered metal sintering market. No assurance can be given that we will be able to enter into any such arrangements or if entered into that they will be successful. Our failure to successfully develop our marketing capabilities, both internally and through third-party alliances, would have a material adverse effect on our business, operating results and financial condition. Further, there can be no assurance that, if developed, such marketing capabilities will lead to sales of our furnaces and products.

We provide a limited, one-year warranty on our furnaces.

We provide a limited, one-year warranty covering equipment defects in manufacturing and installation, but not covering any related loss in manufacturing output or materials. We receive a warranty from our manufacturer, Syno-Therm, with the same coverage. In the unlikely event that Syno-Therm did not honor its warranty to us on the equipment, we would be forced to cover the entire cost of equipment repair or replacement if such equipment is defective under the terms of our warranty to the customer. It may be necessary to segregate certain warranty-covered revenue on our financial statements to effectively allow for potential claims and reserves for such claims.

We are uncertain of our ability to protect our patents and intellectual property.

We rely primarily on a combination of U.S. and foreign patent and trademark laws, trade secrets, license agreements, confidentiality procedures and contractual provisions to protect our proprietary rights, which are our key assets. There can be no assurance that any of our pending or future patent applications, whether or not being currently challenged by applicable governmental patent examiners, will be issued with the scope of the claims sought, if at all. There also can be no assurance that any patents or licenses or sublicenses relating thereto that we may obtain or are relied upon by our key suppliers of equipment, such as industrial microwave furnaces, will not be invalidated, circumvented or challenged. Furthermore, there can be no assurance that others will not develop technologies that are similar or superior to our technology or design around any patents owned by us. Unauthorized parties may attempt to copy aspects of our products or to obtain and use information we regard as proprietary. In addition, the laws of some foreign countries do not protect proprietary rights as fully as do the laws of the United States. There can be no assurance that our means of protecting its proprietary rights in the United States or abroad will be adequate or that others will not independently develop similar or superior technology.

In a similar manner, the patents licensed from Penn State have not been guaranteed by the licensor, and there are no assurances or warranties given or implied that the technology described in the patents licensed is protected from other use or that these patents do

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not infringe on technology licensed by other parties. In addition, while we are the exclusive licensee of eight out of the nine patents we license from Penn State, other licensees under the remaining non-exclusive license may be able to compete with us. No assurances can be made that these technologies will not be superseded, circumvented or challenged.

The patent on which we have a non-exclusive license, U.S. Patent 6,610,241, “Microwave Sintering of Multilayer Dielectrics With Base Metal Electrodes,” is not integral to our proposed business activities, and no licensing fees or other payments are associated solely with the non-exclusive patent license. If other non-exclusive licensees to this patent were to manufacture or license components based on this technology, we do not believe it would impact our business as we do not plan to produce items covered under this patent for the foreseeable future.

We rely on licenses to use various technologies that are material to our business.

We have a licensing agreement with Penn State granting us the right to use certain intellectual property contained in nine patents. The term of the licensing agreement continues until the end of the life of the last to expire patent. If we fail to make the payments under these licenses or if we lose or cannot maintain them on acceptable terms, it would cause us significant time and expense to redevelop our microwave furnaces and technologies for metal and ceramic powder sintering or halt our ability to market our products and technology, which would have a material adverse effect on our business, operating results and financial condition. Our rights to use these technologies and employ the inventions claimed in the licensed patents are subject to Penn State abiding by the terms of those licenses.

We license patent rights from third-party owners. If such owners do not properly maintain or enforce the patents underlying such licenses, our competitive position and business prospects will be harmed.

We are party to a number of licenses from Penn State that give us rights to third-party intellectual property that is necessary or useful for our business. We may also enter into additional licenses to third-party intellectual property in the future. Our success may in some instances depend on the ability of our licensor to obtain, maintain and enforce patent protection for its intellectual property because we do not control the prosecution of the patents to which we hold licenses, and we do not control the strategy for determining when any patents to which we hold licenses should be enforced. Instead, we rely upon our licensor to determine the appropriate strategy for prosecuting and enforcing those patents. For example, Penn State is responsible for filing, prosecuting and maintaining the patents and applications that we have licensed from it. Accordingly we are dependent on Penn State to prosecute the patent applications and maintain issued Penn State patents. In addition, Penn State may determine not to pursue litigation against other companies that are infringing these patents, or may pursue such litigation less aggressively than we would. Without protection for the intellectual property we license, other companies might be able to offer substantially identical products for sale, which could adversely affect our competitive business position and prospects.

We may expand by acquiring other companies, which may divert management’s attention, result in additional dilution to our shareholders, and consume resources that are necessary to operate and sustain our business.

Our business strategy may include acquiring complementary services, technologies or businesses, given sufficient capital and attractive prospects. We also may enter into relationships with other businesses to expand our product or service offerings or our ability to provide service in foreign jurisdictions, which could involve preferred or exclusive licenses, additional channels of distribution, discount pricing, investments in other companies, or other strategies. Negotiating these transactions can be time-consuming, difficult and expensive. Our ability to close these transactions may often be subject to approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close. We have no ongoing negotiations or current agreements or commitments for any acquisitions or similar transactions.

An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses, technologies, products, personnel or operations of

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the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, the target’s technology is not easily adapted to work with ours, or we are unable to retain the customers of any acquired business due to changes in management or otherwise. Acquisitions may also disrupt our business, divert our resources, and require significant management attention that would otherwise be available for operation and development of our business. Moreover, the anticipated benefits of any acquisition, investment or business relationship may not be realized or we may be exposed to unknown liabilities. For one or more of those transactions, we may:

• issue additional equity securities that would dilute our stockholders;

• use cash that we may need in the future to operate our business;

• incur debt on terms unfavorable to us or that we are unable to repay;

• incur large charges or substantial liabilities;

• encounter difficulties retaining key employees of the acquired company or integrating diverse technology or business cultures; and/or

• become subject to adverse tax consequences, substantial depreciation, or deferred compensation charges.

Any of these risks could harm our business and operating results.

Risks Related to this Registration

We will use discretion in the application of the proceeds of this offering.

We intend to use a large portion of the net proceeds of this offering to fund working capital. If significantly less than the entire offering is sold, we will be forced to allocate the reduced proceeds in the discretion of management. Due to the number and variability of factors that we will analyze before we determine how to use such net proceeds, we will have broad discretion in allocating a significant portion of the net proceeds from this offering without any action or approval of our shareholders. Accordingly, investors will not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of such net proceeds.

There is a limited market for your shares and you may not be able to sell them.

We intend to apply for listing of our common stock on the AMEX. There can be no assurance that if such application is granted, that an active market will develop for our common stock on the AMEX. Additionally, there can be no assurance any broker will be interested in trading our stock. Therefore, it may be difficult to sell your shares of common stock if you desire or need to sell them. You may have no more liquidity in your shares of common stock even if we are successful in the future in registering with the SEC and listing on the AMEX.

There is no guarantee that our shares will be listed on the AMEX.

Prior to this offering, there has been no public market for our common stock. We intend to apply for listing of our common stock on the AMEX. As of the date of this prospectus, we believe that we satisfy the AMEX listing requirements and expect that our common stock will be listed on the AMEX. Our AMEX listing, however, is not guaranteed. There can be no assurance that such application will be granted or that an active market will develop for our common stock on the AMEX. Even after deposit of an amount equal to the Minimum Offering in the Escrow Account, if we do not receive confirmation from the AMEX that our shares satisfy such listing requirements, the offering will terminate and all funds will be returned to investors without interest. Even if such

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listing is approved, there can be no assurance any broker will be interested in trading our stock. Therefore, it may be difficult to sell your shares of common stock if you desire or need to sell them. You may have no more liquidity in your shares of common stock even if we are successful in the future in registering with the SEC and listing on the AMEX.

If we do not meet the American Stock Exchange requirements for continued listing, our common stock may be delisted and our securities may become illiquid.

The AMEX requires that listed companies satisfy various requirements for continued listing of their securities, including requirements relating to, among other things, corporate governance, shareholder approval and voting, minimum trading price and shareholders’ equity. If we fail to satisfy any of the requirements for continued listing of our securities on the AMEX, our securities may be delisted.

If our securities are delisted from the AMEX, they will likely be quoted in the over-the-counter market in the “pink sheets” or the OTC Bulletin Board. Consequently, an investor would find it more difficult to trade our securities. In addition, if our common stock is delisted from the AMEX, it will be subject to the rules relating to “penny stocks.” These rules require brokers who sell securities subject to such rules to persons other than established customers and “institutional accredited investors” to complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning the risks of trading in the securities. Application of the penny stock rules to our securities will adversely affect the market liquidity of our securities, which may adversely affect the ability of purchasers in this offering to resell our securities.

Coalitions of a few of our larger stockholders have sufficient voting power to make corporate governance decisions that could have a significant effect on us and the other stockholders.

Our officers, directors, and principal stockholders (greater than five percent (5%) stockholders) together will control approximately 65.53% of our outstanding common stock on a fully diluted basis if the Minimum Offering is sold and 62.59% on a fully diluted basis if the Maximum Offering is sold. Our founders, Mssrs. Hines and Kirksey, will together control approximately 47.42% of our outstanding common stock on a fully diluted basis if the Minimum Offering is sold and 45.05% on a fully diluted basis if the Maximum Offering is sold. As a result, these stockholders, if they act together, will be able to exert a significant degree of influence over our management and affairs and over matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. In addition, this concentration of ownership may delay or prevent a change in our control and might affect the market price of our common stock, even when a change in control may be in the best interest of all stockholders. Furthermore, the interests of this concentration of ownership may not always coincide with our interests or the interests of other stockholders. Accordingly, these stockholders could cause us to enter into transactions or agreements that we would not otherwise consider.

Our common stock could trade at prices below the initial public offering price.

There has not been a public trading market for shares of our common stock prior to this offering. An active trading market may not develop or be sustained after this offering. The initial public offering price for the shares of common stock sold in this offering has been determined by negotiation between us and the Underwriter. This price may not be indicative of the price at which our common stock will trade after this offering, and our common stock could easily trade below the initial public offering price.

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The sale of substantial amounts of our common stock may have a depressive effect on the market price of the outstanding shares of our common stock, lower our value and make it more difficult for us to raise capital.

Of the 4,877,850 shares of our common stock outstanding at December 31, 2008, 3,472,750 are “restricted securities,” as that term is defined in Rule 144 promulgated under the Securities Act, and may be sold only in compliance with Rule 144, pursuant to registration under the Securities Act or pursuant to an exemption from such registration. A sale under Rule 144 or under any other exemption from the Securities Act, if available, or pursuant to registration of shares of common stock of present shareholders, may have a depressive effect upon the price of our common stock in any market that may develop. An excessive sale of our shares may result in a substantial decline in the price of our common stock and limit our ability to raise capital, even if our business is doing well. Furthermore, the sale of a significant amount of securities into the market could cause the value of our securities to decline in value. Of our shares of common stock outstanding, 1,405,100 were eligible for sale under Rule 144 as of December 31, 2008. Further, at December 31, 2008, we had outstanding warrants exercisable to purchase 1,936,860 shares of common stock and 64,000 outstanding options exercisable to purchase shares of common stock. If all such outstanding warrants and options were exercised, we would have a total of 6,878,710 shares of common stock outstanding.

Sales of substantial amounts of common stock by our stockholders under Rule 144 or otherwise, or even the potential for such sales, could have a depressive effect on the market price of the shares of our common stock and could impair our ability to raise capital through the sale of our equity securities. See “Description of Securities,” “Security Ownership of Certain Beneficial Owners and Management” and “Underwriting.”

Our stock price may be volatile, and you may be unable to sell your shares at or above the offering price.

The market price of our common stock could be subject to wide fluctuations in response to, among other things, the factors described in this “Risk Factors” section or otherwise, and other factors beyond our control, such as fluctuations in the valuations of companies perceived by investors to be comparable to us.

Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance of those companies. These broad market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rate changes or international currency fluctuations, may negatively affect the market price of our common stock.

In the past, many companies that have experienced volatility in the market price of their stock have become subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

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Our stock price is likely to be highly volatile because of several factors, including a limited public float.

The market price of our common stock is likely to be highly volatile because it will be a new issue and there may be a relatively thin trading market for our stock, which would cause trades of small blocks of stock to have a significant impact on our stock price. If this is the case, you may not be able to resell shares of our common stock following periods of volatility because of the market’s adverse reaction to volatility.

Other factors that could cause such volatility may include, among other things:

• actual or anticipated fluctuations in our operating results;

• the potential absence of securities analysts covering us and distributing research and recommendations about us;

• we may have a low trading volume for a number of reasons, including that a large amount of our stock is closely held;

• overall stock market fluctuations;

• announcements concerning our business or those of our competitors;

• our ability to raise capital when we require it, and to raise such capital on favorable terms;

• changes in financial estimates by securities analysts or our failure to perform as anticipated by the analysts;

• announcements of technological innovations;

• conditions or trends in the industry;

• litigation;

• changes in market valuations of other similar companies;

• future sales of common stock;

• departure of key personnel or failure to hire key personnel; and

• general market conditions.

Any of these factors could have a significant and adverse impact on the market price of our common stock. In addition, the stock market in general has at times experienced extreme volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.

The possible issuance of common stock subject to options and warrants may dilute the interest of stockholders.

We adopted a 2008 Stock Option and Restricted Stock Plan under which we may grant awards to purchase 1,500,000 shares of our common stock, of which 64,000 options were issued as of December 31, 2008. In addition, as of December 31, 2008 we have 1,936,860 shares issuable upon exercise of warrants granted to third parties in connection with prior private placements of our equity securities and debt. To the extent that outstanding stock options and warrants are exercised, or additional securities are issued, dilution to the interests of our stockholders may occur. Moreover, the terms upon which we will be able to obtain additional equity capital may be adversely affected since the holders of the outstanding options can be expected to exercise them at a time when we would, in all likelihood, be able to obtain any needed capital on terms more favorable to us than those provided in such outstanding options.

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We have additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock.

Our Articles of Incorporation authorize the issuance of 50,000,000 shares of our common stock and 5,000,000 shares of preferred stock. The common stock and preferred stock, as well as the awards available for issuance under the 2008 Stock Option and Restricted Stock Plan, can be issued by our board of directors, without stockholder approval. Any future issuances of such stock would further dilute the percentage ownership of us held by public stockholders. Any preferred stock that is issued may rank ahead of our common stock in terms of dividends, liquidation rights and voting rights and could adversely affect the voting power and the rights of our holders of common stock. In addition, the issuance of the preferred stock may be used as an “anti-takeover” device without further action on the part of our stockholders, and may adversely affect the holders of the common stock.

We have never paid dividends and have no plans to in the future.

Holders of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends on our shares of common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock. See “Dividend Policy.”

We may experience difficulties in the future in complying with Section 404 of the Sarbanes-Oxley Act.

After we are a public company, we will be required to evaluate our internal controls under Section 404 of the Sarbanes-Oxley Act of 2002. We will be required to comply with the internal control requirements of Section 404 of the Sarbanes-Oxley Act. If we fail to maintain the adequacy of our internal controls, we could be subject to regulatory scrutiny, civil or criminal penalties and/or stockholder litigation. Any inability to provide reliable financial reports could harm our business. Section 404 of the Sarbanes-Oxley Act also requires that our independent registered public accounting firm report on management’s evaluation of our system of internal controls. Furthermore, any failure to implement required new or improved controls, or difficulties encountered in the implementation of adequate controls over our financial processes and reporting in the future, could harm our operating results or cause us to fail to meet our reporting obligations.

If we fail to maintain proper and effective internal controls in future periods, it could adversely affect our operating results, financial condition and our ability to run our business effectively and could cause investors to lose confidence in our financial reporting.

Shareholders purchasing shares in this offering will experience immediate and substantial dilution, causing their investment to immediately be worth less than their purchase price.

If you purchase common stock in this offering, you will experience an immediate and substantial dilution in the projected book value of the common stock from the price you pay in this initial offering. This means that if you buy stock in this offering at $6.00 per share, you will pay substantially more than our current shareholders. The following represents your dilution: (i) if the Minimum Offering is sold, you will have an immediate dilution of $5.21 per common share and an immediate increase in net tangible book value to our present shareholders from $(0.11) to $0.79 per share will occur, and (ii) if the Maximum Offering is sold, you will have an immediate dilution of $4.97 per common share and an immediate increase in book value to our new shareholders from $(0.11) to $1.03 per share will occur.

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We will sell broker-dealer warrants to our Underwriter in this offering.

We will sell to the Underwriter, as additional compensation, warrants (“Underwriter’s Warrants”) to purchase one Underwriter’s Warrant for every twenty shares sold in the offering, which is 50,000 Underwriter’s Warrants if we sell the Minimum Offering and 66,667 Underwriter’s Warrants if we sell the Maximum Offering. The Underwriter’s Warrants may be exercised at any time commencing one year from the completion of the offering and continuing for four years thereafter to purchase shares of common stock at an exercise price equal to 150% of the offering price of the shares in this offering.

During the term of the Underwriter’s Warrants, their holders will have the opportunity to profit from an increase in the price of the shares. The existence of the Underwriter’s Warrants may adversely affect the market price of the shares if they become publicly traded and the terms on which we can obtain additional financing. The holders of the Underwriter’s Warrants can be expected to exercise them at a time when we would, in all likelihood, be able to obtain additional capital on terms more favorable than those contained in the Underwriter’s Warrants. See “Underwriting” and “Description of Securities.”

We provide indemnification of our officers and directors and we may have limited recourse against these individuals.

Our Articles of Incorporation and Bylaws contain broad indemnification and liability limiting provisions regarding our officers, directors and employees, including the limitation of liability for certain violations of fiduciary duties. Our shareholders therefore will have only limited recourse against these individuals.

Investors funds will be placed in escrow during the offering period and investors will not have use of their funds during the offering period.

The Underwriters are offering a minimum of 1,000,000 shares of common stock and a maximum of 1,333,334 shares of common stock on a best efforts basis. No commitment by anyone exists to purchase all or any part of the shares offered hereby. Consequently, there is no assurance that the shares being offered will be sold and subscriber’s funds may be escrowed for as long as ninety (90) days, or longer if the Underwriter extends the offering period, and then returned without interest if within such time an aggregate of $6,000,000 of funds are not received in the Escrow Account and the AMEX has not confirmed that the shares offered hereby will be listed on the AMEX. Investors will not have use of any funds paid for the shares during the offering period. See “Underwriting.”

The Underwriter will not make a market in our common stock and has limited experience in conducting public equity offerings.

We have retained Midtown Partners & Co., LLC to serve as the Underwriter in our initial public offering. While the principals of Midtown Partners & Co., LLC have extensive investment banking background and experiences, Midtown Partners & Co., LLC has not led or co-led any prior public offerings. The limited experience of Midtown Partners & Co., LLC may deter investors from investing, which could result in lower dispersion of shares and a less active trading market than could be achieved if we engaged a more experienced underwriter. In addition, Midtown Partners & Co., LLC will not make a market in our common stock after this offering is completed. This may result in lower demand for the shares after the offering.

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USE OF PROCEEDS

The net proceeds from the sale of the shares of common stock offered hereby are estimated to be approximately $5,190,000 if the Minimum Offering is sold and $6,950,000 if the Maximum Offering is sold. We intend to utilize the estimated net proceeds following the offering for the following purposes:

	Minimum Offering			Maximum Offering
	Amount		%	Amount		%
Gross Offering Proceeds (1)	$	6,000,000	100.0	$	8,000,000	100.0
Commissions (2)		480,000	8.0		640,000	8.0
Unaccountable Expense Allowance (3)		180,000	3.0		240,000	3.0
Offering Expenses (4)		150,000	2.5		170,000	2.1
Net Proceeds	$	5,190,000	86.5	$	6,950,000	86.9
Furniture and Fixtures, Equipment (5)		200,000	3.3		275,000	3.4
Marketing (6)		1,250,000	20.8		1,625,000	20.3
Microwave Furnaces (7)		275,000	4.6		600,000	7.5
Research and Development (8)		700,000	11.7		925,000	11.6
Repayment of Shareholder Loans (9)		810,000	13.5		810,000	10.1
Working Capital/Potential Acquisitions (10)		1,955,000	32.6		2,715,000	33.9
Net Cash Proceeds		5,190,000	86.5		6,950,000	86.9
Total Commissions, Unaccountable Expense Allowance, and Offering Expenses		810,000	13.5		1,050,000	13.1
Total Application of Gross Proceeds	$	6,000,000	100.0	$	8,000,000	100.0

(1) We are offering the first 1,000,000 shares on a “best efforts, all-or-none” basis and the remaining 333,334 shares on a “best efforts” basis. If more than the Minimum Offering, but less than the Maximum Offering is sold, the net proceeds will be applied among all of the categories, as set forth below.

(2) We are offering the shares through the Underwriter and will pay a commission of 8% per share sold, provided the Minimum Offering is sold. See “Underwriting.”

(3) We will pay the Underwriter an unaccountable expense allowance of 3% of the price of each share sold, provided the Minimum Offering is sold.

(4) We will pay the offering expenses, and we will then be reimbursed for such costs and expenses from the proceeds of the offering. The offering expenses include legal and accounting fees, blue sky fees, printing, postage and any general administrative expenses directly related to the offer and sale of the shares. See “Underwriting.”

(5) Represents estimated costs of the acquisition of furniture, computer systems, laboratory equipment, power upgrade, analytical and other equipment and fixtures for the production facilities, offices and related tenant improvements.

(6) Represents the estimated costs of website enhancement, public relations expenditures, tradeshow attendance, hiring sales personnel, preparation of sales materials to promote our products and for travel and related expenses.

(7) Represents the cost of the acquisition of one demonstration furnace in the case of the Minimum Offering and two demonstration furnaces in the case of the Maximum Offering.

(8) Represent research and development expenses for materials and contract testing.

(9) Represents repayment of amounts loaned to us by three stockholders. The loans from Mr. Hines are represented by non-interest bearing promissory notes in the principal amounts of $447,000, $63,600, $62,000 and $55,000. All of such notes carry no interest and are payable after June 30, 2009. Of the total principal of $627,600 outstanding loaned from Mr. Hines, $500,000 will be repaid with proceeds from this offering. In addition, this includes the repayment of two loans, each in the amount of $150,000 for a total of $300,000, provided by Mr. Joseph C. Koch, a principal stockholder, in the fourth quarter of 2008 and a loan in the amount of $10,000 provided by a minority stockholder, also in the fourth quarter of 2008, each to fund working capital requirements. These additional loans are due and payable on January 5, 2010 and bear an interest rate of 10%.

(10) Represents the estimated amounts which we will apply toward working capital to cover our expected operating deficits, rent, salaries and general and administrative expenses. We may also apply a portion of our working capital to additional marketing of our product and to strategic acquisitions that are complementary to our business. We have no active negotiations with any potential acquisition target. See “Underwriting.”

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The foregoing represents our best estimate of the allocations of the proceeds of this offering based on our present plans and business conditions. The amounts and timing of expenditures described in the table below for each purpose may vary significantly depending on numerous factors, including, without limitation, the progress of our marketing. There can be no assurances that unforeseen events or changes in business conditions will not result in the application of proceeds of this offering in a manner other than is described in this prospectus. Any such reallocation of the net proceeds of the offering would be substantially limited to the categories set forth above. We believe we will have sufficient working capital for 12 months if the Minimum Offering is sold and 18 months if the Maximum Offering is sold. Pending application, any unused working capital amounts will be invested in interest bearing savings accounts, certificates of deposit and money market accounts where there is appropriate safety of principal.

Once the Minimum Offering is met, additional funds will be allocated as follows: 5% of additional funds to Furniture, Fixtures and Equipment until the full use is reached; 26% of additional funds to Marketing until the full use is reached; 16% of additional funds to Research and Development until the full use is reached; and 53% of additional funds to Working Capital until the full use is reached. Full use in these four categories combined will occur at $6,625,000 in Net Proceeds. A second microwave furnace will be purchased for $325,000 only if the Maximum Offering is reached; if any amount is raised from which Net Proceeds are derived in excess of $6,625,000 but less than the Maximum, that additional amount will be allocated to Working Capital and kept in reserve. No further Use of Proceeds for Debt Repayment will be needed after the Minimum is met.

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DETERMINATION OF OFFERING PRICE

Prior to this offering, there has been no public market for our securities. The offering price of $6.00 per share was determined based on negotiations between the Underwriter and us. Factors considered in determining such price in addition to prevailing market conditions include an assessment of our future prospects. Such price does not have any relationship to any established criteria of value, such as book value or earnings per share. Such price is not indicative of the current market value of our assets. No valuation or appraisal has been prepared for our business. No assurance can be given that the shares can be resold at the public offering price.

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DILUTION

If you purchase common stock in this offering, you will experience an immediate and substantial dilution in the projected net tangible book value of the common stock from the price you pay in this initial offering. The net tangible book value of our common stock as of September 30, 2008 was $(557,749), or $(0.11) per share of common stock. Net tangible book value per share is equal to our total tangible assets, less total liabilities, divided by the number of shares of common stock outstanding.

After giving effect to our sale of common stock in this offering and the receipt and application of the estimated net proceeds (at an initial public offering price of $6.00 per share, after deducting estimated offering expenses), our projected net tangible book value as of September 30, 2008 would be $4,632,251, or $0.79 per share, if the Minimum Offering is sold, and $6,392,251, or $1.03 per share, if the Maximum Offering is sold.

This means that if you buy stock in this offering at $6.00 per share, you will pay substantially more than our current common shareholders paid for their shares. The following represents your dilution:

• If the Minimum Offering is sold, an immediate decrease in net tangible book value to our new shareholders from $6.00 to $0.79 per share and an immediate dilution to the new shareholders of $5.21 per share.

• If the Maximum Offering is sold, an immediate decrease in net tangible book value to our new shareholders from $6.00 to $1.03 per share and an immediate dilution to the new shareholders of $4.97 per share.

The following table illustrates this per share dilution, based on the net tangible book value and the undiluted number of common shares outstanding as of September 30, 2008:

	Minimum Offering			Maximum Offering
Offering price per share of common stock	$	6.00		$	6.00
Net tangible book value per share as of September 30, 2008		(0.11	)		(0.11	)
Net tangible book value per share after this offering		0.79			1.03
Increase attributable to sale of shares to new investors in this offering		0.90			1.14
Projected net tangible book value per share after this offering		0.79			1.03
Dilution per share to new investors	$	5.21		$	4.97
Percentage dilution per share to new investors		87	%		83	%

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DESCRIPTION OF BUSINESS

Introduction

We are an operating stage company that plans to develop, market and distribute industrial microwave technology for the sintering of powdered metals and advanced ceramic powders in the United States and Canada. We will deliver technology to domestic markets through the sale of high-temperature, industrial microwave furnaces and the sublicense of certain intellectual property associated with the microwave sintering of such materials. Sintering is the binding without melting, at a microscopic level, of small particles of metal or ceramics and is frequently used for the production of industrial parts or components.

We plan to derive our future revenue from several sources: (i) sale of industrial microwave furnaces that we purchase from Syno-Therm for high-temperature microwave processing of powdered metals and ceramics; (ii) fixed annual sublicense royalties we will receive from our customers from the sublicense of technology associated with the microwave sintering of powdered metals and advanced ceramics; and (iii) royalties on sales of imported of microwave sintered parts produced off-shore by third parties and sold in the U.S. under our sublicenses. Given sufficient capital and attractive prospects, we also intend to explore marketing our technology to the water treatment and mining equipment industries. Through December 31, 2008, we have derived nominal revenue from the sale of one furnace, and we have received a purchase order in the amount of $295,000 for additional microwave furnaces.

After investigation of various materials technologies, in the spring of 2006 we licensed an industrial microwave intellectual property portfolio of nine patents from Penn State. Our licenses from Penn State are associated with the microwave processing of powdered metal and advanced ceramics, as well as other materials. We obtained exclusive licenses for eight U.S. patents, and a non-exclusive license for one additional U.S. patent, covering advances in material science, including the manufacture of industrial microwave furnaces, microwave processing of powdered metal and specialized microwave processing of advanced ceramic powders. We intend to pursue our target markets by sub-licensing the proprietary processes covered by the patents and selling microwave furnaces and equipment under our distribution agreement with Syno-Therm. These licenses are based on paying license issue fees through 2008 and a minimum royalty at escalating levels through the remaining life of the license. If the payment schedules are met, the license is non-cancellable for the life of the patents. See “License Agreement” for additional information regarding the terms of our license agreement with Penn State.

In 2007 we entered into a Sales Agency Agreement with Syno-Therm. We are the exclusive distributor for Syno-Therm microwave furnaces in North and South America. We believe that these high-temperature systems have significant technical advantages over low-temperature microwave equipment and allow for processing either batch or continuance flow material. Our agreement with Syno-Therm, which expires in 2010, is not cancellable if minimum purchases are made. Under the Sales Agency Agreement, Syno-Therm may not sell any equipment in North and South America during its term except through us, and we may not sell Syno-Therm equipment in Asia or any of Syno-Therm’s other protected areas. However, we may choose to sell microwave furnaces from other manufacturers if it is to our advantage to do so. See “Microwave Furnaces—Sales Agency Agreement” for additional information with respect to our agreement with Syno-Therm.

We believe that our technology has applications in the domestic powdered metal component production industry, where current production methodologies involve the use of gas or electric furnaces with relatively high energy consumption and slow cycle times. Based upon our research, we believe that microwave sintering of powdered metal and metal composites yields components with greater durability, at less than 20% of the energy consumption and with up to a 90% reduction in cycle time. Differences in hardness, density, and other characteristics, are apparent between conventionally produced powdered metal parts and microwave produced

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powdered metal parts, enabling test methods that clearly differentiate microwave sintered components. Utilizing the licensed microwave technology, we also plan to engage in product development to create other products through our research effort in conjunction with Penn State and Arizona State University. Source: Rustum Roy and D.K. Agrawal, Microwave Processing and Engineering Center, Pennsylvania State University, “Revolutionizing Chemistry and Materials Synthesis Using Microwave E/H Fields,” December 2005; Dinesh Agrawal and Motayasu Sato, Pennsylvania State University and National Institute of Fusion Science Japan, “Microwave Processing, Commercialization, and Energy Savings,” presentation at the National Academy of Engineering Regional Meeting at Pennsylvania State University, June 15–16, 2006; D. Agrawal, Materials Research Lab, Pennsylvania State University, “Microwave Sintering of Metallic Materials,” Proceedings of 2000 Powder Metallurgy World Congress, Kyoto, Japan, November 2000.

History. We were founded in 2004 as an Arizona corporation to focus on commercialization of various aspects of materials science. We initially conducted research and product development for a novel method of producing high-purity metal oxides. That research generated new technology, a U.S. patent and progress in the development of commercial production methods and products. The patent that we own covers a methodology of production of certain ceramic powders, which may be complementary to our business in the future. As our research and development continued to evolve in 2006, we focused on the sale of microwave furnaces for high-temperature microwave processing for powdered metals and ceramics. In July 2008, we transferred the domicile of our corporation from Arizona to Nevada.

Business Strategy

The three core elements of our business strategy are:

• Industry-wide promotion of the technologies where supply and demand factors create strong profit margins;

• Protection of those technologies through proprietary or exclusively licensed patents and trademarks; and

• Development of new materials technologies that can be applied near-term.

Microwave Furnaces

A vital part of our microwave technology package are suitable furnaces for high temperature applications. Syno-Therm, our supplier, has considerable experience in producing microwave furnaces for a variety of high temperature uses, and builds models for the sintering of powder metals and ceramics and chemical synthesis. These microwave furnaces have computer controls and other advanced features and operate at temperatures of up to 1700° centigrade. These furnaces range from small laboratory models for experimental and analytical use through large custom multi-stage versions for continuous production of sintered metal powder parts, or large vacuum based furnaces for sensitive materials. The furnaces will be priced from approximately $40,000 for the smallest semi-standard laboratory models to over $500,000 for the largest continuous systems. Microwave furnaces are often simpler in design and construction than similar capacity conventional furnaces, allowing for lower manufacturing costs, and construction in as little as sixty days for some models.

Other important parts of our microwave technology package include sublicenses of our licensed technology from Penn State and service and support of the microwave furnaces we have sold. We will charge annual sublicenses based on a percentage of the value of the output from the licensed microwave furnace, which will vary widely between applications. We plan to provide the technical and engineering support for installation and set-up. We intend to stock spare parts sufficient to provide a reserve for domestic replacements, but will draw the majority of spares from the furnace producers.

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Sales Agency Agreement. We are party to a Sales Agency Agreement with Syno-Therm, effective as of December 15, 2007, which grants us the exclusive right to sell microwave furnaces and relevant devices in North and South America. The Agreement is for a three-year term, and may be terminated by Syno-Therm if we fail to purchase furnaces totaling over $300,000 in the first year of the Agreement, over $400,000 in the second year, and over $500,000 in the third year.

At December 31, 2008, we had annual purchases of $114,998, and an unfulfilled purchase order for $222,100 from Syno-Therm. The Syno-Therm Sales Agency Agreement is in force through December 15, 2009, with these purchases as the minimums have been met for the first year. We expect that this purchase order will be fulfilled in the first quarter 2009.

Upon completion of this offering, we intend to purchase a continuous horizontal furnace from Syno-Therm at a cost of approximately $275,000 for use in our on-going research and development in order to reach a portion of our required purchase amount from Syno-Therm of $400,000 for 2009. This continuous system is vital to our research and process development efforts and for demonstration as part of our marketing efforts, as we believe it will be the first continuous, fully-microwave system in the Western Hemisphere suitable for high temperature use in sintering of powder metals and ceramics.

License Agreement

The second component of our microwave technology package is the intellectual property to produce powdered metal parts using the microwave furnace that we will sublicense to our customers. Without this sublicense a customer would not be able to utilize the microwave furnace to produce powdered metal parts or components. Penn State has licensed us its intellectual property under a License Agreement, dated July 20, 2006. The License Agreement grants us: (i) an exclusive right and license to, with the right to sublicense, the rights existing in eight patents and (ii) a nonexclusive right and license to, with the right to sublicense, the rights existing in one patent, to make and sell any process or product that is covered by at least one unexpired claim of such patent rights (the “Licensed Product”). Penn State retains for itself and for Penn State University the rights to practice under the patent rights for their own research and educational purposes.

In consideration for the licenses, we pay Penn State $25,000 in fees, plus a running royalty of 3% of revenue derived from the sale of a Licensed Product or from any fee collected by us where a Licensed Product is provided by our sub-licensee, plus royalties for all sublicensing revenue. We must pay a minimum of $25,000 in 2009, $50,000 in each of 2010, 2011, and 2012, $100,000 in each of 2013 through 2016, and $250,000 for each year thereafter for the remainder of the term, which continues until the end of the life of the last to expire patent, unless we terminate the License Agreement earlier, regardless of the total royalties we have collected in relation to sales of the Licensed Product. If we fail to make such payments, Penn State may terminate the License Agreement. The last patent expires in July 2021.

Advantages of Microwave Sintering for Powdered Metals and Advanced Ceramics

The powdered metal and ceramic industries use huge amounts of heat energy to sinter, or bind without melting, at a microscopic level, small particles of metal or ceramics. While sintering or firing of ceramics has been done for years, sintering of powdered metal is a more recent innovation that has been widely adopted in the production of industrial parts. In a typical sintering process, powdered metal, such as steel, copper and aluminum, is combined with a binder, pressed into a rough shape, treated at a temperature high enough to attach the powder grains to each other, cooled and, if required, finished.

We believe that there are several significant problems in the powdered metal component industry we can address. These include a dimensional variation in many parts; failure of parts to reach maximum density; inability to create certain desired sizes and shapes; and long, costly and energy-intensive process times. Because of these factors, we have concluded that the powdered metals component industry had difficulty meeting certain requirements or specifications of customers and therefore has not penetrated some high-value markets.

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Based on published studies, we believe that the microwave sintering of powdered metal components, when compared with conventional sintering, has the following advantages:

• Greater durability;

• Greater density and hardness;

• Less post-sintering finishing;

• Lower shrinkage rate, closer to the desired “net shape”;

• Less raw material waste;

• Reduced energy consumption; and

• Faster throughput (based on management’s estimates of shorter processing time).

An advantage of microwave heating is that the entire part couples in the energy field, directly absorbing energy throughout the volume. Conventional gas or electric furnaces may require as much as thirty hours of total heating time for certain materials. The Materials Research Institute at Pennsylvania State University and the National Fusion Institute in Japan estimate the savings in using microwave furnaces for sintering may be as much as 50% in energy costs and 25% in time, depending on the application. These advantages are made possible by the heating characteristics of the microwave sintering process: parts are internally heated by microwave stimulation rather than by being subjected to external convective or radiant heat. Energy is used only to process parts, not to heat the furnace. Microwave heating is much faster, resulting in smaller spaces between metal particles, greater density and hardness, as well as improved dimensional stability, which in many cases eliminates post-sintering finishing steps. This shortens processing time, increases throughput, and reduces manpower needs, maintenance costs and capital expenditures. We believe that this combination of effects will result in substantial cost savings.

Despite the advantages of our microwave sintering process, manufacturers in these markets traditionally have substantial capital investments in their plant and equipment, including in their furnaces. Accordingly, we expect that selling our technology in this market will be subject to budget constraints and resistance to change of long-established production techniques and processes, which could adversely affect the size and timing of our sales. Even if we convince our prospective customers of the efficacy of our technology, they may not have the necessary funds to purchase it. Further, even if such customers have the necessary funds, we may experience delays and relatively long sales cycles due to their internal decision making policies and procedures and reticence to change. There can be no assurance that we will be successful in our efforts to market our products or to develop markets in the manner we contemplate.

Microwave processing of ceramics is in limited use in the U.S. The microwave furnaces being used are low-temperature, very expensive and, in our view, ill-suited to process advanced ceramics, such as nitrides. Until now, management believes that the more rapid adoption of microwave processing in China and Japan has given producers there a distinct advantage over U.S. powdered metal and ceramic processors.

Application of Microwave Processing to Wastewater and Mining

Given sufficient capital and other resources, we plan to explore the marketing of our microwave furnaces and sublicenses to the wastewater treatment and mining industries. In wastewater treatment, current processes are dependent upon the contaminant, location, end use of the flow and many other factors. Based on published research, we believe that microwave technology, acting with chemical reagents and organic compounds, such as trichloroethylene and naphthalene, is more efficient, removing contaminants much faster than is otherwise possible. We may consider the production and marketing of ready-to-use waste water treatment systems, where pumps, filters and/or screens and piping will be added to the microwave unit so that the buyer has a turnkey product. We are also in the process of negotiating additional licenses from a foreign company for wastewater treatment through microwave and its applications. Sources for information regarding wastewater: Appleton, T.J.; Colder, R.I.; Kingman, S.W.; Lowndes, I.S.; Read, A.G., “Microwave Technology for energy efficient processing of waste,” Applied Energy, Vol. 81, 2005; Lin, L.; Yuan, S.; Chen, J.; Xu, Z.; Lu, X.; “Removal of ammonia nitrogen in wastewater by microwave radiation,” Journal of Hazardous Materials, 2008; Gromboni, C.; Kamogawa, M.; Ferriera, A.; Nobrega, J.; Nogueira, A., “Microwave assisted photo-Fenton decomposition of chlorfenvinphos and cypermethrin in residual water,” Journal of Photochemistry and Photobiology, Vol. 185, 2007; Klan, P. and Vavrik, M, “non-catalytic remediation of aqueous solutions by microwave assisted photolysis in the presence of H₂O₂ ,” Journal of Photochemistry and Photobiology A: Chemistry, Vol. 177, 2006; and Polaert, L.; Estel, L.; Ledoux, A., “Microwave assisted remediation of phenl wastewater on activated charcoal,” Chemical Engineering Science, Vol. 60, Issue 22, 2005.

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In metals mining, many current production processes demand that ore be broken and ground, a process known as comminution, into particles as fine as beach sand prior to chemical leaching. Our preliminary sample tests have shown that microwaving the rough mined ore prior to fine grinding makes the ore considerably easier to grind and may also make the metal available without further chemical processes. Published test results have shown that energy use in comminution, which accounts for up to 50% of the metal recovery cost, can be reduced by up to two-thirds using microwave. Sources for information regarding mining: Amankwah, R.A.; Khan, A.U.; Pickles, C.A.; Yen, W.T. “Improved Grindability and gold liberation by microwave pretreatment of a free-milling gold ore.” Institute of Materials, Minerals and Mining, Maney Publishing, 2005; Kingman, S.W.; Jackson, K.; Bradshaw, S.M.; Rowson, N.A.; Greenwood, R., “An investigation into the influence of microwave treatment on mineral ore comminution,” Powder Technology Vol. 146, 2004; Binner, Jon, “Case Study 3: Comminution of Minerals—Presentation at National Academy of Engineering,” Loughborough University, June 2006; Whittles, D.N.; Kingman, S.; Lowndes, I.S.; Griffiths, R.; “An investigation into the parameters affecting mass flow rate of one material through a microwave continuous feed system,” Advanced Powder Technology, Vol. 16, No. 6, 2005; Sayhoun, C.; Rowson, N.A.; Kingman, S.W.; Groves, L.; Bradshaw, S. M.; “The influence of microwave pre-treatment on copper flotation,” Journal of the South African Institute of Mining and Metallurgy, Vol. 105, No. 1, January 2005; Willis, B.A.; Napier-Munn, T.J., “Chapter 5—Principles of Comminution,” Willis Mineral Processing Technology, Elsevier Ltd. 2006.

Market and Industry Overview

Powdered Metal Industry. According to Global Industry Analysts, Inc., an international business research company, sales in the North American powdered metal component industry were valued at $5.6 billion in 2006, which does not include the value of powdered metal components used as OEM parts in imported equipment. Further, it forecasts annual growth of up to 2% through 2010. The Metal Powders Industry Federation estimates that tooling and equipment sold annually to approximately 300 companies in the powdered metal industry totals about $300 million.

Advanced Ceramics Industry. According to the Supplier Relations US, LLC, advanced ceramics industry in the U.S. consists of over 200 producers, with demand of over $10.8 billion in 2007, and a forecasted annual growth rate of demand of over 6% expected through 2010, according to Global Industry Analysts, Inc. This includes sales of high-purity ceramic components for industrial use, but does not include more common ceramics such as dinnerware. Advanced ceramic powders used in these components are valued at approximately $2 billion annually and furnaces and accessories sold into this market are valued at approximately $250 million annually.

Wastewater Treatment Industry. The market for non-chemical water treatment in the U.S. was roughly $1.8 billion in 2007, with an annual growth rate of over 9% expected through 2010, according to Global Industry Analysts, Inc. Technologies in this industry include UV treatment, filtration, sedimentation and thermal processes. We believe that continued emphasis on pollution control and efficiency will support the growth rate for non-chemical waste water treatment.

Mining Equipment Industry. The Freedonia Group, an international business research company, estimates that the North American mining equipment industry generated annual revenues of $4.6 billion in 2006, with $695 million devoted to crushing, pulverizing and screening equipment. It forecasts annual growth of North American mining industry revenues at over 5% through 2011.

Sales and Marketing

We plan to market to the broad category of our customers within our targeted industries, although we believe that the customer with a high-value product (versus a commodity-type product) will be more likely to purchase our products, because it should have more flexibility in its cost structure to accommodate new equipment and more demanding product specifications which may be harder to achieve with conventional processes. We have made only limited marketing efforts to date and had one customer in 2007.

Powdered Metal. Initially, we intend to pursue customers in high-margin areas of powdered metal processing, such as medical instruments, turbine blades and aircraft engine parts. Harder, higher density parts produced via microwave may also take market share from other processing techniques, such as forging or casting that current powdered metal processes can not displace. As awareness of the value of microwave technology in the powder metal industry grows, and as energy costs increase, penetration of lower-margin industry segments may follow.

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We plan to launch a public relations and marketing campaign targeting the powdered metal industry, designed to generate industry and national media coverage. Releases will include information on industry-wide energy savings through microwave, enhanced product quality through microwave, and informational releases about our projects and products.

We plan to advertise our products in industry publications, providing exposure to technical buyers and process engineers who make purchase decisions on sintering systems. We plan to participate in industry tradeshows, the Microwave Processing Consortium, direct mail to powdered metal producers, and other marketing venues. We intend to encourage potential customers to submit designs for sampling, and if possible, to visit laboratory production facilities at Arizona State University and Penn State, where we will have the ability to perform development work and process samples for customers.

We expect to distribute our microwave systems through select manufacturer’s representatives in the powder metal equipment industry. We will select representatives based on their past success and their focus on capital goods for the powder metal industry. We also plan to have an internal direct sales and customer service department to support our sales representatives.

Advanced Ceramics. We plan to market to the advanced ceramics industry in a similar manner to the powdered metal industry, with the following important differences:

• We do not expect that a sublicense will be necessary for certain applications. In specific instances where the customer wishes to produce components covered by the licensed intellectual property, both the price and sublicense terms will be similar to those used in the powdered metal industry;

• Public relations, advertising and other promotional campaigns will target the ceramics industry; and

• We plan to commence an active campaign into ceramics after the powdered metal marketing program is well underway.

Wastewater Treatment Industry. If we pursue this industry, we expect the initial market segment will be the discharge from pharmaceutical and electronics streams, because microwave has a strong advantage in the breakdown of cyclic compounds generated by these industries. Additional target segments could include processing and petroleum processing, which may be added as research and market analyses dictate.

Mining Equipment Industry. If we pursue the mining industry, we will focus on enhanced ore grinding, or comminution, that can be readily mated to industry standard conveyor/material handling systems. Due to its Arizona location, and the suitability of its ores to microwave processing, we will initially target the Arizona copper industry, with other locations and metallic ores to follow.

Research and Development

Development work on the use of microwaves for high-temperature industrial processing continues to take place at the Microwave Processing and Engineering Center at Penn State University under the direction of Dr. Dinesh Agrawal. As a full member of the Microwave Processing Consortium at the University, we have, in association with the other full members, rights of first refusal to any intellectual property developed with Consortium funding.

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If various governmental agencies, including the Department of Defense and the National Science Foundation, make requests for proposals on projects appropriate for us, we plan to apply for grants to support product development and applications for our technology package. There can be no assurance that such grant proposals will be forthcoming or that we will obtain any grants.

During 2007 and 2006, we spent $154,384 and $163,717, respectively, and through September 30, 2008 and September 30, 2007, we spent $114,176 and $90,521, respectively, on research and development. These expenditures were primarily for materials and equipment used in process development activities. In choosing to license technology, rather than develop marketable technology internally, we have minimized our research and development expenditures. As part of our sales and marketing programs, we will process certain materials for existing or potential clients in our demonstration microwave system, which will entail some expense to us. However, if we are processing materials for current or potential customers that are proprietary, involve development of new processes, or involve substantial amounts of machine or employee time, we will require the customer to pay for such activities.

Competition

There are numerous other companies, including Centorr Vacuum Industries, C.I. Hayes, Harper International, Ipsen, Inc., Nabertherm LLC and ThermalTek, that are engaged in the business of manufacturing and marketing conventional electric or gas high temperature sintering and thermal process furnaces. In addition, there are other companies working to introduce microwave or combination microwave conventional furnaces in the United States, such as Carbolite, Muegge and Linn High Therm. All of these companies have substantially greater resources than we do and enjoy well established production facilities and processes, market presence, distribution networks and market share. It is likely that any or all of these other companies are in the process of, and have allocated substantially more resources than we have to, developing their own products that are or would be competitive with our products.

We are not aware of any direct U.S. competition in the powdered metal microwave furnace segment; however, there are approximately thirty producers of custom conventional furnaces. Dana Corporation developed technology to sinter powdered metal in a combination microwave/plasma apparatus, but sold this technology to a firm that we believe has no significant presence in the powdered metal industry. Competition in the high-temperature microwave furnace market for ceramics includes Linn (imported from Europe), Cober and CPI (small scale furnaces). We expect that competition will be based upon price differential at the start of our marketing campaign, with increased differentiation based on quality in later years.

Sources and availability of raw materials and principal suppliers

We intend to sell only equipment manufactured by Syno-Therm. We plan to actively search for other sources of high temperature microwave equipment to insure that we can offer our customers the most cost-effective and efficient equipment available in the market. We are unaware of any industrial process high temperature microwave equipment being built in North America that can currently meet such standards, and therefore will continue to import equipment for the foreseeable future. Increase in material costs used in the manufacture of high temperature microwave equipment may affect the price of our goods, but because these are generally the same materials used in the construction of all other high temperature furnaces, such increases should not harm our competitive position. We expect that the lead times from order to shipment of equipment will be from 60 to 90 days, which appear standard in the industry. We are not aware of scarcity of any component that might cause delays or cancellations, and all materials appear to be in good supply with the manufacturer.

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Sales, marketing and distribution methods

Distribution of our equipment will be through a combination of ocean freight and common carrier through a West Coast port. The equipment will be delivered directly to the customer, with our personnel installing the equipment in concert with customer personnel. We estimate that our distribution times, including customs clearance and installation, should average 45 days, although we have no significant experience in this regard. We plan to carry sufficient insurance on freight to cover any costs associated with loss of cargo or damage in the event of any mishap. Distribution of customer samples and custom process orders is through parcel service or common carrier, depending upon weight.

Our sales efforts require the effective demonstration of the benefits, value, differentiation and validation of our products and services, and training of personnel and departments within a potential customer organization. Accordingly, we expect that the sales cycles for our microwave furnaces and services will be lengthy and unpredictable. The process will begin with the identification of potential customers in selected markets. If the customer is interested, the customer may send samples to us for initial analysis and testing. We would then test run the product through our microwave furnace. If we are able to demonstrate the efficacy of our technology on the application sample to the customer, it may then perform extended durability and other testing. In most cases, we are unable to exert any control or influence over such testing. Upon conclusion of the customer testing, we may be able to determine whether the customer will place an order with us or not. We expect that the customer will need to adapt its product to work with our processes. We expect that the customer’s resistance to change, costs, access to capital and payback on investment will be factors in its decision to adopt and utilize our technology.

We may also be required to negotiate agreements containing terms unique to each prospective customer, which may further lengthen the sales cycle. Furthermore, the capital spending policies of potential customers may have a significant effect on the timing of demand for our products. These policies are based on a wide variety of factors outside of our control, including the requirements of government grants, the resources available for purchasing research equipment and services, the spending priorities among various types of equipment and services and the policies regarding capital expenditures during recessionary periods, all of which can lengthen the sales cycles for our products and services. As a result, we may expend substantial funds and management effort in connection with our sales efforts with no assurance that we will sell our products or services. These lengthy sales cycles may cause revenue and operating results to vary significantly from period to period.

Intellectual Property

In addition to the patents that we have licensed from Penn State, the last of which expires 2021, we also own a patent on technology we developed that covers a methodology of production of certain ceramic powders. This patent will expire in 2024. We have also applied for trademark coverage of several names for products deriving from the intellectual property. We are not pursuing commercialization of this technology at this point.

Governmental Regulation

Effect of existing or probable governmental regulations on the business

We do not know of any current or impending governmental regulations that will impact our business significantly. Any upward changes in tariffs or duties on the type of goods that we import would cause an immediate cost impact, but we plan to pass such cost on to our customers, to the extent feasible under the circumstances.

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Compliance with environmental laws

We are not aware of any issues with compliance with federal, state or local environmental laws regarding our products. Any emissions by our equipment will be a function of the materials processed in them, and as such, will be the responsibility of the operator of the equipment. Our equipment is likely to produce no more, and may produce less, harmful emissions than conventional equipment. In any case, we would expect those emissions to be minimal. Certain materials that are sintered in both microwave and conventional equipment may be considered mildly toxic (i.e. the material is listed in the Toxic Substance Control Act inventory), but any exposure will take place during preparation of the materials, and will be reduced to negligible levels by the consolidation during sintering. We will rely on our customers to have the appropriate compliance mechanisms in place, which should be identical with those in place for conventional processing.

When we perform research and development or custom processing activities in our facility, the only emissions possible are gaseous compounds, typically hydrocarbons, from the heating of the binders used to keep the powders cohesive during the heating process. The scale with which these are currently emitted is negligible; in the future, we may need to install an exhaust gas scrubber, at a likely cost of less than $5,000, to comply with any Arizona or Maricopa County Department of Environmental Quality regulations.

Insurance Coverage

We believe we have adequate product liability insurance. Our product liability insurance coverage per occurrence is $1,000,000 with a $2,000,000 aggregate for our general business liability coverage, with an additional $1,000,000 per occurrence. Our excess or umbrella liability coverage per occurrence is $1,000,000, with an aggregate of $1,000,000.

Employees

We have two contract consultants and three full-time employees at December 31, 2008.

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DESCRIPTION OF PROPERTY

Our office and production and research and development facility consists of approximately 4,000 square feet and is located at 4708 East Van Buren Street, Phoenix, Arizona. The portion of the building leased to us also includes an 800 square foot enclosed yard. The lease will terminate on November 14, 2009, and may be renewed for additional periods. Monthly rent under this lease is $2,000. We lease these premises from an affiliate of Mr.  Hines, our president and one of our principal shareholders.

LEGAL PROCEEDINGS

We are not involved in any pending litigation, legal proceedings or claims.

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MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND

RELATED STOCKHOLDER MATTERS

Our common stock has not been publicly quoted prior to the date of this prospectus. There can be no assurance that a market for our common stock will develop. We intend to list our common stock for trading on the AMEX or other public market after the registration statement, of which this prospectus is a part, becomes effective.

Holders of Common Stock

We have 66 shareholders of record of our common stock as of December 31, 2008.

Dividend Policy

To date, we have not declared or paid cash dividends on our shares of common stock. The holders of the shares of common stock purchased pursuant to this prospectus will be entitled to non-cumulative dividends on the shares of common stock, when and as declared by our board of directors, in its discretion. We intend to retain all future earnings, if any, for our business and do not anticipate paying cash dividends in the foreseeable future.

Any future determination to pay cash dividends will be at the discretion of our board of directors and will be conditions and such other factors as our board of directors may deem relevant.

Securities Authorized for Issuance Under Equity Compensation Plans

Our board of directors adopted the 2008 Stock Option and Restricted Stock Plan (the “Plan”) and our shareholders approved the Plan on June 3, 2008. The Plan authorizes us to issue 1,500,000 shares of our common stock for issuance upon exercise of options and grant of restricted stock awards. We have issued 64,000 options under the Plan as of December 31, 2008.

The Plan authorizes us to grant (i) to the key employees incentive stock options to purchase shares of common stock and non-qualified stock options to purchase shares of common stock and restricted stock awards, and (ii) to non-employee directors and consultants’ non-qualified stock options and restricted stock. Our Compensation Committee will administer the Plans by making recommendations to the board or determinations regarding the persons to whom options or restricted stock should be granted and the amount, terms, conditions and restrictions of the awards.

The Plan allows for the grant of incentive stock options, non-qualified stock options and restricted stock awards. Incentive stock options granted under the Plan must have an exercise price at least equal to 100% of the fair market value of the common stock as of the date of grant. Incentive stock options granted to any person who owns, immediately after the grant, stock possessing more than 10% of the combined voting power of all classes of our stock, or of any parent or subsidiary corporation, must have an exercise price at least equal to 110% of the fair market value of the common stock on the date of grant. Non-statutory stock options may have exercise prices as determined by our Compensation Committee.

Equity Compensation Plan Information As of December 31, 2008
Plan category	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders	64,000	$	1.00	1,436,000
Equity compensation plans not approved by security holders	—		—	—
Total	64,000	$	1.00	1,436,000

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our Financial Statements and notes thereto appearing elsewhere in this prospectus. The following discussion contains forward-looking statements, including, but not limited to, statements concerning our plans, anticipated expenditures, the need for additional capital and other events and circumstances described in terms of our expectations and intentions. You are urged to review the information set forth under the captions for factors that may cause actual events or results to differ materially from those discussed below.

Overview

We were formed in February 2004. Our corporate offices are located at 4708 East Van Buren Street, Phoenix, Arizona 85008, and our telephone number is (602) 218-9292.

Since our inception in 2004, we have been a development stage company, with activities to date focused on organizational activities, research and development, and creation of a business plan and strategies. In 2008 we commenced limited commercial operations through expanding our sales and marketing efforts.

For the Years Ended December 31, 2007 and 2006

Results From Operations

Revenues. Our revenues from operations for the years ended December 31, 2007 and 2006 were $104,764 and $0, respectively, as we transitioned from a development stage company to limited commercial operations and first sale of product in 2007. The revenue recorded in 2007 was from the sale of a single microwave furnace to a large industrial user, and includes revenue from the furnace sales, as well as amounts for freight, duty and customs clearance, and installation of the microwave furnace.

Cost of Sales. Cost of sales on units sold for the years ended December 31, 2007 and 2006 were $83,452 and $0, respectively, due to the first sale of product in 2007. Cost of sales recorded in 2007 includes the cost of the furnace, freight, duty and customs clearance, and installation.

Gross Profit. Gross profit for the years ended December 31, 2007 and 2006 was $21,312 and $0, respectively, due to the commencement of limited commercial operations and first sale of product in 2007. Gross profit was 20.3% in 2007. An outside contractor was used in the installation of the equipment; future installations will not require this contractor because our personnel are now familiar with the installation process. We expect that the use of our personnel rather than contractors should reduce installation costs, a component of total cost of goods, and thereby increase gross profit.

Operating Expenses

Research and Development Expenses. Research and development costs, including consulting research expenses, for the years ended December 31, 2007 and 2006 were $154,384 and $163,717, respectively, a decrease of $9,333 (-5.7%) related to the completion of certain research activities. These activities include purchase of materials, analytical services and consultant’s time in developing an internal knowledge base for support and in determining materials and techniques most appropriate for potential customer’s thermal processing needs.

Selling, General and Administrative Expenses. Selling, general and administrative costs for the years ended December 31, 2007 and 2006 were $463,830 and $372,563, respectively, an increase of $91,267 (24.5%) due to the commencement of limited commercial operations and first sale of product in 2007. The $463,830 of selling, general and administrative costs for the year ended December 31, 2007 consists of management consulting services expenses of $178,960, general and administrative expenses of

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$159,663, rent expense of $24,000, and depreciation and amortization expense of $101,207 and the $372,563 for the year ended December 31, 2006 consists of management consulting services expenses of $170,000, general and administrative expenses of $99,470, rent expense of $24,000, and depreciation and amortization expense of $79,093. Increases in selling expenses in 2007 over 2006 include an increase of $35,738 as we expanded our sales and marketing efforts, including trade show attendance, the development of sales materials and limited advertising in industry specific journals. Increases in general and administrative expenses include (i) approximately $8,960 in management consulting fees as management used various consultants to develop projects; (ii) an increase of $12,799 over 2006 as additional accounting and legal fees were incurred in corporate development and (iii) $22,114 in additional amortization and depreciation expense generated by amortizing the Penn State patent license amounts over a full year versus the partial year in 2006.

Interest Expense

Interest expense was $1,437 and $1,280 for the years ended December 31, 2007 and 2006, respectively, an increase of $157 (12.3%), as we utilized commercial credit to purchase research and development materials.

Operating Loss

Due to limited sales to date, operating losses were ($598,339) and ($537,560) for the years ended December 31, 2007 and 2006, respectively, an increase of $60,779 (11.3%).

Interest and Other Income

Interest income for the years ended December 31, 2007 and 2006 was $4,744 and $0, respectively, due to the sublease of office space to a related party. See “Related Party Transactions.”

Income Tax Provision

There is no provision for taxes for either period because we were a development stage company in such periods, with limited revenues in 2007, and have incurred substantial losses since our inception. No tax benefit is recorded due to the uncertainty of future profitable operations to be able to utilize such tax benefits.

Net Loss. As a result of the above, for the years ended December 31, 2007 and 2006, we recorded a net loss of ($593,595) and ($537,560), respectively, an increase of $56,035 (10.4%).

Basic and Diluted Loss per Share. The basic and diluted loss per share was ($0.23) per share, based on a weighted average number of shares of 2,543,870, for the year ended December 31, 2007, and ($0.29) per share, based on a weighted average number of shares of 2,297,877, for the year ended December 31, 2006, for the reasons previously noted.

For the Nine Months Ended September 30, 2008 and 2007

Results from Operations

Revenues. Our revenues from operations for the nine months ended September 30, 2008 and 2007 were $0 and $104,764, respectively, as we transitioned from a development stage company to limited commercial operations and first sale of product in the first quarter of 2007. During the first nine months of 2008, we had no revenue because we sold no furnaces. The revenue recorded in 2007 was from the sale of a single microwave furnace to a large industrial user. The revenue for September 30, 2007 includes the full price of the equipment plus all amounts for freight, duty and installation.

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On December 9, 2008, we received a purchase order for microwave equipment in the amount of $295,000 plus freight and duty. As this equipment will not be delivered until the first quarter of 2009, no revenue will be booked for 2008 on this sale. We believe additional revenue for the first quarter of 2009 is likely to be $240,000 from the customer who placed the fourth quarter 2008 order and the start of a $140,000 process development contract.

Cost of Sales. Cost of sales on units sold for the nine months ended September 30, 2008 and 2007 was $0 and $83,452, respectively, because we sold no furnaces in the first half of 2008 and had one sale in such period in 2007.

Gross Profit. Gross profit for the nine months ended September 30, 2008 and 2007 was $0 and $21,312, respectively. During the first nine months of 2008, we had no revenue from sales of equipment. Gross margin was 20.3% in 2007. We used an outside contractor in the installation of the equipment, but believe we will be able to make future installations with our own personnel because we are now familiar with the installation process. We believe this will improve our gross profit on future sales. The sales we note under ‘Revenue’ for the fourth quarter of 2008 are expected to provide gross profit of between 25% and 30% provided that costs and expenses remain as currently anticipated.

Operating Expenses

Research and Development Expenses. Research and development costs, including consulting research expenses, for the nine months ended September 30, 2008 and 2007 were $114,176 and $90,521, respectively, an increase of $23,655 (26.1%). These related to the expansion of certain research activities, including trial process development for potential customers.

Selling, General and Administrative Expenses. Selling, general and administrative, including depreciation, costs for the nine months ended September 30, 2008 and 2007 were $662,146 and $381,631, respectively, an increase of $280,515 (73.5%) due to the expansion of limited commercial operations subsequent to the first sale of product in 2007. Increases in general and administrative expenses in 2008 are due principally to (i) an increase of $200,081 in management consulting fees as management used various consultants to develop projects, including preparations for the filing of our registration statement and funding of the private placement, in 2008; (ii) an increase in professional fees of $13,840, an increase of 32.4% as part of the preparation for additional funding through the filing of our registration statement; (iii) an increase of $35,417 in salaries, an increase of 100%, related to the new Director of Sales and Marketing hired September 1, 2008; and (iv) an increase of $31,177 in travel expenses, market research expense and the payroll tax expense associated with increased management consulting fees over the first nine months of 2007.

Interest Expense

Interest expense was $853 and $876 for the nine months ended September 30, 2008 and 2007, respectively, a decrease of $23 (2.6%), as we utilized a Company credit card to purchase research and development materials.

Operating Loss

For the reasons previously stated, operating losses were ($777,175) and ($451,716) for the nine months ended September 30, 2008 and 2007, respectively, an increase of $325,459 (72.0%). Operating losses continued to increase through the fourth quarter of 2008 as we expended funds for marketing and sales of our microwave systems and operating losses will exceed $1,000,000 for the year ended December 31, 2008. We expect these expenditures to lead actual sales for some time as we establish a market base. Further, additional preparation and resulting expense for management, consulting, accounting and legal preparation for the filing of our registration statement are reflected in the fourth quarter of 2008 as well.

Interest and Other Income

Interest income for the nine months ended September 30, 2008 and 2007 were $898 and $8, respectively.

Income Tax Provision

There is no provision for taxes for either period because we were a development stage company in such periods, with limited revenues in 2007, and have incurred substantial losses since our inception. No tax benefit is recorded due to the uncertainty of future profitable operations to be able to utilize such tax benefits.

Net Loss. As a result of the above, for the nine months ended September 30, 2008 and 2007, we recorded net loss of ($776,277) and ($451,708), respectively, an increase of $324,569 (71.9%).

Preferred Stock Dividends

For the nine months ended September 30, 2008 and 2007 respectively, amounts accrued to dividends on our preferred stock issue were $0 and $ 221,143 respectively. This amount was relieved from our Operating Statements at December 31, 2007 as one shareholder converted his accrued dividends of $20,250 to common stock at $1.00 per share and the other preferred shareholder, our President Joseph Hines, abandoned his accrued preferred dividends of $200,893. The Company increased additional Paid-In-Capital equal to the reduction of dividends payable.

Net Loss Available to Common Shareholders

For the nine months ended September 30, 2008 and 2007, respectively, net loss available to common shareholders were ($776,277) and ($672,851), an increase of $103,426 (15.4%).

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Basic and Diluted Loss per Share. The basic and diluted loss per share was $(0.18) per share for the nine months ended September 30, 2008, based on weighted average shares of 4,408,459, and $(0.27) per share for the nine months ended September 30, 2007, based on weighted average shares of 2,476,319, for the reasons previously noted.

Liquidity and Capital Resources

We have provided for our cash requirements to date through private placements of our equity securities and from loans made by shareholders. From 2005 to 2006, we sold units comprised of one share of Series A Convertible Preferred Stock and one common stock purchase warrant in a private placement, resulting in a net of $993,013. From 2006 through July, 2008 we sold units composed of one share of common stock and one common stock purchase warrant in a private placement in which we raised a net of $1,319,799. As of September 30, 2008, we had a working capital deficit of $687,814, including related party payables of $627,600, of which $500,000 will be repaid from the proceeds of the offering, all due to Mr. Hines, our President. In June, 2008, we sold 425,000 restricted shares of our common stock at a price of $1.00 to individual investors, resulting in gross proceeds of $425,000. We sold additional units in the private placement to raise an additional $15,400 in July 2008; we have sold no additional units in the private placement since July 2008. In the fourth quarter 2008, we obtained three loans, for a total of $310,000 from two stockholders, to meet our working capital requirements for the near term. These loans have an annual interest rate of 10%, are repayable on the earlier of the receipt of proceeds from this offering or in January 2010, and include a total of 310,000 warrants exercisable at an exercise price of $3.00 per share with a term of five years from the date of issue.

Based on expected operating results, we anticipate that we will require a minimum of approximately $5,190,000 to fund our operations and full implementation of our business plan over the next twelve months. If we raise the Maximum Offering, we believe we will have enough capital to fund our operations for the next eighteen months. If the implementation of our business plan requires additional capital beyond the offering proceeds, we will need to raise additional working capital through additional offerings of debt or equity. Such additional equity offerings would reduce the percentage ownership of current stockholders.

Our auditors have given us a qualified audit report for 2007, as well as previously, due to a “going concern” opinion, as we have not met our cash needs through operating results. We project sales revenues in 2009 beyond what we have achieved in 2008, however, we believe we will have operating shortfalls for several months. We are not profitable at the current level of expenditure, however, and additional funds must be expended in several areas, including Sales and Marketing, Equipment and Working Capital Reserves to increase the contact with potential customers and the intellectual property and operating base of the company. Please see “Use of Proceeds.” However, the “going concern” issue will continue to influence our activities as we are reliant on raising additional funds from financing activities until such time as operations are financially self supporting.

We have functioned on an operating shortfall basis since the Company was founded in 2004. In the years 2004 through 2007, we were a development stage company and did not expect to generate revenues that would support our activities, which were primarily business and technology development. We became an operating stage company in 2008, as we began to support a sales and marketing effort. We believe that the operating shortfall condition of the Company can be overcome by focusing on the following issues:

• Sales and marketing efforts will be focused on suitable industries, and will be well supported and structured to generate near term revenues. We have begun addressing sales and marketing needs by hiring a qualified sales and marketing director from an industry we target; forming a marketing strategy based on demonstrable benefits of microwave processing in target industries; establishing an activity set we will implement in 2009, including expanded attendance at tradeshows and expanded advertising; and tying these activities to a marketing and sales budget that fits within our budgets for revenue and expense.

• Products will be priced at a level that generates a minimum of thirty percent gross profit after all costs. Our previous large sale in 2007 generated margins lower than this benchmark, and we wish to exceed that margin moving forward. Our goal overall is thirty percent gross profit plus, but we may price certain orders somewhat lower to achieve market penetration, with the

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potential for follow-on higher margin sales. In addition, we will continue to work with our supplier to reduce cost of goods sold where possible based on discounts for grouped and repeat purchases and economies of scale.

• Research and development efforts will be focused on process development for specific customer applications, and will be funded by the customer where possible. Generally, we will not do unfunded research, although, in some cases, we may choose to do so if potential for a result that can be applied immediately in one of our target industries is possible, if the discovery can be protected by patent or other intellectual property, or if the discovery expense can be kept low. We will undertake process development for customers at a price that insures we will recover costs plus a gross profit on our equipment, personnel, materials, etc. In 2009, we believe that we will start a process development program that is based on energy savings, has significant commercial potential and may be eligible for matching funds. These matching funds could come from the Science Foundation Arizona or others. We also believe that we may have opportunities to use equipment, acquired for research and development and demonstration, to produce components that we may sell directly or to offer production services to other companies.

• General and administrative expenses will be kept as low as possible. We have generated relatively large general and administrative expenses relative to other expenses and revenues in 2007 and 2008. We plan no overall reduction in the amount of our general and administrative expenditures, but the transfer of certain tasks such as sales and marketing to other functional areas and the replacement of funding tasks with regulatory tasks will help keep these expenses from growing in size significantly. We do expect increases in certain costs related to our activities as a public company in 2009 when this registration becomes effective, including, but not limited to, legal expenses, accounting expenses and investor relations expenses.

• In summary, we will focus on moving from an operating shortfall situation to a position of sustainability by focusing on near term revenue generation, pricing our products at a profitable level, using process development efforts as a profit center rather than simple sales support, and controlling expenditures in other categories.

The demand for our products appears to be increasing through the fourth quarter of 2008. In addition to the $295,000 purchase order from a customer in the ceramic industry, the same customer has indicated the potential for an additional purchase order for equipment in January 2009. Another potential customer in the ceramic industry has signed a Joint Development Agreement on a process development program with the Company. While these sales or prospective sales are encouraging, they do not constitute all of the 2009 revenue we must generate to reach a point of financial sustainability. Economic conditions, such as those in the automotive industry using powder metal components may delay our penetration of those markets, and overall world economic slowdowns may affect our activities. Revenues generated will help our liquidity in all cases, while revenue targets unmet are likely to decrease our liquidity as already demonstrated.

Cash flows for the twelve month period starting January 1, 2009 are likely to show large uses of cash in operating and investing activities offset by cash provided from financing activities.

• We expect operating activities over the next twelve months to show a use of as much as $3,905,000 in cash for (i) sales and marketing expenses of $1,250,000 as we increase our efforts on our target markets, (ii) research and development costs of $700,000 for 2009 including funding a specific project on energy savings in industrial processing; (iii) working capital for general and administrative expenses of greater than $800,000, and working capital for an as yet unidentified acquisition or joint venture with a profitable microwave engineering firm of greater than $1,155,000 or a reserve for future activities; (iv) a change in cash flow from increased depreciation as we depreciate the equipment to be purchased in investing activities.

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• We expect investing activities to show a use of cash of approximately $275,000 for purchases of microwave furnaces and furniture, fixtures and equipment of approximately $200,000, and the repayment of founders loans of $810,000.

• We also expect financing activities to show cash provided of approximately $5,190,000 based on the completion of this offering, for an increase in cash position at the end of twelve months of approximately $315,000.

Our ability to generate cash at the conclusion of this twelve month period will be based entirely on operating results, as we have no plans at this time for additional financing. We received a purchase order from a customer for $295,000 in the fourth quarter of 2008 and additional purchases of microwave furnaces have been indicated by this customer for the first quarter of 2009. We believe that these new purchases may be indicative of overall market interest in our products. We believe that the use of cash for operations may be turned into a provider of cash by September 30, 2009 for the following reasons: (i) cash provided by financing activities will be utilized to expand sales and marketing and otherwise support marketing efforts; (ii) marketing efforts to date have begun to generate revenues, despite being minimal in expenditure; (iii) management will be able to more effectively focus on growing the company subsequent to the founding and development, and funding stages; (iv) the beginnings of returns on the research processes started in 2008 and expanded in 2009 may generate revenues; and (v) strong indications from current customers and prospective customers indicate that market acceptance and penetration has begun. The monthly average operating use of cash from January through September 2008 was approximately $87,725; using a margin of 30%, this rate of expenditure would require $293,000 per month in revenues to sustain, which we have not yet achieved. We also believe that added expenditures are necessary as noted above, for our sales and marketing efforts, but that those efforts may generate additional revenue sources. We do not expect to be profitable in 2009, but we project that we may be sustainable from a cash standpoint by the fourth quarter 2009. Until this cash flow sustainable position is reached, we will continue to have a “going concern” issue.

Pursuant to our license with Syno-Therm, we were obligated to purchase $300,000 in goods for inventory during 2008 from Syno-Therm. We have purchased goods of $114,998, and have placed an additional unfilled purchase order for $222,100, through December 31, 2008. The Syno-Therm Sales Agency Agreement will stay in force through December 15, 2009 with these purchases. We ordered these furnaces with a fifty percent purchase price deposit as required by Syno-Therm; in return, we have or will obtain a fifty percent deposit from our customer prior to the order from Syno-Therm. We sell these furnaces at a margin over the purchase price, so the collection of the deposit from the customer and the advance of the deposit to Syno-Therm increase our liquidity. In addition, we intend to purchase certain microwave furnaces from Syno-Therm in 2009 for our own use in sales and marketing and research and development through proceeds from this offering that would assist us to reach our 2009 minimums under the Syno-Therm Agreement, in combination with other purchases. If we were to lose our Agreement with Syno-Therm for any reason, we have identified other microwave furnace suppliers that we could work with.

We are obligated to make certain payments to the Penn State Research Foundation under our License Agreement. A fixed payment of $25,000 for the License Issue Fee was paid to PSRF in July 2008 and no further payments are required to be made during 2008, other than royalties that may be generated from revenues. We are aware of no royalties that will be due Penn State under this License Agreement at this time. In 2009, a minimum royalty payment of $25,000 will be payable to the Penn State Research Foundation.

We are obligated to pay lease expenses on certain pieces of equipment. This equipment includes a copier under a five year operating lease commitment at a monthly payment of $117 per month, with the lease agreement expiring in September of 2012; and a telephone system under a three year lease commitment at a monthly payment of $363 per month, with the lease agreement expiring in September of 2010. We are obligated to pay all operating expenses associated with the leases.

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Cash Flow

Net cash used in operating activities was ($474,264) and ($476,711) for the years ended December 31, 2007 and 2006, respectively. The use of cash in 2007 is the result of the net loss of ($593,595), a net change in operating assets and liabilities of approximately $16,698, and partially offset by non-cash charges of approximately $102,633. The cash used in operating activities was used to expand infrastructure, fund research and development and business plan activities and conduct limited commercial operations. The cash used in operating activities in 2006 is the result of a net loss of ($537,560), a net change in operating assets and liabilities of approximately ($28,471), and partially offset by non-cash charges of approximately $89,320. For the year ended December 31, 2007, we were a development stage company and the use of our operating funds was primarily to fund research and development activities and general and administrative expenses.

Net cash used in operating activities for the first nine months of 2008 was ($789,524), and was used primarily in funding the Net Loss for the period of ($776,277). Significant adjustments to reconcile net cash to the net loss were non-cash expenses of $49,022 for depreciation and ($62,269) in other operating items. For the first nine months of 2007, a Net Loss of ($451,708) was partially offset by a non-cash expense of $75,371 for depreciation and other operating items of $54,700 resulting in Net Cash used in operating activities of ($321,637).

Cash used in investing activities was ($102,586) and ($40,709) for the years ended December 31, 2007 and 2006, respectively. The increase in cash used in investing activities for both 2007 and 2006 was due to the purchase of equipment and licensing intellectual property. Cash used in investing activities for the first nine months of 2008 was ($10,962) used to purchase additional laboratory equipment, and cash used in investing activities during the first nine months of 2007 was ($78,469) for patent and license costs, and the acquisition of our initial microwave laboratory furnace.

Cash provided by financing activities was $607,211 and $515,573 for the years ended December 31, 2007 and 2006, respectively. For both years, these monies were provided primarily through the proceeds from the issuance of common stock from private placement activities, and from Founders Loans by our President carried at no interest. Cash provided by financing activities for the first nine months of 2008 was $806,239, as we raised additional funds through the private placement, and cash provided by financing activities for the first nine months of 2007 was $402,394, also provided by funding through the private placement and a Founders Loan from our President.

The net result of these activities resulted in an increase in cash of $30,361 to $39,653 for the year ended December 31, 2007, and a decrease in cash of $(1,847) to $9,292 for the year ended December 31, 2006. For the first nine months of 2008, cash increased $5,753 over the December 31, 2007 balance of $39,653 to $45,406, compared to an increase in cash of $2,288, to a balance of $11, 580 for the nine months ended September 30, 2007.

In the fourth quarter 2008, we obtained three loans, for a total of $310,000 from two stockholders, to meet our working capital requirements for the near term.

Research and Development Costs

Nature of estimates required. We expense all research and development costs as incurred. We incurred costs related to research and development as we prepare our products for market, and will continue to incur these costs as we develop and enhance our products.

Assumptions and approach used. As we begin to move to production, many of these costs will be shifted to expenses related to the production of this product (cost of sales), thus reducing our research and development expense. However, we continue to provide support to the development of enhancements to our existing products as well as invest resources in the development of new products.

Sensitivity analysis. Management continually evaluates our efforts in new product development so that we properly classify costs to either production of existing product or research and development costs related to bringing new/enhanced products to market.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements at December 31, 2007 or at September 30, 2008.

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Critical Accounting Policies and Estimates

Our financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles. Preparation of the statements in accordance with these principles requires that we make estimates, using available data and our judgment, for such things as valuing assets, accruing liabilities and estimating expenses. The following is a discussion of what we feel is the most critical estimates that we must make when preparing our financial statements. Certain accounting estimates used in the preparation of our financial statements require us to make judgments and estimates and the financial results we report may vary depending on how we make these judgments and estimates. Management regularly reviews these estimates and judgments for impairment, valuation and other changes in estimate. Our critical account estimates are set forth below and have not changed during 2007 or 2008. There were no changes to any estimates or judgments that had a material impact on the financial presentation.

Use of estimates. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Revenue recognition. Revenue is recognized when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collection is probable. The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition.” Estimated returns and allowances are accrued at the time of sale. The Company has warranted equipment sold for a period of up to two years. To date, all warranty issues have been covered by the manufacturer. Management does not expect to incur any costs related to the warranty at September 30, 2008.

Research and development. Research and development costs are expensed as incurred.

Cash and cash equivalents. Cash and cash equivalents include money market funds which are carried at cost, plus accrued interest, which approximates market. The Company does not believe that it is subject to any unusual credit or market risk for these instruments. All cash and cash equivalents have an original maturity of three months or less.

Accounts receivable. Accounts receivable consist of unsecured trade receivables from one customer and are recorded based upon the outstanding invoice balance. Receivables considered to be uncollectable are written off. At each of, December 31, 2007 and 2006, no allowance for doubtful accounts was considered necessary. At each of September 30, 2008 and 2007, no allowance for doubtful accounts was considered necessary either.

Inventory. Inventories are stated at cost, based upon the specific identification method. Our inventory consists mainly of research consumables.

Property and equipment. Property and equipment are recorded at cost. Depreciation is being computed over three to five years on the straight-line method based upon the shorter of the estimated useful lives of the assets or the term of the lease.

Intangible assets. Intangible assets are amortized on a straight-line basis over the estimated useful life of the intangible asset.

Advertising. Advertising costs are being expensed as incurred. Advertising costs for the years ended December 31, 2007 and 2006 were $11,169 and $1,831, respectively, and for the nine months ended September 30, 2008 and 2007 are $9,609 and $11,074, respectively.

Warranty obligation. The Company has warranted equipment sold for a period up to two years. To date, all warranty issues have been covered by the manufacturer. Management does not expect to incur any costs related to the warranty at December 31, 2007 or 2006 or at September 30, 2008 or 2007.

Income taxes. The Company accounts for income taxes under the provisions of SFAS No. 109. “Accounting for Income Taxes,” whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between bases used for financial reporting and income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

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On July 2006, FASB Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (“Fin 48”) was issued. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006.

FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. It also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The implementation of Fin 48 has not had a material effect on the Company’s results of operations, financial condition or cash flows. Due to our operating losses incurred to date, we currently pay no income taxes.

Loss per share. Basic EPS is computed as net loss available to common stockholders divided by weighted average shares outstanding. In accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share,” net loss available to common stockholders is computed by reducing net income (or increasing net loss) by any unpaid, but earned, preferred stock dividends. The potential common shares that can be issued total 1,626,860 and 1,407,820 at September 30, 2008 and 2007, respectively, and 567,200 and 1,040,000 at December 31, 2007 and 2006, respectively. However, because the presentation of these potential common shares would be anti-dilutive to the loss per share, basic and diluted loss per share are calculated using the same amounts.

Shipping and handling charges. The Company charges estimated shipping and handling amounts to customers in its invoices and includes these charges as revenue in its Statement of Operations. The Company records the actual shipping and handling costs as a component of cost of goods sold in the Statement of Operations.

Fair Value Measurements. In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements, and does not require any new fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements. The Statement is effective for the fiscal years beginning after November 15, 2007. The Company is assessing SFAS No. 157 and has not yet determined the impact of the adoption of SFAS No. 157 will have its results of operations or financial position, but expects it will not have a material effect on its financial statements.

Quantifying Misstatements. Statements (“SAB No. 108”), which provides interpretive guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 requires registrants to quantify misstatement using both the balance sheet and income statement approaches and to evaluate whether either approach results in quantifying an error that is material based on relevant quantitative and qualitative factors. This guidance is effective for the first fiscal period ending after November 15, 2006. The adoption of SAB No. 108 did not have a material effect on the Company’s results of operations, financial condition or cash flows.

Stock based compensation. The Company adopted the provisions of SFAS 123(R). “Share Based Payments,” in June 2008 with the adoption of the Company’s Stock Option Plan. Accordingly, compensation costs for all share-based awards to employees are measured based on the grant date fair value of those wards and recognized over the period in which the employee is required to perform services in exchange for the award (generally over the vesting period of the award). The Company determines the fair value of the awards using the following information: strike price, share price at valuation date, volatility of stock at valuation date, life expectancy of award and risk free investment rate equal to the interest rate of U.S. Treasury 5 year bonds at date of award. The Company uses these factors to perform a Black Scholes calculation to determine the fair value of the awards and records the resulting amounts as compensation. The Company has no outstanding employee options or share-based payment awards with market or performance conditions.

Recent Pronouncements and Accounting Changes

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS No. 141R”). SFAS No. 141R will significantly change the accounting for business combinations in a number of areas, including the treatment of contingent consideration, contingencies, acquisition costs, in-process research and development and restructuring costs. SFAS No. 141R includes an amendment to SFAS No. 109, “Accounting for Income Taxes.” This statement is effective for fiscal years beginning after December 15, 2008. The Company is assessing the impact of SFAS No. 141R and has not determined whether it will have a material impact on the Company’s results of operations or financial position. In February 2007, the FASB issued SFAS No. 159, which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 also includes an amendment to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” which applies to all entities with available-for-sale and trading securities. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company is assessing the impact of SFAS No. 159 and has not determined whether it will have a material impact on the Company’s results of operations or financial position.

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In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements, and does not require any new fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements. The Statement is effective for the fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FSP FAS No. 157-1 and FSP FAS No. 157-2. FSP FAS No. 157-1 amends SFAS No. 157, “Fair Value Measurements” to exclude SFAS No. 13, “Accounting for Leases,” and other accounting pronouncements that address fair value measurements for purposes of lease classification or measurement under SFAS No. 13. FSP FAS No. 157-2 delays the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP. The Company is assessing SFAS No. 157 and FSP FAS No. 157-1 and 157-2 and has not determined the impact the adoption of SFAS No. 157 will have on its results of operations or financial position.

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DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

The following table sets forth the names, positions and ages of our directors and executive officers. Our directors were elected by the majority written consent of our shareholders in lieu of a meeting. Our directors are typically elected at each annual meeting and serve for one year and until their successors are elected and qualify. Officers are elected by our board of directors and their terms of office are at the discretion of our board.

Name	Age	Position
Joseph Hines	80	President, CEO, and Chairman of the Board
Michael Kirksey	53	Executive Vice President, COO and Director
Gregg A. Linn	46	Chief Financial Officer
Peter Blonsky (1)(2)(3)	49	Director
Jason Mayer (1)(2)(3)	39	Director
Lester R. Garnas (1)(2)(3)	68	Director

(1) Member of Audit Committee.

(2) Member of Compensation Committee.

(3) Member of Nominating Committee.

Joseph Hines has been our President, Chief Executive Officer and Chairman of the Board since 2004, when he co-founded us. From 2002 through 2008, Mr. Hines has been the owner of Desert Valley Consulting, his wholly-owned consulting firm. From 1982 through 2002, Mr. Hines was President, Chief Executive Officer and Chairman of the board of directors of Zila, Inc. (NASDAQ: ZILA). Prior to his employment with Zila, Inc., Mr. Hines served as Executive Vice President of the Chemical/Plastics Group of Dart Industries.

Michael Kirksey has been our Executive Vice President and a member of our board of directors since 2004, when he co-founded us. During 2002 and 2003, Mr. Kirksey served in consulting or contract CFO roles for several startup companies. From 1996 to 2001, he was Interim President, Director of Finance, and Financial Analyst of Rowpar Pharmaceuticals, Inc., a pharmaceutical development and marketing firm, and President of its subsidiary, Micropure, Inc. From 1991 to 1996, he was Executive Vice President of GroMax, Inc., an agricultural equipment manufacturer and marketer. Mr. Kirksey received an undergraduate degree in Biochemistry from the University of Arizona in 1977 and received a Masters degree in Business Administration from Arizona State University in 1979.

Gregg A. Linn has been our Chief Financial Officer since August, 2008. From 2001 to 2004 and 2007 through 2008, Mr. Linn was president of Red Rock Advisors, LLC in Scottsdale, Arizona, providing guidance to a public hi-tech manufacturing firm and consulting for a number of emerging growth and turnaround companies, with emphasis on capital formation, mergers and acquisition. From 2004 to 2007, he was chief operating officer and chief financial officer of Vital Living, Inc., in Phoenix, Arizona, a publicly traded nutritional supplements company. Mr. Linn received an undergraduate degree in Accounting and Business from Michigan State University in 1984 and a Masters in Business Administration, summa cum laude, from Pace University in 1992. Mr. Linn is a certified public accountant.

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Peter Blonsky, Ph.D. has been a member of our board of directors since June, 2008. From 2005 to 2008, Dr. Blonsky was a technical and business development consultant to us. Prior to that, Dr. Blonsky was Director of Applications Engineering and Business Development at Eagle-Picher Industries, Inc., a privately-held, diversified advanced technologies company providing power solutions, gaskets, precision milled parts, and filtration aids located in Phoenix, Arizona during 2005. From 2000 to 2005, he was the Vice President of Business and Product Development at H & T Battery Components, a global company producing deep drawn and stamped metal components located in Waterbury, Connecticut. Dr. Blonsky received a doctorate in Inorganic Chemistry from Northwestern in 1992 and a Masters in Business Administration from Xavier University in 1994. Dr. Blonsky is the inventor or co-inventor on seventeen U.S. and Foreign patents.

Jason Mayer has been a member of our board of directors since June, 2008. He has been a vice president at The Biltmore Bank of Arizona since July 2008. From 2002 through June 2008, Mr. Mayer was a Vice President for Commercial Lending at National Bank of Arizona. He was a senior commercial lender for Wells Fargo Bank N.A. from 2000 through 2002. Mr. Mayer holds a M.S. in Accounting from the University of Wisconsin (1995) and BBA also from the University of Wisconsin (1991). Mr. Mayer is a Certified Public Accountant.

Lester Garnas has been a member of our board of directors since July, 2008. For the past 30 years, Mr. Garnas has been president of his wholly-owned business consulting company, Edgemark Strategic Solutions, LLC, a Pennsylvania limited liability company. Such firm specializes in providing for-profit and non-profit companies with consulting advice and business solutions in marketing and organizational development, with special emphasis on business positioning, analysis and strategy. Representative clients have included American Express, Eastman Kodak, McGraw Hill Companies, The Financial Times, London and other European organizations, as well as start-up companies. Mr. Garnas holds a B.A. degree in Marketing from Parsons University (1962).

Certain Other Key Employees

Kuruvilla Cherian, Ph.D., age 60, has been our Director of Applied Research since 2006. In this capacity Dr. Cherian advises us regarding the development of new approaches to materials processing using microwave and other forms of electromagnetic radiation and applications of these processes for industrial use. From 2002 to 2006 he was the Senior Materials Scientist for Dana Corporation in its Microwave Technologies Division. From 2000 through 2002, Dr. Cherian was Chief Scientist and V.P. of Research with QQC Lasers and Advanced Materials Division. From 1994 through 2000, Dr. Cherian was involved with two major research projects on microwave effects: first for a joint project between Pennsylvania State University and the Naval Research Laboratory and second for a joint project between Pennsylvania State University and the University of Queensland. He holds a doctorate in Solid State Physics and Materials Science from Sardar Patel University, Gujarat, India, which he received in 1984. Dr. Cherian’s work has been published internationally in such journals as Materials Technology, Journal of Materials Research and Nature.

Janice Backus, age 59, has been our Corporate Secretary and Human Resources Director since incorporation. She was the Corporate Secretary of Zila, Inc., from 1982 through 2004, with responsibility for regulatory reporting, senior executive support and operational management of facilities. From 2002 to the present, Ms. Backus has owned and operated her own dance studio.

Robert Desberg, age 51, has been our Director of Sales and Marketing since September, 2008. From 1999 to 2008, he was a manager of Business Development for H.C. Starck, Inc., a global manufacturer of refractory metals and fabricated components for electronics, medical, aerospace and industrial markets. He served in product management, business development and sales capacities for such company. From 1989 to 1998 he was aerospace product manager for Hoogovens Aluminum Corp., and from 1985 to 1989

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he was a metallurgical engineering supervisor at Agro-Tech Corporation (formerly TRW). Mr. Desberg was a senior metallurgical engineer (landing gear systems) for Cleveland Pneumatic Corporation (now BF Goodrich) from 1981 to 1985. He was a metallurgical engineer at Republic Steel Corporation (now Warren Consolidated) from 1979 to 1981. Mr. Desberg has a Bachelor of Science degree in Metallurgy and Materials Science from Case Western Reserve University.

Committees of the Board of Directors

Our board of directors has three committees: an Audit Committee, a Compensation Committee and a Corporate Governance Nominating Committee. Each committee has a written charter approved by the board of directors outlining the principal responsibilities of the committee. These charters are also available on our website. All of our directors, other than our Chief Executive Officer, plan to meet in executive sessions with each committee without management present on a regular basis in 2008.

Audit Committee

Our Audit Committee appoints our independent auditors, reviews audit reports and plans, accounting policies, financial statements, internal controls, audit fees, and certain other expenses and oversees our accounting and financial reporting process. Specific responsibilities include: selecting, hiring and terminating our independent auditors; evaluating the qualifications, independence and performance of our independent auditors; approving the audit and non-audit services to be performed by our auditors; reviewing the design, implementation, adequacy and effectiveness of our internal controls and critical accounting policies; overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to financial statements or accounting matters; reviewing any earnings announcements and other public announcements regarding our results of operations, in conjunction with management and our public auditors; and preparing the report that the SEC will require in our annual proxy statement.

The Audit Committee is comprised of three directors, each of whom is independent, as defined by the rules and regulations of the SEC and the listing standards of the American Stock Exchange. The members of our Audit Committee are Mr. Mayer, Dr. Blonsky and Mr. Garnas. On April 7, 2008 the Audit Committee adopted a written charter. Mr. Mayer is the Chairman of the Committee and the board of directors has determined that Mr. Mayer qualifies as an “audit committee financial expert,” as defined under the rules and regulations of the SEC, qualifies as “financially sophisticated” under the listing standards of the American Stock Exchange, and is independent as noted above.

Compensation Committee

Our Compensation Committee assists our board of directors in determining the development plans and compensation of our officers, directors and employees. Specific responsibilities include approving the compensation and benefits of our executive officers; reviewing the performance objectives and actual performance of our officers; and administering our stock option and other equity compensation plans.

Our Compensation Committee is comprised of three Directors, whom the board considers to be independent under the rules of the SEC and the listing standards of the AMEX. On April 7, 2008, the board of directors adopted a written charter. The members of our Compensation Committee are Dr. Blonsky, Chairman, Mr. Mayer and Mr. Garnas.

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Corporate Governance and Nominating Committee

Our Corporate Governance and Nominating Committee assists our board of directors by identifying and recommending individuals qualified to become members of our board of directors, reviewing correspondence from our stockholders, and establishing, evaluating and overseeing our corporate governance guidelines. Specific responsibilities include the following: developing criteria for membership on our board of directors, recruiting, reviewing and nominating candidates for election to our board of directors, evaluating and making recommendations regarding the functions, contributions and composition of committees of our board of directors, making recommendations to our board of directors regarding corporate governance matters; reviewing stockholder nominees for election to our board of directors, and developing and recommending governance and nominating guidelines and principles applicable to our board of directors.

Our Nominating Committee is comprised of three Directors, whom the board considers to be independent under the rules of the SEC and the listing standards of the AMEX. The members of our Nominating Committee are Dr. Blonsky, Chairman, Mr. Mayer and Mr. Garnas. The Nominating Committee was created by our board of directors on April 7, 2008, when the board of directors adopted a written charter.

Consulting and Employment Agreements; Termination of Employment and Change-in-Control Arrangements

The Company has entered into an employment agreement with Mr. Hines, as of October 1, 2008. The agreement will have a term of three years. Mr. Hines will receive a base salary of $96,000 annually during the term of the agreement, including an additional automobile allowance of $500 per month. Mr. Hines is also eligible to participate in any bonus or stock option plan of the Company.

The Company has entered into an employment agreement with its executive vice president and chief operating officer, Mr. Kirksey, as of October 1, 2008. The agreement will have a term of three years. Mr. Kirksey will receive a base salary of $120,000 annually during the term of the agreement, including an additional automobile allowance of $500 per month. Mr. Kirksey is also eligible to participate in any bonus or stock option plan of the Company.

The Company’s corporate secretary, Ms. Backus, has also entered into an employment agreement with Ms. Backus, as of October 1, 2008. The agreement will have a term of three years. Ms. Backus will receive a base salary of $65,000 annually during the term of the agreement, including an additional automobile allowance of $300 per month. Ms. Backus is also eligible to participate in any bonus or stock option plan of the Company.

Each of the above employment agreements automatically renews at the end of the term for successive one-year terms unless one party provides a written notice of non-renewal to the other party thirty (30) days prior to the last day of the term. The employment agreements may be terminated prior to the end of the term by: (i) the Company for “Cause,” as defined therein; (ii) the executive for “Good Reason”; or (iii) upon thirty days written notice given to the other party for any reason except death or disability. “Cause” is defined as, among other things, a willful and substantial failure to fulfill the duties as required under the agreement. If the Company terminates the agreement for Cause, the Company shall be relieved of all further obligations thereunder other than the obligation to pay the executive: (i) his or her salary through date of termination; (ii) any deferred compensation due the executive; and (iii) any other benefits to the extent unpaid. “Good Reason” is defined as, among other things, the failure of the Company to substantially

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comply with its requirements under the agreement. If the executive terminates the agreement for Good Reason, the Company shall pay the executive: (i) his or her annual salary that would have been payable over the balance of the term of the agreement, provided that Company will pay such amount to the executive over the period that the compensation would have been due had the termination not occurred; (ii) any declared and accrued, but as of then unpaid, bonus or stock options grant, all of which shall be deemed immediately vested; (iii) any accrued vacation pay; (iv) any amounts payable pursuant to the Company’s benefit plans. If the executive terminates his or her employment for other than for Good Reason, the Company’s obligations shall terminate other than for: (i) his or her salary through date of termination; (ii) any deferred compensation due the executive; and (iii) any other benefits to the extent unpaid.

If the executive dies prior to the completion of the term, the agreement will automatically terminate. Upon executive’s death, the Company’s obligations under the agreement terminate other than for: (i) payment of any death benefit compensation under other contracts; (ii) payment of the amounts due under the term life insurance policy; (iii) full vesting and non-forfeiture of stock options granted to the executive, and (iv) the timely payment or provision of other benefits. If the Company determines that the executive has become disabled, the agreement shall terminate thirty days after executive’s receipt of written notice. Upon termination for disability, the Company’s obligations under the agreement terminate other than for: (i) salary payments through the termination date; (ii) accrued bonus through the termination date; (iii) payment of pension, 401(k), and other disability benefits; (iv) full vesting and non-forfeiture of stock options; and (v) the receipt of fully-paid welfare-benefit plans.

Upon a “Change in Control,” generally defined as a majority change in Company ownership or Board membership, if the executive terminates the agreement for Good Reason or if the Company terminates for other than Cause within one year of the Change in Control, the Company shall: (i) pay his or her annual salary that would be payable for a 24-month period, provided that it will pay such amount to the executive over the period that the compensation would have been due had the termination not occurred; (ii) any declared and accrued, but as of then unpaid, bonus or stock options grant, all of which shall be deemed immediately vested. The Company also has a consulting agreement with Red Rock Advisors, LLC pursuant to which Gregg Linn is engaged as our chief financial officer on an independent contractor basis. The agreement was entered into on August 15, 2008 and terminates on July 31, 2009. Pursuant to the agreement, the Company is obligated to pay Mr. Linn $5,000 per month prior to the effectiveness of this registration statement and $6,000 per month thereafter. In addition, Mr. Linn has been granted 25,000 options, which vested on August 15, 2008. In addition, Mr. Linn will receive 30,000 options upon the completion of the initial public offering under this registration statement. All options will be exercisable at $1.00 per share and will have a term of five years from the date of grant. We have granted options to no other executive officer to date.

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EXECUTIVE COMPENSATION

The table below sets forth all cash compensation paid or proposed to be paid by us to the chief executive officer and the most highly compensated executive officers, and key employees for services rendered in all capacities to us during fiscal years 2007 and 2006.

Summary Compensation Table

As of December 31, 2008

Name (a)	Year (b)	Consulting Fees ($) (c)		Bonus ($) (d)	Stock Awards ($) (e)	Option Awards ($) (f) (1)	Non-Equity Incentive Plan Compensation ($) (g)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)	All Other Compensation ($) (i)	Total ($) (j)
Joseph Hines, Chairman, CEO and President	2008 2007 2006	$ $ $	80,000 60,000 60,000	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	$ $ $	80,000 60,000 60,000
Michael Kirksey, Executive Vice President, General Manager and Director	2008 2007 2006	$ $ $	80,000 60,000 60,000	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	$ $ $	80,000 60,000 60,000
Karl Cherian, Ph.D., Director of Applied Research	2008 2007 2006	$ $ $	119,250 108,000 44,450	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	-0- -0- -0-	$ $ $	119,250 108,000 44,450
Janice L. Backus, Secretary	2008	$	54,167	-0-	-0-	-0-	-0-	-0-	-0-	$	54,167
	2007	$	50,000	-0-	-0-	-0-	-0-	-0-	-0-	$	50,000
	2006	$	50,000	-0-	-0-	-0-	-0-	-0-	-0-	$	50,000
Gregory Linn Chief Financial Officer	2008	$	22,500	-0-	-0-	25,000	-0-	-0-	-0-	$	47,500

Compensation Policy. Our executive compensation plan is based on attracting and retaining qualified professionals who possess the skills and leadership necessary to enable us to achieve earnings and profitability growth to satisfy our stockholders. We must, therefore, create incentives for these executives to achieve both our goals and individual performance objectives through the use of performance-based compensation programs.

No one component is considered by itself, but all forms of the compensation package will be considered in total. Wherever possible, we will use objective measurements to quantify performance, but many subjective factors still come into play when determining performance.

Compensation Components. The main elements of our compensation package will consist of salary, stock options, and bonus. We plan to review the salary for each executive officer and compare it to the prior year, with consideration given for increase based on performance. During 2006 and 2007, our executive officers were independent contractors and had base fees of $60,000 each. We made no equity awards to our officers or directors in 2007. Our executive officers became employees on October 1, 2008, which is the effective date of our employment agreements with them. After we commence revenue operations we will review their compensation packages for possible adjustments. Salary adjustments will be based on both individual and our performance and will include both objective and subjective criteria specific to each executive’s role and responsibility with us. To date, we have been granted no bonuses.

Contracts for the compensation for Mr. Hines and Mr. Kirksey in the amount of $96,000 and $120,000, respectively, on an annual basis, are based on the three-year length of the contracts and the need to pay viable salaries for the position. At March 31, 2008, Mr. Hines and Mr. Kirksey received compensation increases from the previous rate of $5,000 per month to $7,000 per month. These actual rates, equivalent to $84,000 annually, represent voluntary pay cuts from the stated contract amounts. No immediate increase is planned in these compensation rates despite the stated contract amounts, nor is any difference being accrued to the Company. When we find it advisable to increase salaries due to need and opportunity, any changes in actual compensation rates from the current level will be determined and reviewed by the Compensation Committee prior to any adjustments.

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Outstanding Equity Awards at Fiscal Year-End

	Option Awards						Stock Awards
Name (a)	Number of Securities Underlying Unexercised Options (#) Exercisable (b)	Number of Securities Underlying Unexercised Options (#) Unexercisable (c)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)	Option Exercise Price ($) (e)		Option Expiration Date (f)	Number of Shares or Units of Stock That Have Not Vested (#) (g)	Market Value of Shares or Units of Stock That Have Not Vested ($) (h)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (i)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (j)
Joseph Hines Chairman, CEO and President	—	—	—	$	—	—	—	—	—	—
Michael Kirksey, Executive Vice President, General Manager and Director	—	—	—	$	—	—	—	—	—	—
Karl Cherian, Ph.D., Director of Applied Research	—	—	—	$	—	—	—	—	—	—
Janice L. Backus, Secretary	—	—	—	$	—	—	—	—	—	—
Gregory Linn, Chief Financial Officer	25,000	25,000	—	$	1.00	8/15/2013	—	—	—	—

The table above indicates options granted under the Plan to officers in fiscal 2008. Mr. Linn received 25,000 options as part of the 2008 Stock Option Plan, all of which were vested at the time of issuance. All of these options have an exercise price of $1.00 each and have a 5-year expiration period from the date of issuance.

Stock Option Plan

Our board of directors adopted the 2008 Stock Option and Restricted Stock Plan (the “Plan”) and our shareholder approved the Plan on June 3, 2008. The Plan authorizes us to issue 1,500,000 shares of our common stock for issuance upon exercise of options and grant of restricted stock awards. As of December 31, 2008, we have issued 64,000 options under the Plan, 25,000 of which were granted to Gregg Linn, our Chief Financial Officer.

The Plan allows for the grant of incentive stock options, non-qualified stock options and restricted stock awards. The Plan authorizes us to grant (i) to the key employees incentive stock options to purchase shares of common stock and non-qualified stock options to purchase shares of common stock and restricted stock awards, and (ii) to non-employee directors and consultants’ non-qualified stock options and restricted stock. Our Compensation Committee will administer the Plan by making recommendations to the Board or determinations regarding the persons to whom options or restricted stock should be granted and the amount, terms, conditions and restrictions of the awards.

Incentive stock options granted under the Plan must have an exercise price at least equal to 100% of the fair market value of the common stock as of the date of grant. Incentive stock options granted to any person who owns, immediately after the grant, stock possessing more than 10% of the combined voting power of all classes of our stock, or of any parent or subsidiary corporation, must have an exercise price at least equal to 110% of the fair market value of the common stock on the date of grant. Non-statutory stock options may have exercise prices as determined by our Compensation Committee.

The Compensation Committee is also authorized to grant restricted stock awards under the Plan. A restricted stock award is a grant of shares of the common stock that is subject to restrictions on transferability, risk of forfeiture and other restrictions and that may be forfeited in the event of certain terminations of employment or service prior to the end of a restricted period specified by the Compensation Committee.

Compensation of Directors

We had no non-employee directors in 2007 and paid no cash compensation or issued no stock options to persons serving as directors. During 2008, we granted the non-employee directors, who are neither employees nor our affiliates, options to purchase 2,500 shares of common stock per calendar quarter of service on the Board and our Audit, Compensation and Corporate Governance and Nominating Committees. To date, we have granted a total of 20,000 director options to our three outside directors. The options will be exercisable at $1.00 per share for a term of seven years and such options will vest as follows: 2,500 upon grant and 2,500 in each succeeding quarter, provided that the grantee remains a director. In 2008, non-employee members of our board of directors accrued compensation per quarter of $1,000 for their services as Board members. The non-employee directors will be reimbursed for their out-of-pocket costs in attending the meetings of the board of directors.

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Consulting Agreement

On February 1, 2008, we entered into a consulting agreement with Steven Scott for consulting services relating to our financing, evaluating financing alternatives and sources for us and the introduction of firms to provide investor relations services. Mr. Scott receives consulting fees of $7,500 per month during the term of such agreement, which terminates on January 31, 2009.

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TRANSACTIONS WITH RELATED PERSONS, PROMOTERS

AND CERTAIN CONTROL PERSONS

We lease our production, research and development and office facility, located at 4708 East Van Buren Street, Phoenix, Arizona from JH Realty, LLC (“JH Realty”), an entity wholly owned by Mr. Hines, our President, Chief Executive Officer and Chairman of the Board, at a rate of $2,000 per month. We believe this rental rate to be at or below market in the area for similar facilities. The lease terminates on November 14, 2009, and we may renew it for additional 12 month periods. The portion of the building leased to us contains approximately 4,000 square feet along with an 800 square foot enclosed yard. We have made $144,880 in improvements to the leased premises through September 30, 2008. We may remove these improvements provided we repair any damage caused by the removal. On December 31, 2007, we issued a non-interest bearing promissory note to JH Realty in the principal amount of $62,000, consolidating older promissory notes and representing outstanding rent due on our leased premises for the years 2005, 2006 and 2007. Such note is due and payable on June 30, 2009.

In 2005, Mr. Hines converted his outstanding non-interest bearing loans to us, totaling $940,000, into units comprised of 470,000 shares of Series A Convertible Preferred Stock and common stock purchase warrants. Such warrants are exercisable to purchase stock at a price of $1.00 per share through 2010. In 2007, Mr. Hines converted all of his Preferred Stock into 940,000 shares of common stock and declined to receive any dividends that we paid on the Preferred Stock at that point. In 2006, Mr. Hines made non-interest bearing advances to us totaling $447,000 to finance our operations. In 2007 Mr. Hines made loans to us of $63,600 and $55,000. All of these loans are represented by non-interest bearing notes due and payable after June 30, 2009. We intend to repay a total of $500,000 principal amount of these loans from the proceeds of this offering, leaving $65,600 due Mr. Hines after the completion of this offering.

We used the funds loaned by Mr. Hines to provide working capital for the Company. In 2006, a total of $447,000 was loaned by Mr. Hines to the Company in monthly amounts (excepting May) ranging from $2,000 to $67,000. During this period, the Company experienced an operating loss of $(537,560) and also added $139,940 to our patent portfolio from the award of U.S. Patent 7,105,079 and the license value of the Penn State patent portfolio. The cash flow shortfall during 2006 was primarily associated with the market development and technological process development for microwave furnaces.

In 2007, we used funds totaling $118,000 loaned by Mr. Hines to fund working capital for the Company. These funds were loaned to us in amounts ranging from $1,600 to $25,000 in January, February, March, July, October and November of 2007. During 2007, we experienced an operating loss of $(598,339). The cash flow shortfall during 2007 was primarily associated with the market development and technological process development for microwave furnaces.

In April 2006, we entered into an Agreement and Mutual Release (the “Agreement and Mutual Release”) with Rosemary Drlik, Romuald Drlik and their wholly-owned corporation, Avion Romuald, S.A. (“ARSA”), relating to certain metal oxide technology under development. Prior to April 2006, we employed Rosemary Drlik as our director of purchasing and Romuald Drlik as our Vice President of Research and Development. Mrs. Drlik also was a member of our Board of Directors and ARSA owned more than ten percent of our outstanding common stock at such time. Under the terms of the Agreement and Mutual Release, we transferred to ARSA certain equipment with a book value of $10,227 which we utilized in our metal oxide development projects; the parties agreed to share technology developments relating to the production of metal oxides; and they granted each other a non-exclusive, non-transferable license to ARSA for certain proprietary or patented technology relating to the production of metal oxides, with accompanying royalty cross-payment obligations if one or both of the parties generates net revenue based upon the implementation of such technology. We are not actively pursuing the commercialization of our metal oxide technology given our focus on microwave sintering. In April 2006 Mr. and Mrs. Drlik resigned from all positions they held with us and Mr. Hines purchased 625,000 shares of common stock from ARSA for $20,000, which stock represented its entire ownership interest in us.

In July 2008, Mr. Peter Blonsky, a member of our Board of Directors, received compensation for consulting services rendered prior to becoming a director of our Company, of 19,000 options to purchase shares of our common stock with an exercise price of $1.00 per share and a term of five years.

A principal stockholder, Joseph Koch, made two loans to the Company of $150,000 each in November 2008 and December 2008, for a total of $300,000, to fund working capital requirements for the fourth quarter 2008 and the first quarter 2009. Each of these loans have an annual interest rate of 10%, have a maturity date of January 5, 2010, are payable from the proceeds of this offering if completed before the maturity date, and include 150,000 warrants per note, for a total of 300,000 warrants. These warrants have a term of five years from the date of issue and are exercisable at a price of $3.00 per share.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of December 31, 2008, the number and percentage of outstanding shares of common stock beneficially owned by (a) each person known by us to beneficially own more than five percent of such stock, (b) each director of the Company, (c) each named officer of the Company, and (d) all our directors and executive officers as a group. We have no other class of capital stock outstanding.

Name and Address of Beneficial Owner(1)	Amount and Nature of Beneficial Ownership(2) Before Offering	Percent of Class Before Offering(3)		Percent After Sale of Minimum Offering(3)		Percent After Sale of Maximum Offering(3)
Joseph Hines, Chairman, CEO and President (4)	2,510,000	46.93	%	39.54	%	37.57	%
Michael Kirksey, Executive Vice President, General Manager and Director (5)	500,000	10.25	%	8.51	%	8.05	%
Gregg A. Linn, Chief Financial Officer (6)	25,000	0.51	%	0.42	%	0.40	%
Peter Blonsky, Ph.D., Director (7)	49,500	1.01	%	0.84	%	0.79	%
Jason Mayer, Director (8)	17,500	0.36	%	0.30	%	0.28	%
Lester R. Garnas, Director (9)	15,000	0.31	%	0.25	%	0.24	%
Janice Backus, Corporate Secretary (10)	75,000	1.54	%	1.28	%	1.21	%
Arlan Akerlind (11)	385,000	7.65	%	6.38	%	6.05	%
Joseph C. Koch (12)	1,070,250	19.81	%	16.72	%	15.89	%
All executive officers and directors as a group (7 persons )	3,192,000	58.98	%	49.78	%	47.32	%

(1) The address of these persons is c/o 4708 East Van Buren Street, Phoenix, Arizona 85008.

(2) The foregoing beneficial owners hold investment and voting power in their shares.

(3) The percent of Common Stock owned is calculated using the sum of (A) the number of shares of Common Stock owned and (B) the number of warrants and options of the Beneficial Owner that are exercisable within 60 days, as the numerator, and the sum of (Y) the total number of shares of Common Stock outstanding (4,877,850) and (Z) the number of warrants and options of the Beneficial Owner that are exercisable within 60 days as the denominator.

(4) Includes 470,000 warrants and 0 options to purchase shares of common stock exercisable within 60 days.

(5) Includes 0 options to purchase shares of common stock exercisable within 60 days.

(6) Includes 25,000 options to purchase shares of common stock exercisable within 60 days.

(7) Includes 26,500 options to purchase shares of common stock exercisable within 60 days.

(8) Includes 7,500 options to purchase shares of common stock exercisable within 60 days.

(9) Includes 5,000 options to purchase shares of common stock exercisable within 60 days.

(10) Includes 0 options to purchase shares of common stock exercisable within 60 days.

(11) Includes 155,000 warrants and 0 options to purchase shares of common stock exercisable within 60 days.

(12) Includes 525,000 warrants and 0 options to purchase shares of common stock exercisable within 60 days.

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UNDERWRITING

Midtown Partners & Co., LLC (“Midtown”) has agreed, subject to the terms and conditions of the underwriting agreement among the Company and Midtown as representative of the several underwriters, to act as the sales agent of the Company for the sale of shares offered pursuant to this prospectus at the public offering price of $6.00, less the underwriting discount set forth on the cover page of this prospectus.

The underwriters have made no commitment to purchase all or any part of the shares of common stock offered pursuant to this prospectus but have agreed to use their best efforts to sell the Minimum Offering of 1,000,000 shares of common stock and the Maximum Offering of 1,333,334 shares of common stock within ninety days of the date of this prospectus, subject to an extension at the underwriters’ option for an additional ninety day period. All funds received in connection with the sale of the shares will be promptly transmitted to Signature Bank, a New York State chartered bank, (the “Escrow Agent”) pursuant to the terms of an escrow agreement among the Company, the Escrow Agent and Midtown.

The Underwriting Agreement provides for reciprocal indemnification between the Company and Midtown against certain liabilities in connection with this prospectus and the registration statement, of which this prospectus forms a part, including liabilities under the Securities Act.

All payments for subscriptions hereunder should be made payable to “Signature Bank” as Escrow Agent for the Company’s Escrow Account. If, prior to the termination of the offering period, at least an aggregate of $6,000,000 of funds are not received in the Escrow Account and AMEX does not confirm the listing of the shares on the AMEX, the offering will terminate and funds deposited with the Escrow Agent will be returned to investors promptly without interest. The shares are being offered by the Underwriter subject to the delivery of an opinion of our counsel and various other conditions.

Midtown has advised us that they propose to offer the shares to the public at the initial public offering price set forth on the cover page of this prospectus. The Underwriter may allow to certain dealers, who are members of FINRA, concessions, not in excess of $ per share, of which no reallowance will be made to other dealers who are members of FINRA.

We have agreed to pay to Midtown a commission of 8% of the price of each share sold in this offering, as well as a non-accountable expense allowance of 3% of the gross proceeds of the offering, of which $25,000 has been paid as of the date of this prospectus. We have also agreed to pay all expenses in connection with qualifying the shares offered hereby for sale under the laws of such states as the underwriters may designate, including expenses of counsel retained for such purpose by the underwriters.

We will sell to Midtown, as additional compensation, warrants (“Underwriter’s Warrants”) to purchase one Underwriter’s Warrant for every twenty shares sold in the offering, which is 50,000 Underwriter’s Warrants if we sell the Minimum Offering and 66,667 Underwriter’s Warrants if we sell the Maximum Offering. The Underwriter’s Warrants may be exercised at any time commencing one year from the completion of the offering and continuing for four years thereafter to purchase shares of common stock at an exercise price equal to 150% of the offering price of the shares in this offering.

Midtown is principally engaged in providing securities brokerage, investment banking and related financial services to individuals, institutions and corporations. Midtown also provides consulting and financial services to private and public entities seeking to obtain or participate in financing arrangements. Although the executive officers of Midtown have extensive investment banking background and experience, Midtown has never led or co-led any public equity offerings.

Prior to this offering, there has been no public trading market for our securities. Consequently, the initial public offering price of the shares has been determined by negotiations between us and Midtown and bears no relationship to our earnings, book value, net worth or other financial criteria of value and may not be indicative of the market price of our common stock after this offering. Among the factors considered in determining the offering price were our financial condition and prospects, market prices of similar securities of comparable publicly-traded companies, certain financial and operating information of companies engaged in activities similar to ours and the

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general condition of the securities market. Additionally, the initial public offering price of our shares may not be indicative of the prices that may prevail in the public market.

Stabilization, Short Positions and Penalty Bids

The underwriters may engage in stabilizing transactions, syndicate covering transactions, and penalty bids or purchases for the purpose of pegging, fixing or maintaining the price of the common stock, in accordance with Regulation M under the Securities Exchange Act of 1934 (the “Exchange Act”):

• Stabilizing transactions permit bids to purchase the underlying security so long as the stabilizing bids do not exceed a specified maximum;

• Syndicate covering transactions involve purchases of the common stock in the open market after the distribution has been completed in order to cover syndicate short positions. If the underwriters sell more shares than could be covered by the maximum number of shares offered hereby, a naked short position, the position can only be closed out by buying shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there could be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering; and

• Penalty bids permit the underwriters to reclaim a selling concession from a syndicate member when the common stock originally sold by the syndicate member is purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of our common stock or preventing or delaying a decline in the market price of the common stock. As a result, the price of the common stock may be higher than the price that might otherwise exist in the open market. These transactions may be effected on the AMEX or otherwise and, if commenced, may be discontinued at any time.

Neither we nor the underwriters make any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the price of the common stock. In addition, neither we nor the underwriters make representation that the underwriters will engage in these stabilizing transactions or that any transaction, once commenced, will not be discontinued without notice.

Foreign Regulatory Restrictions on Purchase of Shares

We have not taken any action to permit a public offering of shares of our common stock outside the United States or to permit the possession or distribution of this prospectus outside the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to this offering of shares of our common stock and the distribution of the prospectus outside the United States.

Italy. This offering of shares of common stock has not been cleared by Consob, the Italian Stock Exchanges regulatory agency of public companies, pursuant to Italian securities legislation and, accordingly, no shares may be offered, sold or delivered, nor may copies of this prospectus or of any other document relating to the shares be distributed in Italy, except (1) to professional investors (operatori qualificati); or (2) in circumstances which are exempted from the rules on solicitation of investments pursuant to Decree

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No. 58 and Article 33, first paragraph, of Consob Regulation No. 11971 of May 14, 1999, as amended. Any offer, sale or delivery of the shares or distribution of copies of this prospectus or any other document relating to the shares in Italy under (1) or (2) above must be (i) made by an investment firm, bank or financial intermediary permitted to conduct such activities in Italy in accordance with the Decree No. 58 and Legislative Decree No. 385 of September 1, 1993, or the Banking Act; (ii) in compliance with Article 129 of the Banking Act and the implementing guidelines of the Bank of Italy, as amended from time to time, pursuant to which the issue or the offer of securities in Italy may need to be preceded and followed by an appropriate notice to be filed with the Bank of Italy depending, inter alia, on the aggregate value of the securities issued or offered in Italy and their characteristics; and (iii) in compliance with any other applicable laws and regulations.

Germany. The offering of shares of common stock is not a public offering in the Federal Republic of Germany. The shares may only be acquired in accordance with the provisions of the Securities Sales Prospectus Act (Wertpapier-Verkaudfspropsektgestz), as amended, and any other applicable German law. No application has been made under German law to publicly market the shares in or out of the Federal Republic of Germany. The shares are not registered or authorized for distribution under the Securities Sales Prospectus Act and accordingly may not be, and are not being, offered or advertised publicly or by public promotion. Therefore, this prospectus is strictly for private use and the offering is only being made to recipients to whom the document is personally addressed and does not constitute an offer or advertisement to the public. The shares of common stock will only be available to persons who, by profession, trade or business, buy or sell shares for their own or a third party’s account.

France. The shares of common stock offered by this prospectus may not be offered or sold, directly or indirectly, to the public in France. This prospectus has not been or will not be submitted to the clearance procedure of the Autorité des Marchés Financiers, or the AMF, and may not be released or distributed to the public in France. Investors in France may only purchase the shares offered by this prospectus for their own account and in accordance with articles L. 411-1, L. 441-2 and L. 412-1 of the Code Monétaire et Financier and decree no. 98-880 dated October 1, 1998, provided they are “qualified investors” within the meaning of said decree. Each French investor must represent in writing that it is a qualified investor within the meaning of the aforesaid decree. Any resale, directly or indirectly, to the public of the shares offered by this prospectus may be effected only in compliance with the above mentioned regulations.

“Les actions offertes par ce document d’information ne peuvent pas être, directement ou indirectement, offertes ou vendues au public en France. Ce document d’information n’a pas été ou ne sera pas soumis au visa de l’Autorité des Marchés Financiers et ne peut être eclare ou eclarer au public en France. Les investisseurs en France ne peuvent acheter les actions offertes par ce document d’information que pour leur compte eclar et conformément aux articles L. 411-1, L. 441-2 et L. 412-1 du Code Monétaire et Financier et du décret no. 98-880 du 1 octobre 1998, sous eclare qu’ils soient des investisseurs eclarer au sens du décret susvisé. Chaque investisseur doit eclarer par écrit qu’il est un investisseur qualifié au sens du décret susvisé. Toute revente, directe ou indirecte, des actions offertes par ce document d’information au public ne peut être effectuée que conformément à la réglementation susmentionnée.”

Switzerland. This prospectus may only be used by those persons to whom it has been directly handed out by the offeror or its designated distributors in connection with the offer described therein. The shares of common stock are only offered to those persons and/or entities directly solicited by the offeror or its designated distributors, and are not offered to the public in Switzerland. This prospectus constitutes neither a pubic offer in Switzerland nor an issue prospectus in accordance with the respective Swiss legislation, in particular but not limited to Article 652A Swiss Code Obligations. Accordingly, this prospectus may not be used in connection with any other offer, whether private or public and shall in particular not be distributed to the public in Switzerland.

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United Kingdom. In the United Kingdom, the shares of common stock offered by this prospectus are directed to and will only be available for purchase to a person who is an exempt person as referred to at paragraph ^® below and who warrants, represents and agrees that: (a) it has not offered or sold, will not offer or sell, any shares offered by this prospectus to any person in the United Kingdom except in circumstances which do not constitute an offer to the public in the United Kingdom for the purposes of section 85 of the Financial Services and Markets Act 2000 (as amended) (“FSMA”); (b) it has complied and will comply with all applicable provisions of FSMA and the regulations made thereunder in respect of anything done by it in relation to the shares offered by this prospectus in, from or otherwise involving the United Kingdom; and (c) it is a person who falls within the exemptions to Section 21 of the FSMA as set out in the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (“the Order”), being either an investment professional as described under Article 19 or any body corporate (which itself has or a group undertaking has a called up share capital or net assets of not less than £500,000 (if more than 20 members) or otherwise £5 million) or an unincorporated association or partnership (with net assets of not less than £5 million) or is a trustee of a high value trust or any person acting in the capacity of director, officer or employee of such entities as defined under Article 49(2)(a) to (d) of the Order, or a person to whom the invitation or inducement may otherwise lawfully be communicated or cause to be communicated. The investment activity to which this document relates will only be available to and engaged in only with exempt persons referred to above. Persons who are not investment professionals and do not have professional experience in matters relating to investments or are not an exempt person as described above, should not review nor rely or act upon this document and should return this document immediately. It should be noted that this document is not a prospectus in the United Kingdom as defined in the Prospectus Regulations 2005 and has not been approved by the Financial Services Authority or any competent authority in the United Kingdom.

Israel. The shares of common stock offered by this prospectus have not been approved or disapproved by the Israeli Securities Authority (ISA). The shares may not be offered or sold, directly or indirectly, to the public in Israel. The ISA has not issued permits, approvals or licenses in connection with the offering of the shares or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of the shares being offered. Any resale, directly or indirectly, to the public of the shares offered by this prospectus is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws and regulations.

Sweden. Neither this prospectus nor the shares of common stock offered hereunder have been registered with or approved by the Swedish Financial Supervisory Authority under the Swedish Financial Instruments Trading Act (1991:980) (as amended), nor will such registration or approval be sought. Accordingly, this prospectus may not be made available nor may the shares offered hereunder be marketed or offered for sale in Sweden other than in circumstances which are deemed not to be an offer to the public in Sweden under the Financial Instruments Trading Act. This prospectus may not be distributed to the public in Sweden and a Swedish recipient of the prospectus may not in any way forward the prospectus to the public in Sweden.

Norway. This prospectus has not been produced in accordance with the prospectus requirements laid down in the Norwegian Securities Trading Act 1997, as amended. This prospectus has not been approved or disapproved by, or registered with, either the Oslo Stock Exchange or the Norwegian Registry of Business Enterprises. This prospectus may not, either directly or indirectly, be distributed to Norwegian potential investors.

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Denmark. This prospectus has not been prepared in the context of a public offering of securities in Denmark within the meaning of the Danish Securities Trading Act No. 171 of 17 March 2005, as amended from time to time, or any Executive Orders issued on the basis thereof and has not been and will not be filed with or approved by the Danish Financial Supervisory Authority or any other public authority in Denmark. The offering of shares of common stock will only be made to persons pursuant to one or more of the exemptions set out in Executive Order No. 306 of 28 April 2005 on Prospectuses for Securities Admitted for Listing or Trade on a Regulated Market and on the First Public Offer of Securities exceeding EUR 2,500,000 or Executive Order No. 307 of 28 April 2005 on Prospectuses for the First Public Offer of Certain Securities between EUR 100,000 and EUR 2,500,000, as applicable.

Electronic Distribution of Prospectus

A prospectus in electronic format relating to our offering may be made available on the Internet sites or through other online services maintained by the Underwriter or selling group members participating in this offering, or their affiliates. In those cases, prospective investors may view offering terms online and may be able to open an account online with the underwriters to participate in the public offering.

Other than the prospectus in electronic format, the information on the Underwriter’s or any selling group member’s website and any information contained in any other website maintained by the Underwriter or a selling group member is not part of the prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us, any underwriter or any selling group member in its capacity as underwriter or selling group member and should not be relied upon by investors.

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SHARES ELIGIBLE FOR FUTURE SALE

The sale of a substantial amount of our common stock in the public market after this offering, or the perception that such sales may occur, could adversely affect the prevailing market price of our common stock. Furthermore, because some of our shares will not be available for sale shortly after this offering due to the contractual and legal restrictions on resale described below, the sale of a substantial amount of common stock in the public market after these restrictions lapse could adversely affect the prevailing market price of our common stock and our ability to raise equity capital in the future.

Sales of Restricted Securities

Upon the completion of this offering, we will have 5,877,850 shares of common stock outstanding if the Minimum Offering is sold and 6,211,184 shares of common stock outstanding if the Maximum Offering is sold. Currently, we have 4,877,850 shares outstanding.

Of the current outstanding shares of 4,877,850, 1,435,500 shares are restricted securities we sold in prior private placements, of which 1,405,100 are currently eligible for sale under Rule 144 under the Securities Act of 1933 as of December 31, 2008, and 30,400 additional shares will be eligible at March 31, 2009. The remaining 3,442,350 shares of common stock are held by the executives, directors and their affiliates and are “restricted” shares under Rule 144 and, therefore, generally may be sold in the public market only in compliance with Rule 144. Further, 1,547,600 warrants are exercisable to purchase shares of restricted common stock at $1.00 per share at various dates, the last of which is July 15, 2013, 79,260 warrants are excisable to purchase shares of restricted common stock at $1.20 per share, expiring July 1, 2013, 310,000 warrants are exercisable to purchase shares at $3.00, each with a term of five years from the date of issuance, the last expiration date of which is December 29, 2013 with the total number of warrants issued as of December 31, 2008, at 1,936,860. The total number of options issued at December 31, 2008 is 64,000. At the time these options were issued, the Company had sold common stock in private placements within the previous six months at $1.00 per share, supporting the option exercise price of $1.00 per share.

We granted piggyback registration rights to the purchasers of units composed of one share of common stock and one common stock purchase warrant made from 2006 to July 2008. These rights were subject to the consent of the Underwriter, which has not been granted. If the Underwriter does not consent to the registration of these shares in this registration statement, the Company has no requirement or obligation to pay those affected shareholders any cash or non-cash penalty and thus no accounting entry is required.

Of the shares to be outstanding after the closing of this offering, the shares sold in this offering will be freely tradable without restriction under the Securities Act, except that any shares purchased in this offering by our “affiliates,” as that term is defined in Rule 144 under the Securities Act of 1933, generally may be sold in the public market only in compliance with Rule 144.

Rule 144

In general, under Rule 144, a person who is one of our affiliates and has beneficially owned those shares of common stock for at least six months would be entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

• 1% of the number of our shares of common stock then outstanding, which is expected to equal approximately 58,778 shares immediately after this offering if the Minimum Offering is sold and approximately 62,112 shares if the Maximum Offering is sold, and

• the average weekly trading volume of our common stock on the Amex during the four calendar weeks before a notice of the sale on SEC Form 144 is filed.

Sales under Rule 144 are also subject to certain manner-of-sale provisions and notice requirements and to the availability of certain public information about us.

A person who is not one of our affiliates, and who is not deemed to have been one of our affiliates at any time during the three months preceding a sale, may sell the shares proposed to be sold according to the following conditions:

• if the person has beneficially owned the shares for at least six months, including the holding period of any prior owner other than an affiliate, the shares may be sold, subject to continued availability of current public information about us; and

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• if the person has beneficially owned the shares for at least one year, including the holding period of any prior owner other than an affiliate, the shares may be sold without any Rule 144 limitations.

Stock Issued Under Our Stock Option Plan

We intend to file a registration statement on Form S-8 under the Securities Act to register 1,500,000 shares of common stock, with respect to awards to be granted or otherwise, under our 2008 Stock Option and Restricted Stock Plan. We have issued 64,000 options under the Plan through December 31, 2008. Shares that are issued upon the exercise of stock options or restricted stock issued under the Plan after the effective date of the Form S-8 registration statement will be eligible for resale in the public market without restriction, subject to Rule 144 limitations applicable to affiliates.

Lock-up Agreements

Pursuant to lock-up agreements with our Underwriter, each of Mr. Hines and Mr. Kirksey has agreed that he will not, without the prior written consent of the Underwriter, for a period of twelve (12) months following the closing date of this offering, sell any shares of common stock, or any options or warrants to purchase shares of common stock, or any other securities convertible into or exchangeable for shares of common stock, now owned or hereafter acquired by each of Mr. Hines and Mr. Kirksey.

INTEREST OF NAMED EXPERTS AND COUNSEL

The December 31, 2007 and 2006 financial statements appearing in the registration statement have been audited by Farber Hass Hurley LLP, an independent registered public accounting firm, to the extent and for the periods indicated in their report appearing elsewhere herein, which report expresses a qualified opinion and includes an explanatory paragraph relating to our ability to continue as a going concern and are included in reliance upon such report and upon the authority of such firm as experts in accounting and auditing.

The balance sheets of as of September 30, 2008 and 2007, and the statements of operations, shareholders’ deficit and cash flows for the nine months then ended, incorporated in this prospectus, have been included herein in reliance on the report of Farber Hass Hurley LLP, independent public accountants, given on the authority of that firm as experts in auditing and accounting.

With respect to the unaudited interim financial information for the periods ended September 30, 2008 and 2007, incorporated in this prospectus, the independent registered public accountants have reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report included in this prospectus states that they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. The accountants are not subject to the liability provisions of section 11 of the Securities Act of 1933 for their report on the unaudited interim financial information because that report is a “report” or a “part” of the registration statement prepared or certified by the accountants within the meaning of sections 7 and 11 of the Act.

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DESCRIPTION OF SECURITIES

Common Stock

We are authorized to issue 50,000,000 shares of common stock, par value $0.001 per share, of which 4,877,850 shares were issued and outstanding at December 31, 2008. The rights of the holders of the common stock are subject to any rights that may be fixed for holders of preferred stock, when and if any preferred stock is issued.

The shares of common stock will be issued and maintained in book-entry form registered in the name of the nominee, The Depository Trust Company, except in limited circumstances. See “Book-Entry Procedures” below.

Voting

Holders of the common stock are entitled to one vote for each share in the election of directors and in all other matters to be voted on by the stockholders. There is no cumulative voting in the election of directors.

No Preemptive, Redemption or Conversion Rights

Holders of our common stock are not entitled to preemptive rights and our common stock is not subject to redemption or conversion. The holders of common stock are not subject to further calls or assessments. There are no redemption or sinking fund provisions applicable to our common stock.

Dividends

Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive dividends out of assets legally available at the time when and if declared by our board of directors.

Right to Receive Liquidation Distributions

Upon our liquidation, dissolution or winding-up, the holders of our common stock are entitled to share in all assets remaining after payment of all our debts and other liabilities and the liquidation preferences of any outstanding preferred stock.

Fully Paid

The common stock currently outstanding is, and the common stock offered by us hereby will, when issued, be validly issued, fully paid and non-assessable.

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Preferred Stock

We are authorized to issue 5,000,000 shares of serial preferred stock, par value $0.001 per share, of which no shares are currently outstanding. Any future issues of preferred stock may, without action by our stockholders, be issued by our board of directors from time to time in one or more series for such consideration and with such relative rights, privileges and preferences as the board may determine. Accordingly, the board has the power to fix the dividend rate and to establish the provisions, if any, relating to voting rights, redemption rate, sinking fund, liquidation, preferences and conversion rights for any series of preferred stock issued in the future.

It is not possible to state the actual effect of any future series of preferred stock upon the rights of holders of the common stock because our board has the power to determine the specific rights of the holders of any future series of preferred stock. The board’s authority to issue preferred stock provides a convenient vehicle in connection with possible acquisitions and other corporate purposes, but could have the effect of making it more difficult for a third party to acquire a majority of the outstanding voting stock. Accordingly, the issuance of the preferred stock may be used as an “anti-takeover” device without further action on the part of our stockholders, and may adversely affect the holders of the common stock.

There are currently no shares of our preferred stock designated or outstanding. Upon completion of this offering, no shares of our preferred stock will be outstanding, and we have no present plans to issue any shares of preferred stock.

Warrants

From December 2004 to December 2005, we sold 520,000 units at a price of $2.00 per unit to individual investors in a private placement, raising gross proceeds of $1,040,000. Each unit consisted of one share of Series A Convertible Preferred Stock (the “Preferred Stock”) and one redeemable common stock purchase warrant exercisable to purchase one share of common stock at a purchase price of $1.00 per share for a period of five years. Each share of Preferred Stock was convertible into two shares of common stock. We sold the securities through our officers, none of whom received compensation in connection with the placement. We sold the offering and the securities were issued in reliance on the exemption from registration set forth in Section 4(2) of the Securities Act. All outstanding shares of the Preferred Stock were converted into common stock in 2007. At December 31, 2007, 520,000 warrants to purchase shares of common stock at a price of $1.00 per share were outstanding. The warrants expire in 2009 and 2010, unless sooner redeemed by us upon satisfaction of certain conditions.

From May 2006 to August 31, 2008, we made a private placement of units at a price of $1.00 per unit to individual investors. Each unit consisted of one share of common stock and one redeemable common stock purchase warrant exercisable to purchase one share of common stock at a price of $1.00 per share for a period of five years from their dates of issue. The warrants expire from 2011 to 2013. The warrants are redeemable by us upon satisfaction of certain criteria. We sold 1,072,600 units in the placement, raising gross proceeds of $1,117,600, as 45,000 warrants were exercised at the time of the sale of the units, at a price of $1.00 per share. We sold the units through our officers and through a third party. The officers received no compensation for such sales. The third party sold 796,600 units and we paid him $103,038 in fees and in an unaccountable expense allowance. We also issued him a warrant exercisable to purchase 79,260 shares of common stock at a price of $1.20 per share for a four-year term. We sold the offering and the securities were issued in reliance on the exemption from registration set forth in Section 4(2) of the Securities Act.

In November 2008 and December 2008, we issued an additional 310,000 warrants, with a term of five years and an exercise price of $3.00 per share, to a principal stockholder, Joseph C. Koch, and a minority stockholder, as part of three working capital loans to the Company.

Board of Directors

The Board consists of five directors. The term of office of each director expires at each annual meeting of stockholders or until successors are elected.

Certain Anti-Takeover Provisions

Stockholders’ rights and related matters are governed by Nevada corporate law, our articles of incorporation and our bylaws. Certain provisions of the Nevada Revised Statutes may discourage or have the effect of delaying or deferring potential changes in control of us. The cumulative effect of these terms may be to make it more difficult to acquire and exercise control of us and to make changes in management. Furthermore, these provisions may make it more difficult for shareholders to participate in a tender or exchange offer for common stock and in so doing may diminish the market value of the common stock. The existence of these provisions could limit the price that investors might be willing to pay in the future for shares of our common stock.

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Authorized but unissued shares. The authorized but unissued shares of our common stock and preferred stock are available for future issuance without stockholder approval. These additional shares may be used for a variety of corporate purposes, such as for additional public offerings, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise. One of the effects of the existence of authorized but unissued shares of our common stock may be to enable our board of directors to render it more difficult or to discourage an attempt to obtain control of us and thereby protect the continuity of or entrench our management, which may adversely effect the market price of our common stock. If in the due exercise of its fiduciary obligations, for example, our board of directors were to determine that a takeover proposal were not in the best interests of our shareholders, such shares could be issued by the board of directors without stockholder approval in one or more private placements or other transactions that might prevent or render more difficult or make more costly the completion of any attempted takeover transaction by diluting voting or other rights of the proposed acquirer or insurgent stockholder group, by creating a substantial voting block in institutional or other hands that might support the position of the incumbent board of directors, by effecting an acquisition that might complicate or preclude the takeover, or otherwise. See “Risk Factors—We have additional securities available for issuance, which, if issued, could adversely affect the rights of the holders of our common stock.”

Amendment to bylaws. Our bylaws may be repealed, altered or amended by the majority vote of our shareholders or by the majority of our board of directors without further shareholder approval.

Advance notice of director nominations and matters to be acted upon at meetings. Our bylaws contain advance notice requirements for nominations for directors to our board of directors and for proposing matters that can be acted upon by stockholders at stockholder meetings.

Shareholder action by written consent. Our bylaws provide that shareholders may act by written consent if such written consent is signed by the number of shareholders as are required to pass such action and entitled to vote with respect to the subject matter thereof.

Special meeting of shareholders. Our bylaws provide that special meetings of shareholders may be called only by our board of directors, chairman of the board or our president, or as otherwise provided under Nevada law.

Transfer Agent

Our transfer agent is Computershare, located at 350 Indiana Street, Suite 800, Golden, Colorado. Computershare’s web address is www.computershare.com. All inquiries may be made at (303) 262-0705.

Book Entry Procedures

The Depository Trust Company, which we refer to herein as DTC, will act as securities depositary for the common stock. We will issue one or more fully registered global securities certificates in the name of DTC’s nominee, Cede & Co. These certificates will represent the total aggregate number of common stock sold in this offering. We will deposit these certificates with DTC or a custodian appointed by DTC. We will not issue certificates to you for the common stock that you purchase, unless DTC’s services are discontinued as described below.

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Title to book-entry interests in the common stock will pass by book-entry registration of the transfer within the records of DTC, as the case may be, in accordance with their respective procedures. Book-entry interests in the securities may be transferred within DTC in accordance with procedures established for these purposes by DTC.

Each person owning a beneficial interest in the common stock must rely on the procedures of DTC and the participant through which such person owns its interest to exercise its rights as a holder of the common stock.

DTC has advised us that it is a limited-purpose trust company organized under the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered under the provisions of Section 17A of the Securities Exchange Act. DTC holds securities that its participants, referred to as Direct Participants, deposit with DTC. DTC also facilitates the settlement among Direct Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Direct Participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly, referred to as “Indirect Participants”. The rules applicable to DTC and its Direct and Indirect Participants are on file with the SEC.

When you purchase the common stock within the DTC system, the purchase must be made by or through a Direct Participant. The Direct Participant will receive a credit for your shares of the common stock on DTC’s records. You, as the actual owner of your shares of common stock, are the “beneficial owner”. Your beneficial ownership interest will be recorded on the Direct and Indirect Participants’ records, but DTC will have no knowledge of your individual ownership. DTC’s records reflect only the identity of the Direct Participants to whose accounts shares of common stock are credited.

You will not receive written confirmation from DTC of your purchase. The Direct or Indirect Participants through whom you purchased the shares of common stock should send you written confirmations providing details of your transactions, as well as periodic statements of your holdings. The Direct and Indirect Participants are responsible for keeping an accurate account of the holdings of their customers like you.

Transfers of ownership interests held through Direct and Indirect Participants will be accomplished by entries on the books of Direct and Indirect Participants acting on behalf of the beneficial owners.

The laws of some states may require that specified purchasers of securities take physical delivery of the shares of common stock in definitive form. These laws may impair the ability to transfer beneficial interests in the global certificates representing the shares of common stock.

Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

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We understand that, under DTC’s existing practices, in the event that we request any action of holders, or an owner of a beneficial interest in a global security such as you desires to take any action which a holder is entitled to take under our amended and restated articles of incorporation, as amended or supplemented, DTC would authorize the Direct Participants holding the relevant shares to take such action, and those Direct Participants and any Indirect Participants would authorize beneficial owners owning through those Direct and Indirect Participants to take such action or would otherwise act upon the instructions of beneficial owners owning through them.

In those instances where a vote is required, neither DTC nor Cede & Co. itself will consent or vote with respect to the shares of common stock. Under its usual procedures, DTC would mail an omnibus proxy to us as soon as possible after the record date. The omnibus proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants whose accounts the shares of common stock are credited on the record date, which are identified in a listing attached to the omnibus proxy.

Dividends on the shares of common stock will be made directly to DTC. DTC’s practice is to credit participants’ accounts on the relevant payment date in accordance with their respective holdings shown on DTC’s records unless DTC has reason to believe that it will not receive payment on that payment date.

Payments by Direct and Indirect Participants to beneficial owners such as you will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name.” These payments will be the responsibility of the participant and not of DTC, us or any agent of ours.

DTC may discontinue providing its services as securities depositary with respect to the common stock at any time by giving reasonable notice to us. Additionally, we may decide to discontinue the book-entry only system of transfers with respect to the common stock. In that event, we will print and deliver certificates in fully registered form for the common stock. If DTC notifies us that it is unwilling to continue as securities depositary, or if it is unable to continue or ceases to be a clearing agency registered under the Securities Exchange Act and a successor depositary is not appointed by us within ninety days after receiving such notice or becoming aware that DTC is no longer so registered, we will issue the shares of common stock in definitive form, at our expense, upon registration of transfer of, or in exchange for, such global security.

According to DTC, the foregoing information with respect to DTC has been provided to the financial community for informational purposes only and is not intended to serve as a representation, warranty or contract modification of any kind.

Initial settlement for the shares of common stock will be made in immediately available funds. Secondary market trading between DTC’s participants will occur in the ordinary way in accordance with DTC’s rules and will be settled in immediately available funds using DTC’s Same-Day Funds Settlement System.

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DISCLOSURE OF COMMISSION POSITION OF

INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

The Nevada Private Corporation Act, under which we are organized, permits the inclusion in the articles of incorporation of a provision limiting or eliminating the potential monetary liability of directors to a corporation or its shareholders by reason of their conduct as directors. The provision would not permit any limitation on or the elimination of liability of a director for disloyalty to his corporation or its shareholders, failing to act in good faith, engaging in intentional misconduct or a knowing violation of the law, obtaining an improper personal benefit or paying a dividend or approving a stock repurchase that was illegal under the Nevada Private Corporation Act. Accordingly, the provisions limiting or eliminating the potential monetary liability of directors permitted by Nevada law apply only to the “duty of care” of directors, i.e., to unintentional errors in their deliberations or judgments and not to any form of “bad faith” conduct.

Our Articles of Incorporation contain a provision which eliminates the personal monetary liability of directors to the extent allowed under Nevada law. Accordingly, a shareholder is able to prosecute an action against a director for monetary damages only if he can show a breach of the duty of loyalty, a failure to act in good faith, intentional misconduct, a knowing violation of law, an improper personal benefit or an illegal dividend or stock repurchase, as referred to in the amendment, and not “negligence” or “gross negligence” in satisfying his duty of care. Nevada law applies only to claims against a director arising out of his role as a director and not, if he is also an officer, his role as an officer or in any other capacity or to his responsibilities under any other law, such as the federal securities laws.

In addition, the articles of incorporation and bylaws provide that we will indemnify our directors, officers, employees and other agents to the fullest extent permitted by Nevada law. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of Spheric pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Company 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, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

No pending litigation or proceeding involving one of our directors, officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation that may result in claims for indemnification by any such director, officer, employee or other agent.

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WHERE TO GET MORE INFORMATION

It is our intent to become a reporting company under the Securities Exchange Act of 1934, as amended, upon the effectiveness of this prospectus. You may obtain annual, quarterly, and special reports and other information that we file with the Securities and Exchange Commission (“SEC”). You may read and copy any document that we file with the SEC at the SEC’s Public Reference Room, 100 F Street, N.E., Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Electronic filings filed on or after July 1, 1992 are available via the Electronic Data Gathering Analysis and Retrieval System (“EDGAR”) at the public reference facility. The SEC also maintains a web site that contains reports, proxy and information statements and other materials that are filed through EDGAR which can be accessed at http://www.sec.gov.

When we become a reporting company, our filings may also be accessed through the SEC’s website (http://www.sec.gov). We will provide a copy of any or all documents incorporated by reference herein (exclusive of exhibits unless such exhibits are specifically incorporated by reference therein), without charge, to each person to whom this prospectus is delivered, upon written or oral request to Spheric Technologies, Inc., at 4708 East Van Buren Street, Phoenix, Arizona 85008; our telephone number is 602-218-9292 and our web address is www.spherictechnologies.com.

We will furnish record-holders of our securities with annual reports containing financial statements, audited and reported upon by our independent auditors, quarterly reports containing unaudited interim financial information and such other periodic reports as we determine to be appropriate or as may be required by law.

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FINANCIAL STATEMENTS

Spheric Technologies, Inc.

Financial Report

For the Nine Months Ended September 30, 2008 (Unaudited) and September 30, 2007

and

for the Years Ended December 31, 2007 and 2006 (Audited)

TABLE OF CONTENTS

Financial Statements:

Report of Independent Registered Public Accounting Firm	F-1
Balance Sheets	F-3
Statements of Operations	F-4
Statements of Stockholders’ Deficit	F-5
Statements of Cash Flows	F-6
Notes to the Financial Statements	F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Spheric Technologies, Inc.

We have reviewed the accompanying interim balance sheet of Spheric Technologies, Inc. as of September 30, 2008 and 2007, and the related interim statements of income, stockholders’ deficit, and cash flows for the nine month period ended September 30, 2008 and 2007. These interim financial statements are the responsibility of the company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying interim financial statements for them to be in conformity with accounting principles generally accepted in the United States of America.

/s/ Farber Hass Hurley LLP

Granada Hills, CA

December 11, 2008

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Spheric Technologies, Inc.

We have audited the accompanying balance sheets of Spheric Technologies, Inc (A Development Stage Company) as of December 31, 2007 and 2006, and the related statements of income, stockholders’ deficit, and cash flows for each of the years in the three-year period ended December 31, 2007. Spheric Technology Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Spheric Technology Inc. (A Development Stage Company) as of December 31, 2007 and 2006, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Spheric Technology Inc. (A Development Stage Company) will continue as a going concern. As discussed in Note 2 to the financial statements, the company has suffered recurring losses from operations and requires additional financing to continue in operation. These conditions raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of the uncertainty.

/s/ Farber Hass Hurley LLP

Granada Hills, CA

July 22, 2008

F-2

SPHERIC TECHNOLOGIES, INC.

BALANCE SHEETS

September 30, 2008 and 2007 (Unaudited) and

December 31, 2007 and 2006 (Audited)

	SEPTEMBER 30,						DECEMBER 31,
	2008			2007			2007			2006
	(Unaudited)			(Unaudited)			(Audited)			(Audited)
ASSETS
Current assets
Cash and cash equivalents	$	45,406		$	11,581		$	39,653		$	9,292
Accounts receivable		—			—			4,095			—
Prepaid expenses		7,500			—			505			—
Inventory parts		6,248			—			—			—
Total current assets		59,154			11,581			44,253			9,292
Property and equipment, net		82,280			91,037			90,236			57,835
Deposits		47,785			1,839			452			36,714
Patent costs, net		121,379			153,827			151,483			183,931
Total assets	$	310,598		$	258,284		$	286,424		$	287,772
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	57,326		$	109,035		$	56,399		$	38,716
License fees payable, current portion		—			25,000			25,000			60,495
Payroll taxes		62,042			25,909			43,757			25,909
Related party payables		627,600			542,593			652,738			467,993
Total current liabilities		746,968			702,537			777,894			593,113
License fee payable, net of current portion		—			—			—			15,000
Total liabilities		746,968			702,537			777,894			608,113
Shareholders’ deficit
Preferred stock, $0.001 par value, 5,000,000 shares authorized, Series A 520,000 shares issued and outstanding at September 30, 2007 and December 31, 2006, respectively		—			520			—			520
Common stock, $0.001 par value, 55,000,000 shares authorized, 4,877,850, 2,652,000, 3,877,450 and 2,325,000 shares issued and outstanding at September 30, 2008 and 2007, and December 31, 2007 and 2006, respectively		4,878			2,652			3,877			2,325
Additional paid in capital		2,312,626			1,388,283			1,482,250			1,060,816
Accumulated deficit		(2,753,874	)		(1,835,710	)		(1,977,597	)		(1,384,002	)
Total shareholders’ deficit		(436,370	)		(444,255	)		(491,470	)		(320,341	)
Total liabilities and shareholders’ deficit	$	310,598		$	258,282		$	286,424		$	287,772

See accompanying notes to financial statements

F-3

SPHERIC TECHNOLOGIES, INC.

STATEMENTS OF OPERATIONS

For the Nine Months Ended September 30, 2008 and 2007 (Unaudited) and

Years Ended December 31, 2007 and 2006 (Audited)

	SEPTEMBER 30,						DECEMBER 31,
	2008			2007			2007			2006
	(Unaudited)			(Unaudited)			(Audited)			(Audited)
Revenue	$	—		$	104,764		$	104,764		$	—
Cost of sales		—			83,452			83,452			—
Gross profit		—			21,312			21,312			—
Operating expenses
Research and development		24,176			171			15,384			88,738
Consulting fees, research		90,000			90,350			139,000			74,979
Consulting fees, management		352,941			152,860			178,960			170,000
General and administrative		242,183			135,399			159,663			99,470
Rent		18,000			18,000			24,000			24,000
Depreciation and amortization		49,022			75,372			101,207			79,093
Interest and finance charges		853			876			1,437			1,280
		777,175			473,028			619,651			537,560
Net loss from operations		(777,175	)		(451,716	)		(598,339	)		(537,560	)
Other income		898			8			4,744			—
Net loss		(776,277	)		(451,708	)		(593,595	)		(537,560	)
Less: Preferred stock dividends		—			221,143			—			137,943
Net loss available to common stockholders	$	(776,277	)	$	(672,851	)	$	(593,595	)	$	(675,503	)
Loss per share, basic and diluted	$	(0.18	)	$	(0.27	)	$	(0.23	)	$	(0.29	)
Weighted average shares		4,408,459			2,476,319			2,543,870			2,297,877

See accompanying notes to financial statements.

F-4

SPHERIC TECHNOLOGIES, INC

STATEMENTS OF STOCKHOLDERS’ DEFICIT

For the Nine Months Ended September 30, 2008 (Unaudited) and

Years Ended December 31, 2007 and 2006 (Audited)

	Preferred Stock					Common Stock			Additional			Accumulated			Stock
	Shares		Amount			Shares	Amount		Paid in Capital			Deficit			Subscription			Total
Balance at December 31, 2005	520,000		$	520		2,250,000	$	2,250	$	992,493		$	(846,442	)	$	(175	)	$	148,646
Stock issued in private placement	—			—		75,000		75		74,925			—			—			75,000
Costs incurred in stock offering	—			—		—		—		(6,602	)		—			—			(6,602	)
Collection of stock subscription	—			—		—		—		—			—			175			175
Net loss for the year ended December 31, 2006	—			—		—		—		—			(537,560	)		—			(537,560	)
Balance at December 31, 2006	520,000			520		2,325,000		2,325		1,060,816			(1,384,002	)		—			(320,341	)
Stock issued in private placement	—			—		492,200		492		491,708			—			—			492,200
Costs incurred in stock offering	—			—		—		—		(69,734	)		—			—			(69,734	)
Conversion of preferred stock to common stock	(520,000	)		(520	)	1,060,250		1,060		(540	)		—			—			—
Net loss for the year ended December 31, 2007	—			—		—		—		—			(593,595	)		—			(593,595	)
Balance at December 31, 2007	—			—		3,877,450		3,877		1,482,250			(1,977,597	)					(491,470	)
Stock issued in private placement	—			—		940,400		941		939,459			—			—			940,400
Stock issued in warrant exercise	—			—		35,000		35		34,965			—			—			35,000
Stock issued in payment of services	—			—		25,000		25		24,975			—			—			25,000
Costs incurred in stock offering	—			—		—		—		(169,023	)		—			—			(169,023	)
Net loss for the nine months ended September 30, 2008	—			—		—		—		—			(776,277	)		—			(776,277	)
Balance at September 30, 2008	—		$	—		4,877,850	$	4,878	$	2,312,626		$	(2,753,874	)	$	—		$	(436,370	)

See accompanying notes to financial statements.

F-5

SPHERIC TECHNOLOGIES, INC

STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30, 2008 and 2007 (Unaudited)

Years Ended December 31, 2007 and 2006 (Audited)

	SEPTEMBER 30,						DECEMBER 31,
	2008			2007			2007			2006
	(Unaudited)			(Unaudited)			(Audited)			(Audited)
Cash flows from operating activities:
Net loss	$	(776,277	)	$	(451,708	)	$	(593,595	)	$	(537,560	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense		49,022			75,371			101,207			79,093
Loss on disposition of equipment		—			—			1,426			10,227
Increase (decrease) in cash resulting from changes in:
Accounts receivable		4,095			—			(4,095	)		—
Inventory		(6,248	)		—			—			—
Prepaid expenses		(6,995	)		—			—			—
Deposits and other assets		(47,333	)		34,876			35,757			(32,875	)
Accounts payable and accrued expenses		927			70,319			17,683			16,916
Licensing fee		(25,000	)		(50,495	)		(50,495	)		(25,247	)
Payroll taxes		18,285			—			17,848			12,735
Net cash used in operating activities		(789,524	)		(321,637	)		(474,264	)		(476,711	)
Cash flows from investing activities:
Purchase of property and equipment		(10,962	)		(78,469	)		(94,895	)		(1,511	)
Patent costs		—			—			(7,691	)		(39,198	)
Net cash used in investing activities		(10,962	)		(78,469	)		(102,586	)		(40,709	)
Cash flows provided by financing activities:
Issuance of common stock		831,377			327,794			422,466			68,398
Collection of stock subscription		—			—			—			175
Proceeds from (payments of) notes payable		(25,138	)		—			66,145			—
Proceeds from Founder’s loan		—			74,600			118,600			447,000
Net cash provided by financing activities		806,239			402,394			607,211			515,573
Net change in cash and cash equivalents		5,753			2,288			30,361			(1,847	)
Cash and cash equivalents, beginning of period		39,653			9,292			9,292			11,139
Cash and cash equivalents, end of period	$	45,406		$	11,580		$	39,653		$	9,292
Supplemental disclosure of cash flow information
Interest paid	$	717		$	876		$	1,437		$	1,280
Non-cash investing and financing activities
Acquisition of intangible asset license with long term payable	$	—		$	—		$	—		$	100,742

See the accompanying notes to financial statements.

F-6

SPHERIC TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

UNAUDITED

NOTE 1. NATURE OF OPERATIONS

Organization

Spheric Technologies, Inc. (the “Company”) was incorporated in the state of Arizona on February 18, 2004. From February 1, 2004 to December 31, 2007, the Company was a development stage enterprise, with an accumulated deficit of $1,977,597. However, Management has moved from spending significant time on developing the business plan and product development toward spending the majority of its time on marketing and operations. There has been increased sales activity and management believes that the Company has transitioned to ordinary operational status from the development stage. The Company is not currently listed on any stock exchange.

Nature of Operations

The Company is the exclusive distributor in North and South America for high efficiency industrial microwave furnaces produced by a manufacturer in China and has sublicensed certain intellectual property relating to the microwave sintering of powdered metals and ceramics to produce industrial components or parts. It became a Nevada corporation on July 17, 2008 under a plan of conversion in which it transferred its domicile from Arizona to Nevada.

NOTE 2. BASIS OF PRESENTATION

The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has generated limited revenue and has incurred operating losses since inception of $2,753,874 at September 30, 2008 and has working capital deficit of $687,814 at September 30, 2008, generating significant doubt about its ability to continue as a going concern. Management is in the process of completing an offering with minimum proceeds of $5,520,000 and maximum proceeds of $7,360,000. These proceeds will enable the Company to operate for a minimum of twelve months. Management further expects to continue to increase sales activity and develop markets for its products. Management has indicated its intention to fund operating shortfalls in order to fund future research and working capital. If the Company is unsuccessful with the offering, or if Management’s plans do not succeed and is unable to fund operating shortfalls, the Company will be required to modify its plans, which may impact its ability to continue current operations.

The private placement memorandum and initial public offering disclose various risks to potential investors, including but not limited to: competition within the Company’s industry, the ability to raise sufficient capital, the ability to commercialize its production processes and to attract and retain customers to generate revenue and achieve profitable operations.

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Concentration of Credit Risk

Currently, the Company has no financial instruments that would potentially subject it to concentrations of credit risk.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collection is probable. The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition.” Estimated returns and allowances are accrued at the time of sale. The Company has warranted equipment sold for a period of up to two years. To date, all warranty issues have been covered by the manufacturer. Management does not expect to incur any costs related to the warranty at September 30, 2008.

Shipping and Handling Charges

The Company collects estimated shipping and handling charges from customers in its invoices, and includes those collected charges in revenues in the Statement of Operations. The Company reflects actual shipping and handling costs as part of its cost of goods sold in the Statement of Operations.

Advertising Costs

Advertising and promotional costs are expensed as incurred. Advertising and promotional expenses were $9,609 and $11,074 for the nine months ended September 30, 2008 and 2007, respectively, and $11,169 and $1,831 for the years ended December 31, 2007 and 2006, respectively.

Research and Development Expenses

Research and development costs are expensed as incurred.

F-7

SPHERIC TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

UNAUDITED

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes

The Company accounts for income taxes under the provisions of SFAS No. 109. “Accounting for Income Taxes,“ whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between bases used for financial reporting and income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

On July 2006, FASB Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109 (“Fin 48”) was issued. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. It also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The adoption of FIN 48 had no material impact on the Company’s results of operations, financial condition or cash flows.

Stock-Based Compensation

The Company adopted the provisions of SFAS 123(R), Share-based Payments, in June 2008, with the adoption of the Company’s Stock Option Plan. Accordingly, compensation costs for all share-based awards to employees are measured based on the grant date fair value of those awards and recognized over the period during which the employee is required to perform services in exchange for the award (generally over the vesting period of the award). The Company determines the fair value of the awards using the following information: Strike price, share price at valuation date, volatility of stock at valuation date, life expectancy of award, and risk free investment rate equal to the interest rate of U.S. Treasury 5 year bonds at date of award. The Company uses these factors to perform a Black Scholes calculation to determine the fair value of the awards and records the resulting amounts as compensation. The Company has no outstanding employee options or share-based payment awards with market or performance conditions. The implementation of SFAS 123(R) did not have a material effect on the Company’s financial statements.

Quantifying Misstatements

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB No. 108”), which provides interpretive guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 requires registrants to quantify misstatement using both the balance sheet and income statement approaches and to evaluate whether either approach results in quantifying an error that is material based on relevant quantitative and qualitative factors. This guidance is effective for the first fiscal period ending after November 15, 2006. The adoption of SAB No. 108 did not have a material effect on the Company’s results of operations, financial condition or cash flows.

Loss per Share

Basic Earnings per Share (EPS) is computed as net loss available to common stockholders divided by weighted average shares outstanding. In accordance with SFAS No. 128, “Earnings per Share,” net loss available to common stockholders is computed by reducing net income (or increasing net loss) by any unpaid, but earned, preferred stock dividends. The potential common shares that can be issued total 1,457,200 and 1,407,820 at September 30, 2008 and 2007, respectively, and 567,200 and 1,040,000 at December 31, 2007 and 2006, respectively. However, because the presentation of these potential common shares would be anti-dilutive to the loss per share, basic and diluted loss per share are calculated using the same amounts.

Cash and Cash Equivalents

Cash and cash equivalents include money market funds which are carried at cost, plus accrued interest, which approximates market. The Company does not believe that it is subject to any unusual credit or market risk. All cash and cash equivalents have an original maturity of three months or less.

F-8

SPHERIC TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

UNAUDITED

NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Trade Accounts Receivable

Trade accounts receivable are recorded on shipment of products to customers and are generally due net 30 days. The trade receivables are not collateralized and interest is not accrued on past due accounts. Periodically, management reviews the adequacy of its provision for doubtful accounts based on historical bad debt expense results and current economic conditions using factors based on the aging of its accounts receivable. Additionally, the Company may identify additional allowance requirements based on indications that a specific customer may be experiencing financial difficulties. Actual bad debt results could differ materially from these estimates. At September 30, 2008 and 2007, no allowance for doubtful accounts was considered necessary. At December 31, 2007 and 2006, no allowance for doubtful accounts was considered necessary.

Inventory parts

Inventories consist principally of parts and are stated at cost, based upon the specific identification method.

Property and Equipment

Property and equipment are depreciated over their estimated useful lives using the straight-line method over three to five years. Additions are capitalized when acquired. The cost of maintenance and repairs is charged to expense as incurred.

Intangible Assets

Intangible assets are amortized on a straight-line basis over the estimated useful life of the intangible asset.

Reclassifications

Certain prior year amounts in the accompanying financial statements have been reclassified to conform to the current year’s presentation.

Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements, and does not require any new fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements. The Statement is effective for the fiscal years beginning after November 15, 2007. The Company is assessing SFAS No. 157 and has not determined the impact of its the adoption of SFAS No. 157 will have its results of operations or financial position, but expects it will not have a material effect on its financial statements.

NOTE 4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at September 30, 2008 and 2007 and December 31, 2007, and 2006.

	September 30,				December 31,
	2008		2007		2007		2006
Computers and office equipment	$	25,933	$	21,273	$	21,273	$	21,273
Office furniture		6,105		6,105		6,105		6,105
Machinery		109,126		89,348		102,823		10,878
Tenant improvements		144,880		144,880		144,880		144,880
		286,044		261,606		275,081		183,136
Less : accumulated depreciation		203,764		170,569		184,845		125,301
	$	82,280	$	91,037	$	90,236	$	57,835

During the nine months ended September 30, 2008 and 2007, depreciation expense totaled $18,918 and $45,267, respectively. During the years ended December 31, 2007 and 2006 depreciation expense totaled $61,069 and $64,628, respectively.

F-9

SPHERIC TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

UNAUDITED

NOTE 5. INTANGIBLE ASSETS

Intangible assets consist of licenses and licensing agreements, as well as trademark and other intellectual rights. The Company is amortizing these intangible assets over their useful life of five years. Intangible assets consist of the following:

	September 30,				December 31,
	2008		2007		2007		2006
Patent costs	$	60,753	$	60,753	$	62,180	$	60,753
License costs		139,940		139,940		139,940		139,940
Trademark costs		6,263		—		6,263		—
		208,383		200,693		208,383		200,693
Less : accumulated depreciation		87,004		46,866		56,900		16,792
	$	121,379	$	153,827	$	151,483	$	183,901

Amortization expense at September 30, 2008 and 2007 was $30,104 and $30,104, respectively. Amortization expense at December 31, 2007 and 2006 was $40,162 and $14,466, respectively.

Amortization for Patent costs at September 30, 2008 and 2007 was $9,113 and $9,113 respectively, and at December 31, 2007 and 2006 was $12,150 and $12,150, respectively. Amortization for License costs at September 30, 2008 and 2007 was $20,991 and $20,991, respectively, and at December 31, 2007 and 2006 was $28,012 and $2,316, respectively. Amortization for Trademark costs at September 30, 2008 and 2007 was $0 and $0, respectively, and at December 31, 2007 and 2006 was $0 and $0, respectively.

Amortization expense for total intangible assets for the next five fiscal years is estimated to be as follows:

For the years ended December 31,
2008	$	41,676
2009		41,676
2010		39,330
2011		27,231
2012		1,570

NOTE 6. COMMITMENTS AND CONTINGENCIES

Leases

The Company entered into a three-year lease agreement with its president for office and laboratory space in Phoenix, Arizona. The lease expired on November 15, 2007, and was subsequently renewed for one year. The lease requires monthly rents of $2,000 through November 14, 2008. The lease also contains a renewal option and requires the Company to pay all utility, insurance and maintenance costs. Rent expense for the nine months ended September 30, 2008 and 2007 was $18,000 and $18,000, respectively, and for the years ended December 31, 2007 and 2006 was $24,000 and $24,000, respectively.

The Company also has operating leases for a copier (five year lease) and a telephone system (three year lease). The leases require monthly payments of $480 and the company is required to pay all operating expenses associated with the leases. Equipment rental expense totaled $4,948 and $6,951 for the nine months ended September 30, 2008 and 2007 and $9,965 and $11,615 for the years ended December 31, 2007 and 2006, respectively.

The Company’s future annual minimum lease payments as of September 30, 2008 are as follows:

Year Ending December 31,
2008	$	11,879
2009		5,759
2010		4,670
2011		1,404
2012		1,053
	$	24,765

Litigation

As of September 30, 2008, there were no claims filed against the Company. However, the Company may, during its normal course of business, be subject from time to time to disputes and to legal proceedings against it.

NOTE 7. STOCK AND WARRANT TRANSACTIONS

Preferred Stock

During 2004, the Board authorized the issuance of up to 962,500 shares of series A preferred stock. The preferred stock had voting rights, liquidation preferences and cumulative dividend rights of 8% per year. The dividends were payable quarterly once net income exceeded $250,000 per year. The preferred stock was redeemable at prices ranging from $2.30 to $2.50 per share plus accrued dividends after two years solely at the Company’s option. A warrant to purchase a share of the Company’s common stock was also issued with each share.

All 520,000 outstanding preferred shares and $20,250 of cumulative unpaid dividends were converted to 1,060,250 shares of common stock on December 31, 2007. The remaining $200,893 of cumulative unpaid dividends were forgiven by the shareholder, who is also President of the Company. The Company reflected this reduction in preferred dividends accrued with an offsetting entry to Paid-In-Capital.

F-10

SPHERIC TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

UNAUDITED

NOTE 7. STOCK AND WARRANT TRANSACTIONS (continued)

Common Stock

In connection with its private offering, the Company issued 940,400 and 327,000 shares in the nine months ended September 30, 2008 and 2007, respectively, and 492,200 and 75,000 shares in the years ended December 31, 2007 and 2006, respectively. In September, 2008, the Company issued 25,000 shares to an employee for services. No options or warrants were issued in connection with the issuance. The shares were valued at $1.00 per share, the most recent price the Company was able to sell shares in its private placement offering.

Stock Option Issuances

In 2007 and 2006, there were no options granted.

In June, 2008, the Company approved the adoption of its 2008 Stock Option Plan (the “Plan”) by which the Company’s Board of Directors may grant options to purchase Company common stock to the Company’s officers, employees, directors and consultants. The Plan reserves 1,500,000 shares of the Company’s common stock for issuances. The expense price under the plan may not be less than 100% of the fair market value of the Company’s common stock on the date of grant. As of September 30, 2008, 51,500 options had been granted under the Plan. The options were granted with an exercise period of 5 years, at a strike price of $1.00 per share. The Company calculated these fair value of these options using a Black-Scholes value of $0.7675 per option, resulting in a deferred compensation expense of $39,530, which is being amortized as follows:

Expected compensation expense for the fiscal years ended December 31,

2008	$	3,561
2009	$	7,549
2010	$	7,549
2011	$	7,549
2012	$	7,549
2013	$	5,773
	$	39,530

Warrants

In connection with the Company’s private offerings, it sold units at $1.00 each, which units were composed of one share of common stock and one warrant exercisable for one share of common stock at $1.00. These warrants have a five year exercise period, with the last warrant to expire June, 2013. The following table summarizes the activity of the warrants related to the private placement offerings:

	Nine Months Ended		Year Ended
	September 30, 2008	September 30, 2007	December 31,  2007	December 31,  2006
Beginning balance, December 31	1,087,200	595,000	595,000	520,000
Issued	495,400	195,000	492,200	75,000
Exercised	35,000	—	—	—
Forfeited	—	—	—	—
Expired	—	—	—	—
Outstanding at end of period	1,547,600	790,000	1,087,200	595,000

F-11

SPHERIC TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

UNAUDITED

NOTE 8. STOCK BASED COMPENSATION

We account for equity instruments issued to employees in accordance with the provision of SFAS 123(R) which requires that such issuances be recorded at their fair value on the grant date. The recognition of the expense is subject to periodic adjustment as the underlying equity instrument vests.

Stock-based compensation expense is included in general and administrative expense for each period as follows:

Stock-Based Compensation	September 30,				December 31,
Type of Award:	2008		2007		2007		2006
Restricted stock units	$	25,000	$	—	$	—	$	—
Employee stock options		25,000		—		—		—
Total stock-based compensation	$	25,000	$	—	$	—	$	—

As of September 30, 2008 the unrecorded deferred stock-based compensation balance related to stock options was $39,531, which will be amortized as expense over an estimate weighted average vesting amortization period of approximately 6.67 years.

The fair value of each option grant was estimated on the date of grant using the following assumptions:

	September 30,				December 31,
	2008			2007	2007	2006
Volatility		100	%	N/A	N/A	N/A
Risk-free interest rate		3.00	%	N/A	N/A	N/A
Expected life		5.95 years		N/A	N/A	N/A
Expected dividends		0	%	N/A	N/A	N/A
Strike price	$	1.00		N/A	N/A	N/A
Share price	$	1.00		N/A	N/A	N/A

Based on the Black-Scholes option pricing model, the weighted average estimated fair value of employee stock option grants was $0.77 for the nine months ended September 30, 2008.

The expected life was determined using the simplified method outlined in Staff Accounting Bulletin No.107 (“SAB 107”), taking the average of the vesting term and the contractual term of the option. Expected volatility of the stock options was based upon historical data and other relevant factors, such as the volatility of comparable publicly-traded companies at a similar stage of life cycle. The Company has not provided an estimate for forfeitures because the Company has no history of forfeited options and believes that all outstanding options at September 30, 2008 will vest. In the future, the Company may change this estimate based on actual and expected future forfeiture rates.

The following table summarizes activity under the equity incentive plans for the indicated periods:

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2005	—	$	—	—	$	—
Options granted	—		—	—		—
Options exercised	—		—	—		—
Options cancelled	—		—	—		—
Outstanding at December 31, 2006	—		—	—		—
Options granted	—		—	—		—
Options exercised	—		—	—		—
Options cancelled	—		—	—		—
Outstanding at December 31, 2007	—		—	—		—
Options granted	51,500		1.00	6.67		39,531
Options exercised	—		—	—		—
Options cancelled	—		—	—		—
Outstanding at September 30, 2008	51,500	$	1.00	6.67	$	39,531

Intrinsic value is calculated at the difference between the last price the Company was able to sell its unregistered shares of common stock and the exercise price of the options. For options exercised, the intrinsic value is the difference between market price and the exercise price on the date of exercise.

The following table summarizes information about stock options at September 30, 2008:

Options Outstanding					Options Vested and Exerciseable
Range of Exercise Price	Number Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Number Exerciseable	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$1.00	51,500	6.67	$	1.00	51,500	$	1.00	6.67
	51,500	6.67	$	1.00	51,500	$	1.00	6.67

F-12

SPHERIC TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

UNAUDITED

NOTE 9. PROVISION FOR INCOME TAXES

No provision for income taxes was recorded for either the nine months ended September 30, 2008 and 2007 or for the years ended December 31, 2007 and 2006 since the Company generated both book and tax losses. A valuation allowance has been established to offset the benefit of any deferred tax assets since the Company has not yet achieved a history of profitable operations. The Company’s deferred tax assets consist of the following:

	Nine Months Ended						Year Ended
	September 30, 2008			September 30, 2007			December 31,  2007			December 31,  2006
Net operating loss carryforward	$	2,754,000		$	1,836,000		$	1,978,000		$	1,384,000
Estimated deferred tax benefit	$	1,101,600		$	734,400		$	808,400		$	553,600
Valuation allowance		(1,101,600	)		(734,400	)		(808,400	)		(553,600	)
	$	—		$	—		$	—		$	—
Provision for income tax benefits were as follows:
Tax benefit, at statutory rates	$	(293,200	)	$	(180,800	)	$	(255,000	)	$	(215,000	)
Increase in valuation allowance		293,200			180,800			255,000			215,000
	$	—		$	—		$	—		$	—

At September 30, 2008, the Company had net operating carryforwards for federal purposes that expire in various years through 2028 and for state purposes that expire in various years through 2013. The extent to which these loss carryforwards can be used to offset future taxable income may be limited.

F-13

SPHERIC TECHNOLOGIES, INC.

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2008

UNAUDITED

NOTE 10. RELATED PARTY TRANSACTIONS

The Company’s president and principal shareholder advanced substantial portions of the Company’s start-up and development expenses. As of September 30, 2008, the president had advanced funds totaling $565,600 for the Company’s operations, which advances are represented by non-interest bearing promissory notes due December 31, 2008. In 2005, expenses and advances which totaled $559,500 were converted to preferred stock.

The Company has consulting agreements with various key personnel, including its president, vice president and secretary. During the nine months ended September 30, 2008 and 2007 and years ended December 31, 2007 and 2006, the Company paid $161,333, $127,500, $259,000 and $170,000, respectively, to various stockholders and officers for consulting services. The Company may be exposed to claims from taxing authorities that the officers are employees. As such, the Company has recorded an estimate for potential payroll taxes.

The Company’s credit card liability is guaranteed by the Company’s president, which amounted to $4,619 and $7,518 at September 30, 2008 and 2007, respectively, and $13,923 and $10,176 at December 31, 2007 and 2006, respectively.

Notes payable, related party consists of advances of $62,000 from certain officers of the Company. These amounts due to related parties are unsecured and non-interest bearing.

The Company leased a portion of its office space and storage to another company generating rental revenue of $6,160 in 2007. The owner of the other company is related to the Company’s president.

During 2006, the President of the Company acquired the stock of another stockholder. The agreement provides for the transfer of certain licenses to the Company and certain equipments to the retiring shareholder. The equipment had a net book value of $10,227.

NOTE 11. LICENSING AGREEMENT

The Company has entered into a licensing agreement with The Penn State Research Foundation (PSRF) effective July 20, 2006. The agreement grants the Company the exclusive right to use the intellectual property contained in certain patents owned by PSRF.

In consideration of the rights granted under the agreement, the Company is to pay a non-refundable fee of $10,000 which was due on December 20, 2007 and $15,000 due on July 20, 2008. All fees were paid in July, 2008. In addition, the Company is to pay a running royalty of 3% of net sales, with the following minimum payments:

Year ending December 31:
2009	$	25,000
2010-2012		50,000
2013-2016		100,000
2016 until end of license agreement term		250,000

The Company is also to pay royalties on a percentage of all sublicense revenue according to the following schedule:

2008	10	%
2009	15	%
2010 until end of license agreement term	20	%

The Company is to reimburse PSRF for all reasonable and ordinary fees and external costs incurred relating to the filing, prosecution, and maintenance of patents. For those expenses that PSRF has already incurred, the Company paid PSRF $0 and $25,247 for the nine months ended September 30, 2008 and 2007, respectively, and $50,495 and $25,247 during the years ended December 31, 2007 and 2006, respectively.

F-14

SPHERIC TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2007

1. NATURE OF OPERATIONS

Organization

Spheric Technologies, Inc. (the “Company”) was incorporated in the State of Arizona on February 18, 2004. It became a Nevada corporation on July 17, 2008 under a plan of conversion in which it transferred its domicile from Arizona to Nevada.

Nature of operations

The Company intends to develop, market and distribute industrial microwave furnaces and technology for the sintering of powdered metals and advanced ceramic powders in North and South America. The Company also developed production processes for high purity ceramic powders (metal oxides and nitrides).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Revenue recognition

Revenue is recognized when persuasive evidence of an arrangement exists, title transfer has occurred, the price is fixed or readily determinable, and collection is probable. The Company recognizes revenue in accordance with Staff Accounting Bulletin No. 104, “Revenue Recognition.” Estimated returns and allowances are accrued at the time of sale. The Company has warranted equipment sold for a period of up to two years. To date, all warranty issues have been covered by the manufacturer. Management does not expect to incur any costs related to the warranty at December 31, 2007.

Shipping and handling charges

The Company collects estimated shipping and handling charges to customers in its invoices and includes these as revenue in the Statement of Operations. The Company records the actual shipping and handling costs as part of the cost-of-goods-sold in the Statement of Operations.

Research and development

Research and development costs are expensed as incurred.

Cash and cash equivalents

Cash equivalents include highly liquid debt instruments and other short-term investments with an original maturity of three months or less.

Accounts receivable

Accounts receivable consist of unsecured trade receivables from one customer and are recorded based upon the outstanding invoice balance. Receivables considered to be uncollectible are written off. At December 31, 2007 and 2006, no allowance for doubtful accounts is considered necessary.

Inventory

Inventories are stated at cost, based upon the specific identification method.

Property and equipment

Property and equipment are recorded at cost. Depreciation is being computed over three to five years on the straight-line method based upon the shorter of the estimated useful lives of the assets or the term of the lease.

Intangible Assets

Intangible assets are being amortized on a straight-line basis over the estimated useful life of the asset.

F-15

SPHERIC TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Advertising

Advertising costs are being expensed as incurred. Advertising costs for the years ended, December 31, 2007 and 2006, were $11,169 and $1,831, respectively.

Warranty obligation

The Company has warranted equipment sold for a period up to two years. To date, all warranty issues have been covered by the manufacturer. Management does not expect to incur any costs related to the warranty at December 31, 2007 or 2006.

Income taxes

The Company accounts for income taxes under the provisions of SFAS No. 109. “Accounting for Income Taxes,” whereby deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between bases used for financial reporting and income tax purposes. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.

On July 2006, FASB Interpretation (FIN) No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109” (“Fin 48”) was issued. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, Accounting for Income Taxes. It also prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company does not believe the implementation of Fin 48 has a material affect on its results of operations, financial condition or cash flows.

Loss per share

Basic EPS is computed as net loss available to common stockholders divided by weighted average shares outstanding. In accordance with Statement of Financial Accounting Standards No. 128, “Earnings per Share,” net loss available to common stockholders is computed by reducing net income (or increasing net loss) by any unpaid, but earned, preferred stock dividends. The potential common shares that can be issued total 567,200 and 1,040,000 at December 31, 2007 and 2006, respectively. However, because the presentation of these potential common shares would be anti-dilutive to the loss per share, basic and diluted loss per share are calculated using the same amounts.

Stock-based compensation

The Company adopted the provisions of SFAS 123(R), Share-based Payments. In June 2008, with the adoption of the Company’s Stock Option Plan. Accordingly, compensation costs for all share-based awards to employees are measured based on the grant date fair value of those awards and recognized over the period in which the employee is required to perform services in exchange for the award (generally over the vesting period of the award). The Company determines the fair value of the awards using the following information; strike price, share price at valuation date, volatility of stock at valuation date, life expectancy of award, and risk free investment rate equal to the interest rate of U.S. Treasury 5 year bonds at date of award. The Company uses these factors to perform a Black Scholes calculation to determine the fair value of the awards and records the resulting amounts as compensation. The Company has no outstanding employee options or share-based payment awards with market or performance conditions.

Fair Value Measurements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements, and does not require any new fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements. The Statement is effective for the fiscal years beginning after November 15, 2007. The Company is assessing SFAS No. 157 and has not determined the impact of it’s the adoption of SFAS No. 157 will have its results of operations or financial position, but expects it will not have a material effect on its financial statements.

Reclassifications

Certain prior year amounts in the accompanying financial statements have been reclassified to conform to the current year’s presentation.

F-16

SPHERIC TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2007

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Quantifying Misstatements

In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, Considering Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB No. 108”), which provides interpretive guidance on the consideration of the effects of prior year misstatements in quantifying current year misstatements for the purpose of a materiality assessment. SAB No. 108 requires registrants to quantify misstatement using both the balance sheet and income statement approaches and to evaluate whether either approach results in quantifying an error that is material based on relevant quantitative and qualitative factors. This guidance is effective for the first fiscal period ending after November 15, 2006. The adoption of SAB No. 108 did not have a material effect on the Company’s results of operations, financial condition or cash flows.

Recent Pronouncements and Accounting Changes

In December 2007, the FASB issued SFAS No. 141(revised 2007), “Business Combinations” (“SFAS No. 141R”). SFAS No. 141R will significantly change the accounting for business combinations in a number of areas, including the treatment of contingent consideration, contingencies, acquisition costs, in-process research and development and restructuring costs. SFAS No. 141R includes an amendment to SFAS No. 109, “Accounting for Income Taxes.” This statement is effective for fiscal years beginning after December 15, 2008. The Company is assessing the impact of SFAS No. 141R and has not determined whether it will have a material impact on the Company’s results of operations or financial position.

In February 2007, the FASB issued SFAS No. 159, which permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS No. 159 also includes an amendment to SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities” which applies to all entities with available-for-sale and trading securities. This Statement is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. The Company is assessing the impact of SFAS No. 159 and has not determined whether it will have a material impact on the Company’s results of operations or financial position.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” The Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements, and does not require any new fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements. The Statement is effective for the fiscal years beginning after November 15, 2007. In February 2008, the FASB issued FSP FAS No. 157-1 and FSP FAS No. 157-2. FSP FAS No. 157-1 amends SFAS No. 157, “Fair Value Measurements” to exclude SFAS No. 13, “Accounting for Leases,” and other accounting pronouncements that address fair value measurements for purposes of lease classification or measurement under SFAS No. 13. FSP FAS No. 157-2 delays the effective date of SFAS 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP. The Company is assessing SFAS No. 157 and FSP FAS No. 157-1 and 157-2 and has not determined the impact the adoption of SFAS No. 157 will have its results of operations or financial position.

F-17

SPHERIC TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2007

3. BASIS OF PRESENTATION

Although we believe we may derive revenues in the future from our product offerings, and are currently endeavoring to develop our offerings into marketable products, we have not done so to date with any material success. As such, we are in the development stage and consequently are subject to the risks associated with development stage companies, including the need for additional financings, the uncertainty that our development initiatives will produce successful commercial products as well as the uncertainty of marketing and customer acceptance of such products.

Through December 31, 2007, the Company has generated limited revenue and has incurred operating losses of $2,021,317. The Company is continuing its attempt to raise additional capital through private placements and an initial public offering. The private placements were of units composed of common stock and warrants. Additionally, management has indicated its intention to fund operating shortfalls in order to fund future research and working capital. If the Company is unsuccessful with the offering and management is unable to fund operating shortfalls, the Company will be required to modify its plans, which may impact its ability to continue current operations.

The private placement memorandum and initial public offering disclose various risks to potential investors, including but not limited to: competition within the Company’s industry, the ability to raise sufficient capital, the ability to commercialize its production processes and to attract and retain customers to generate revenue and achieve profitable operations.

These financial statements are prepared on a going concern basis that contemplates the realization of assets and discharge of liabilities in the normal course of business. We have incurred net operating losses and negative cash flows from operations. At December 31, 2007 and 2006, we had a deficit accumulated in the development stage of $2,021,317 and $1,384,002, respectively.

It is not possible to predict the success of our efforts to achieve profitability. If we are unable to meet our goals or obtain additional financing, we may find it necessary to undertake other actions as may be appropriate if we are to continue operations and meet our commitments.

4. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 2007 and 2006:

	December 2007		December 2006
Computers and Office Equipment	$	21,273	$	21,273
Office Furniture		6,105		6,105
Machinery		102,823		10,878
Tenant Improvements		144,880		144,880
		275,081		183,136
Less: Accumulated Depreciation		184,845		125,301
	$	90,236	$	57,835

5. INTANGIBLE ASSETS

Intangible assets consist of licenses and licensing agreements, as well as trademark and other intellectual rights. The Company is amortizing these intangible assets over their useful life of five years. Intangible assets consist of the following:

	December 31,
	2007		2006
Patent costs	$	62,180	$	60,753
License costs		139,940		139,940
Trademark costs		6,263		—
		208,383		200,693
Less: accumulated depreciation		56,900		16,792
	$	151,483	$	183,901

Amortization expense at December 31, 2007 and 2006 was $40,162 and $14,466, respectively.

Amortization for Patent costs at December 31, 2007 and 2006 was $12,150 and $12,150, respectively. Amortization for License costs at December 31, 2007 and 2006 was $28,012 and $2,316, respectively. Amortization for Trademark costs at December 31, 2007 and 2006 was $0 and $0, respectively.

Amortization expense for total intangible assets for the next five fiscal years is estimated to be as follows:

For the years ended December 31,
2008	$	41,676
2009		41,676
2010		39,330
2011		27,231
2012		1,570

F-18

SPHERIC TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2007

6. STOCK TRANSACTIONS

Preferred Stock

During 2004, the Board authorized the issuance of up to 962,500 shares of Series A Preferred Stock. The preferred stock has voting rights, liquidation preferences and cumulative dividend rights of 8% per year. The dividends are payable quarterly, once net income has exceeded $250,000 per year. The preferred stock is redeemable at prices ranging from $2.30 to $2.50 per share plus accrued dividends after two years solely at the Company’s option.

Effective December 31, 2007, all preferred stock and $20,250 of unpaid dividends were converted to 1,060,250 shares of common stock. The Company’s president forgave his right to dividends, totaling approximately $200,893. The Company reflected this reduction in preferred dividends accrued with an offsetting entry to Paid-In-Capital.

Cumulative unpaid dividends on preferred stock totaled $221,143 and $137,943 at December 31, 2007 and 2006, respectively, prior to conversion.

Common Stock

The Company has issued units under its private placement at a price of $1.00 per unit. Each unit consists of one unregistered common share and one redeemable common stock purchase warrant exercisable to purchase one share of common stock at a price of $1.00 per share. If the Company is unable to register these shares, the Company has no requirement or obligation to pay those affected shareholders any cash or non-cash penalty. The warrants are exercisable for 5 years from their dates of issue. 492,200 and 75,000 shares were issued under this offering during the years ended December 31, 2007 and 2006, respectively.

The warrants expire as follows:

Year ended December 31,	2007	2006
2011	75,000	75,000
2012	492,200	—
Total warrants outstanding	567,200	75,000

Warrants from the Preferred Stock and Common Stock private placements are redeemable solely at the Company’s discretion.

7. LEASE COMMITMENTS

The Company entered into a three-year lease agreement with an affiliate of its president for office and laboratory space in Phoenix, Arizona. The lease expired on November 15, 2007 and was subsequently renewed for one year. The lease requires monthly rents of $2,000 through November 14, 2008. The lease contains a renewal option and requires the Company to pay all utility, insurance and maintenance costs. Rent expense was $24,000 for the years ended December 31, 2007 and 2006, respectively.

In 2007, the Company signed new lease agreements on a copier and telephone system. The copier is under a five-year operating lease agreement and the telephone system a three-year operating lease agreement. The copier lease requires monthly payments of $117 per month and the phone system requires monthly payments of $363 per month. The Company is required to pay all operating expenses associated with the leases. Equipment rental expense totaled $9,965 and $11,615 for the years ended December 31, 2007 and 2006, respectively.

F-19

SPHERIC TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2007

7. LEASE COMMITMENTS (continued)

Future minimum lease obligations at December 31, 2007 are as follows:

Year ending December 31
2008	$	19,319
2009		5,759
2010		4,307
2011		1,404
2012		1,053
	$	31,842

8. INCOME TAXES

Substantially all expenses, except for research and development, have been capitalized as-start up costs and will be amortized over five years beginning in 2007. Start-up costs and net operating loss carry forwards totaled approximately $2,021,000 and $1,384,002 at December 31, 2007 and 2006, respectively. Research and development have also been used to generate approximately $13,000 in tax credits for federal income tax purposes that may be carried forward to future years.

Net operating loss carry forwards will be available to reduce future taxable income for 20 years for federal purposes and 5 years for state tax purposes. The utilization of net operating loss and R & D credit carry forwards could be impaired if there is a significant change in the ownership of the Company.

A valuation allowance has been established to offset the benefit of any deferred tax assets since the Company has not yet achieved a history of profitable operations. The valuation allowance increased by approximately $247,000 and $207,000 in 2007 and 2006, respectively, using an arbitrary effective tax rate of 38.6% which is the maximum federal and state effective tax rate. The Company’s effective tax rate may be different than 38.6% once the Company begins to pay income taxes.

9. RELATED PARTY TRANSACTIONS

The Company’s president and principal stockholder advanced substantial portions of its start-up and development expenses. As of December 31, 2007 and 2006, the president had advanced funds totaling $565,600 and $447,000, respectively, for the Company’s operations. In 2005, he converted the expenses and advances which totaled $559,500 into preferred stock. At December 31, 2007 the Company owed its president $565,600 for advances he made to it, which advances are represented by non-interest bearing notes in the principal amounts of $447,000 (originally due and payable December 31, 2006, extended to December 31, 2008), $63,600 (originally due and payable March 31, 2007, extended to December 31, 2008), and $55,000 (due and payable March 31, 2008, extended to December 31, 2008).

The Company has independent contractor agreements with various key personnel, including its president, vice president and secretary. During the years ended December 31, 2007 and 2006, the Company paid $259,000 and $170,000, respectively, to various stockholders and officers for services under these agreements. The Company may be exposed to claims from taxing authorities that the officers are employees. As such, the Company has recorded an estimate for potential payroll taxes.

The Company’s credit card liability is guaranteed by its president.

Notes payable, related party consists of advances of $87,138 from certain officers of the Company. These amounts due to related parties are unsecured and non-interest bearing.

F-20

SPHERIC TECHNOLOGIES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

December 31, 2007

9. RELATED PARTY TRANSACTIONS (continued)

The Company paid $144,880 for improvements to the property leased from an affiliate of an officer of the Company.

The Company leased a portion of its office space and storage to another company generating rental revenue of $6,160 in 2007. The owner of the other company is related to the Company’s president.

During 2006, the President purchased the common stock owned by another stockholder. The agreement provides for the transfer of certain licenses to the Company and certain equipment to the retiring shareholder. The equipment had a net book value of $10,227.

10. LICENSE AGREEMENT

The Company has entered into a licensing agreement with The Penn State Research Foundation (PSRF) effective July 20, 2006. The agreement grants the Company exclusive right and license to certain patents owned by PSRF.

In consideration of the rights granted under the agreement, the Company is to pay a non-refundable fee of $10,000 which was due on December 20, 2007 and $15,000 due on July 20, 2008. In addition, the Company is to pay a running royalty of 3% of net sales, with the following minimum payments:

Year ending December 31
2009	$	25,000
2010 – 2012		50,000
2013 – 2016		100,000
2016 until the end of the term of the License Agreement		250,000

The Company is to also pay royalties on a percentage of all sublicense revenue according to the following schedule:

Year ending December 31
2008	10	%
209	15	%
2010 until the end of the term of the License Agreement	20	%

The Company is to reimburse PSRF for all reasonable and ordinary fees and external costs incurred, relating to the filing, prosecution, and maintenance of the patents. For those expenses that PSRF has already incurred, the Company paid PSRF $0 and $50,495 in 2008 and 2007, respectively.

F-21

No dealer, salesman or any other person has been authorized to give any information or to make any representation not contained in this prospectus in connection with the offer made by this prospectus. If given or made, such information or representation must not be relied upon as having been authorized by Spheric. This prospectus does not constitute an offer of any securities other than the registered securities to which it relates or an offer to any person in any jurisdiction in which such an offer would be unlawful. Neither delivery of this prospectus nor any sale made hereunder shall under any circumstances create an implication that information contained herein is correct as of any time subsequent to the date of this prospectus.

Until                     , all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

SPHERIC TECHNOLOGIES, INC.

Minimum of 1,000,000 shares of common stock and a

Maximum of 1,333,334 shares of common stock

$     per share

PROSPECTUS

                    , 2009

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

Other Expenses of Issuance and Distribution.

The following table sets forth the estimated costs and expenses of Spheric in connection with the offering described in the registration statement.

Securities and Exchange Commission Registration Fee	$	352
Legal Fees and Expenses		125,000
Accounting Fees and Expenses		20,000
Other Expenses		5,000
Total Expenses	$	150,352

Indemnification of Directors and Officers.

The Nevada Private Corporation Act, under which we are organized, permits the inclusion in the articles of incorporation of a provision limiting or eliminating the potential monetary liability of directors to a corporation or our shareholders by reason of their conduct as directors. The provision would not permit any limitation on or the elimination of liability of a director for disloyalty to his corporation or its shareholders, failing to act in good faith, engaging in intentional misconduct or a knowing violation of the law, obtaining an improper personal benefit or paying a dividend or approving a stock repurchase that was illegal under the Nevada Private Corporation Act. Accordingly, the provisions limiting or eliminating the potential monetary liability of directors permitted by the Law apply only to the “duty of care” of directors, i.e., to unintentional errors in their deliberations or judgments and not to any form of “bad faith” conduct.

Our Articles of Incorporation contain a provision which eliminates the personal monetary liability of directors to the extent allowed under Nevada law. Accordingly, a shareholder is able to prosecute an action against a director for monetary damages only if he can show a breach of the duty of loyalty, a failure to act in good faith, intentional misconduct, a knowing violation of law, an improper personal benefit or an illegal dividend or stock repurchase, as referred to in the amendment, and not “negligence” or “gross negligence” in satisfying his duty of care. The Law applies only to claims against a director arising out of his role as a director and not, if he is also an officer, his role as an officer or in any other capacity or to his responsibilities under any other law, such as the federal securities laws.

In addition, our Articles of Incorporation and Bylaws provide that we will indemnify our directors, officers, employees and other agents to the fullest extent permitted by Nevada law. 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 SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers or controlling persons 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, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-1

No pending litigation or proceeding involving one of our directors, officers, employees or other agents as to which indemnification is being sought exists, and we are not aware of any pending or threatened material litigation that may result in claims for indemnification by any director, officer, employee or other agent.

Recent Sales of Unregistered Securities

From December 2004 to December 2005, we sold 520,000 units at a price of $2.00 per unit to individual investors in a private placement, raising gross proceeds of $1,040,000. Each unit consisted of one share of Series A Convertible Preferred Stock (the “Preferred Stock”) and one redeemable common stock purchase warrant exercisable to purchase one share of common stock at a purchase price of $1.00 per share for a period of five years. Each share of Preferred Stock was convertible into two shares of common stock. We sold the securities through our officers, none of whom received compensation in connection with the placement. We sold the offering and the securities were issued in reliance on the exemption from registration set forth in Section 4(2) of the Securities Act. All outstanding shares of the Preferred Stock were converted into common stock in 2007. At December 31, 2007, 520,000 warrants to purchase shares of common stock at a price of $1.00 per share were outstanding. The warrants expire in 2009 and 2010, unless sooner redeemed by us upon satisfaction of certain conditions.

II-2

From May 2006 to August 31, 2008, we made a private placement of units at a price of $1.00 per unit to individual investors. Each unit consisted of one share of common stock and one redeemable common stock purchase warrant exercisable to purchase one share of common stock at a price of $1.00 per share for a period of five years from their dates of issue. The warrants expire from 2011 to 2013. The warrants are redeemable by us upon satisfaction of certain criteria. We sold 1,112,200 units in the placement, raising gross proceeds of $1,112,200. We sold the units through our officers and through a third party. The officers received no compensation for such sales. The third party sold 796,600 units and we paid him $103,038 in fees and in an unaccountable expense allowance. We also issued him a warrant exercisable to purchase 79,260 shares of common stock at a price of $1.20 per share for a four-year term. We sold the offering and the securities were issued in reliance on the exemption from registration set forth in Section 4(2) of the Securities Act.

In June, 2008, we sold 425,000 shares of our common stock at a price of $1.00 to individual investors, raising $425,000 in gross proceeds. We sold the shares through a member of the Financial Industry Regulatory Authority (“FINRA”) and paid a commission of $34,000 as compensation for its services. We sold the offering and the securities were issued in reliance on the exemption from registration set forth in Section 4(2) of the Securities Act.

A principal stockholder, Joseph Koch, made two loans to the Company of $150,000 each in November 2008 and December 2008, for a total of $300,000, to fund working capital requirements for the fourth quarter 2008 and the first quarter 2009. Each of these loans have an annual interest rate of 10%, have a maturity date of January 5, 2010, are payable from the proceeds of this offering if completed before the maturity date, and include 150,000 warrants per note. These warrants have a term of five years from the date of issue and are exercisable at a price of $3.00 per share.

Exhibits

Exhibit Number	Description	Reference
1.1	Form of Underwriting Agreement with Midtown Partners.	Filed herewith.
3.1	Articles of Incorporation of the Company, filed July 17, 2008.	Filed previously.
3.2	Articles of Conversion of the Company, filed July 17, 2008.	Filed previously.
3.3	Amended and Restated Bylaws of the Company, adopted July 17, 2008.	Filed previously.
3.4	Audit Committee Charter, dated July 17, 2008.	Filed previously.
3.5	Compensation Committee Charter, dated July 17, 2008.	Filed previously.
3.6	Corporate Governance and Nominating Committee Charter, dated July 17, 2008.	Filed previously.
4.1	Plan of Conversion of the Company, dated June 3, 2008.	Filed previously.
4.2	Form of Common Stock Certificate.	Filed previously.
4.3	Form of Common Stock Purchase Warrant ($1.00 per share, part of Unit with Common Stock).	Filed previously.
4.4	Form of Amendment to Common Stock Purchase Warrant ($1.00 per share, part of Unit with Common Stock).	Filed previously.
4.5	Form of Common Stock Purchase Warrant ($2.00 per share, part of Unit with Series A Convertible Preferred Stock).	Filed previously.
4.6	2008 Stock Option and Restricted Stock Plan.	Filed previously.
4.7	Form of Underwriter Warrant.	Filed herewith.
5.1	Opinion of Quarles & Brady LLP as to the legality of securities being registered (includes consent).	Filed herewith.
10.1	Lease Agreement with JH Realty LLC, dated November 15, 2004.	Filed previously.
10.2	Addendum to Lease Agreement with JH Realty LLC, dated November 15, 2007.	Filed previously.
10.3	Promissory Note between the Company and Joseph Hines, dated December 31, 2006, in the principal amount of $447,000.	Filed previously.
10.4	Promissory Note between the Company and Joseph Hines, dated March 31, 2007, in the principal amount of $63,600.	Filed previously.
10.5	Promissory Note between the Company and Joseph Hines, dated December 31, 2007, in the principal amount of $55,000.	Filed previously.
10.6	Promissory Note between the Company and J H Realty, dated December 31, 2007, in the principal amount of $62,000.	Filed previously.
10.7	Allonge to Promissory Notes between the Company and Joseph Hines, dated March 1, 2008.	Filed previously.
10.8	Allonge to Promissory Note between the Company and JH Realty LLC, dated March 1, 2008.	Filed previously.
10.9	Independent Contractor Agreement between the Company and Desert Valley Consulting Group, Inc., dated January 1, 2005.	Filed previously.
10.10	Independent Contractor Agreement between the Company and Michael Kirksey, dated January 1, 2005.	Filed previously.
10.11	Independent Contractor Agreement between the Company and Janice Backus, dated January 1, 2005.	Filed previously.
10.12	Independent Contractor Agreement between the Company and Kuruvilla Cherian, dated August 25, 2006.	Filed previously.
10.13	License Agreement between the Company and The Penn State Research Foundation, dated July 20, 2006.	Filed previously.

II-3

Exhibit Number	Description	Reference
10.14	Sales Agency Agreement between the Company and ChangSha Syno-Therm Co., Ltd, dated December 15, 2007.	Filed previously.
10.15	Stock Purchase Agreement between Joseph Hines and Avion Romuald, S.A., dated April 20, 2006.	Filed previously.
10.16	Agreement and Mutual Release between the Company and Gary Waldeck, dated August 17, 2006.	Filed previously.
10.17	Agreement and Mutual Release between the Company and Richard Schuff, dated August 18, 2006.	Filed previously.
10.18	Consulting Agreement between the Company and Steven Scott, dated February 1, 2008.	Filed previously.
10.19	Consulting Agreement between the Company and Gregg A. Linn, dated August 15, 2008.	Filed previously.
10.20	Employment Agreement between the Company and Joseph Hines, dated October 1, 2008.	Filed previously.
10.21	Employment Agreement between the Company and Michael Kirksey, dated October 1, 2008.	Filed previously.
10.22	Employment Agreement between the Company and Janice Backus, dated October 1, 2008.	Filed previously.
10.23	Stock Option Agreement between the Company and Peter Blonsky, dated June 3, 2008.	Filed previously.
10.24	Stock Option Agreement between the Company and Peter Blonsky, dated June 3, 2008.	Filed previously.
10.25	Stock Option Agreement between the Company and Jason Mayer, dated June 3, 2008.	Filed previously.
10.26	Stock Option Agreement between the Company and Lester Garnas, dated July 31, 2008.	Filed previously.
10.27	Stock Option Agreement between the Company and Gregg A. Linn, dated August 15, 2008.	Filed previously.
10.28	Form of Lock-up Agreement between the Company and Joseph Hines.	Filed previously.
10.29	Form of Lock-up Agreement between the Company and Michael Kirksey.	Filed previously.
10.30	Form of Escrow Deposit Agreement among the Company, Midtown Partners & Co. LLC, and Signature Bank.	Filed herewith.
10.31	Certificate of Extension of Sales Agency Agreement between the Company and Synotherm Corporation, dated December 16, 2008.	Filed herewith.
10.32	Allonge No. 2 to Promissory Notes between the Company and Joseph Hines, dated December 31, 2008.	Filed herewith.
10.33	Allonge No. 2 to Promissory Note between the Company and JH Realty LLC, dated December 31, 2008.	Filed herewith.
10.34	Addendum to Lease Agreement with JH Realty LLC, dated November 15, 2008.	Filed herewith.
15.1	Letter on unaudited interim financial information.	Filed previously.
23.1	Consent of Farber Hass Hurley LLP.	Filed herewith.
23.2	Consent of Quarles & Brady LLP (Included in 5.1 above).	Filed previously.
24.1	Power of Attorney (included on signature page).	Filed previously.

II-4

Undertakings

(a) Rule 415 Offering. The undersigned registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) 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 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 Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii) 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;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, 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 bona fide offering thereof.

(3) 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.

(4) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b) Request for acceleration of effective date or filing of registration statement becoming effective upon filing.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 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 Act 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

II-5

whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(c) Reliance on Rule 430A:

(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus 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 bona fide offering thereof.

II-6

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements of filing on Form S-1 and authorized this Amendment No. 1 to Form S-1 to be signed on its behalf by the undersigned, in the City of Phoenix, State of Arizona on January 16, 2009.

SPHERIC TECHNOLOGIES, INC., a Nevada corporation
/s/ JOSEPH HINES
Name:	Joseph Hines
Title:	President, CEO, & Chairman of the Board

Each person whose signature appears below authorizes Joseph Hines and/or Michael Kirksey to execute in the name of each such person who is then an officer or director of the registrant, and to file, any amendments to this registration statement on Form S-1 necessary or advisable to enable the registrant to comply with the Securities Act of 1933 and any rules, regulations and requirements of the SEC in respect thereof, which amendments may make such changes in such Form S-1 as such attorney-in-fact may deem appropriate.

In accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons in the capacities and on the date stated:

Signature and Title	Date
/s/ JOSEPH HINES	January 16, 2009
Joseph Hines, President, Chief Executive Officer and Chairman of the Board
/s/ MICHAEL KIRKSEY	January 16, 2009
Michael Kirksey, Executive Vice President, Chief Operating Officer and Director
/s/ GREGG A. LINN	January 16, 2009
Gregg A. Linn, Chief Financial Officer and Principal Accounting Officer
/s/ PETER BLONSKY, PH.D.	January 16, 2009
Peter Blonsky, Ph.D., Director
/s/ LESTER GARNAS	January 16, 2009
Lester Garnas, Director
/s/ JASON MAYER	January 16, 2009
Jason Mayer, Director

II-7

Exhibit Number	Description	Reference
1.1	Form of Underwriting Agreement with Midtown Partners.	Filed herewith.
3.1	Articles of Incorporation of the Company, filed July 17, 2008.	Filed previously.
3.2	Articles of Conversion of the Company, filed July 17, 2008.	Filed previously.
3.3	Amended and Restated Bylaws of the Company, adopted July 17, 2008.	Filed previously.
3.4	Audit Committee Charter, dated July 17, 2008.	Filed previously.
3.5	Compensation Committee Charter, dated July 17, 2008.	Filed previously.
3.6	Corporate Governance and Nominating Committee Charter, dated July 17, 2008.	Filed previously.
4.1	Plan of Conversion of the Company, dated June 3, 2008.	Filed previously.
4.2	Form of Common Stock Certificate.	Filed previously.
4.3	Form of Common Stock Purchase Warrant ($1.00 per share, part of Unit with Common Stock).	Filed previously.
4.4	Form of Amendment to Common Stock Purchase Warrant ($1.00 per share, part of Unit with Common Stock).	Filed previously.
4.5	Form of Common Stock Purchase Warrant ($2.00 per share, part of Unit with Series A Convertible Preferred Stock).	Filed previously.
4.6	2008 Stock Option and Restricted Stock Plan.	Filed previously.
4.7	Form of Underwriter Warrant.	Filed herewith.
5.1	Opinion of Quarles & Brady LLP as to the legality of securities being registered (includes consent).	Filed herewith.
10.1	Lease Agreement with JH Realty LLC, dated November 15, 2004.	Filed previously.
10.2	Addendum to Lease Agreement with JH Realty LLC, dated November 15, 2007.	Filed previously.
10.3	Promissory Note between the Company and Joseph Hines, dated December 31, 2006, in the principal amount of $447,000.	Filed previously.
10.4	Promissory Note between the Company and Joseph Hines, dated March 31, 2007, in the principal amount of $63,600.	Filed previously.
10.5	Promissory Note between the Company and Joseph Hines, dated December 31, 2007, in the principal amount of $55,000.	Filed previously.
10.6	Promissory Note between the Company and J H Realty, dated December 31, 2007, in the principal amount of $62,000.	Filed previously.
10.7	Allonge to Promissory Notes between the Company and Joseph Hines, dated March 1, 2008.	Filed previously.
10.8	Allonge to Promissory Note between the Company and JH Realty LLC, dated March 1, 2008.	Filed previously.
10.9	Independent Contractor Agreement between the Company and Desert Valley Consulting Group, Inc., dated January 1, 2005.	Filed previously.
10.10	Independent Contractor Agreement between the Company and Michael Kirksey, dated January 1, 2005.	Filed previously.
10.11	Independent Contractor Agreement between the Company and Janice Backus, dated January 1, 2005.	Filed previously.
10.12	Independent Contractor Agreement between the Company and Kuruvilla Cherian, dated August 25, 2006.	Filed previously.
10.13	License Agreement between the Company and The Penn State Research Foundation, dated July 20, 2006.	Filed previously.

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Exhibit Number	Description	Reference
10.14	Sales Agency Agreement between the Company and ChangSha Syno-Therm Co., Ltd, dated December 15, 2007.	Filed previously.
10.15	Stock Purchase Agreement between Joseph Hines and Avion Romuald, S.A., dated April 20, 2006.	Filed previously.
10.16	Agreement and Mutual Release between the Company and Gary Waldeck, dated August 17, 2006.	Filed previously.
10.17	Agreement and Mutual Release between the Company and Richard Schuff, dated August 18, 2006.	Filed previously.
10.18	Consulting Agreement between the Company and Steven Scott, dated February 1, 2008.	Filed previously.
10.19	Consulting Agreement between the Company and Gregg A. Linn, dated August 15, 2008.	Filed previously.
10.20	Employment Agreement between the Company and Joseph Hines, dated October 1, 2008.	Filed previously.
10.21	Employment Agreement between the Company and Michael Kirksey, dated October 1, 2008.	Filed previously.
10.22	Employment Agreement between the Company and Janice Backus, dated October 1, 2008.	Filed previously.
10.23	Stock Option Agreement between the Company and Peter Blonsky, dated June 3, 2008.	Filed previously.
10.24	Stock Option Agreement between the Company and Peter Blonsky, dated June 3, 2008.	Filed previously.
10.25	Stock Option Agreement between the Company and Jason Mayer, dated June 3, 2008.	Filed previously.
10.26	Stock Option Agreement between the Company and Lester Garnas, dated July 31, 2008.	Filed previously.
10.27	Stock Option Agreement between the Company and Gregg A. Linn, dated August 15, 2008.	Filed previously.
10.28	Form of Lock-up Agreement between the Company and Joseph Hines.	Filed previously.
10.29	Form of Lock-up Agreement between the Company and Michael Kirksey.	Filed previously.
10.30	Form of Escrow Deposit Agreement among the Company, Midtown Partners & Co. LLC, and Signature Bank.	Filed herewith.
10.31	Certificate of Extension of Sales Agency Agreement between the Company and Synotherm Corporation, dated December 16, 2008.	Filed herewith.
10.32	Allonge No. 2 to Promissory Notes between the Company and Joseph Hines, dated December 31, 2008.	Filed herewith.
10.33	Allonge No. 2 to Promissory Note between the Company and JH Realty LLC, dated December 31, 2008.	Filed herewith.
10.34	Addendum to Lease Agreement with JH Realty LLC, dated November 15, 2008.	Filed herewith.
15.1	Letter on unaudited interim financial information.	Filed previously.
23.1	Consent of Farber Hass Hurley LLP.	Filed herewith.
23.2	Consent of Quarles & Brady LLP (Included in 5.1 above).	Filed previously.
24.1	Power of Attorney (included on signature page).	Filed previously.

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EX-1.1

Exhibit 1.1

SPHERIC TECHNOLOGIES, INC.

Minimum of 1,000,000 shares of common stock

and

Maximum of 1,333,334 shares of common stock

UNDERWRITING AGREEMENT

                         , 2009

Midtown Partners & Co., LLC

4218 West Linebaugh Avenue

Tampa, Florida 33624

Attention: Bruce Jordan

As Representative of the Several Underwriters

Gentlemen:

SPHERIC TECHNOLOGIES, INC., a Nevada corporation (the “Company”), proposes to issue and sell to the underwriters named in Schedule I to this Agreement (the “Underwriters”) on a best efforts basis a minimum of 1,000,000 shares of the Company’s common stock $0.001 par value per share (the “Common Stock”) and a maximum of 1,333,334 shares of the Company’s Common Stock for whom Midtown Partners & Co., LLC is acting as the representative (the “Representative”). The Shares being offered are hereinafter referred to as (the “Shares”). The Shares are more fully described in the Registration Statement and Prospectus referred to below. The Company confirms its agreement with the Representative and the other several Underwriters as follows:

1. REGISTRATION STATEMENT AND PROSPECTUS.

The Company has prepared and filed with the Securities and Exchange Commission (the “Commission”), in accordance with the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder (the “Rules and Regulations ,” and together with said Act, the “Securities Act” ), a registration statement on Form S-1 (File No. 33-             ) and may have filed one or more amendments thereto, including in such registration statement and in certain amendments thereto a related preliminary prospectus for the registration under the Securities Act of the Shares. In addition, subject to the provisions of Section 4(e) hereof, the Company has filed or will promptly file a further amendment to such registration statement prior to the effectiveness of such registration statement, unless an amendment is not required pursuant to Rule 430A of the Rules and Regulations. As used in this Agreement, the term “Registration Statement” means such registration statement, including the Prospectus (as hereinafter defined), financial statements and schedules thereto, exhibits and other documents filed as part thereof, as amended when, and in the form in which, it is declared effective by the Commission, and, in the event any post-effective amendment thereto is filed thereafter and on or before the Closing Date (as hereinafter defined), shall also mean (from and after the date such post-effective amendment is effective under the Securities Act) such registration statement as so amended, provided that such Registration Statement, at the time it becomes effective, may omit such information as is permitted to be omitted from the Registration Statement when it becomes effective pursuant to Rule 430A of the Rules and Regulations, which information (“Rule 430 Information”) shall be deemed to be included in such Registration Statement when a final prospectus is filed with the Commission in accordance with Rules 430A and 424(b)(1) or (4) of the Rules and Regulations; the term “Preliminary Prospectus” means each Prospectus included in the Registration Statement, or any amendments thereto, before it becomes effective under the Securities Act, the form of Prospectus omitting Rule

430A Information included in the Registration Statement when it becomes effective, if applicable (the “Rule 430A Prospectus” ), and any prospectus filed by the Company with the consent of the Underwriters pursuant to Rule 424(a) of the Regulations; the term “ Prospectus” means the final prospectus included as part of the Registration Statement, except that (i) if any prospectus (including any Preliminary Prospectus) which differs from the prospectus included in the Registration Statement is provided to the Representative for use in connection with the offering of the Shares (whether or not such differing prospectus is required to be filed by the Company pursuant to Rule 424(b) under the Securities Act), the term “Prospectus” as used herein shall mean such differing prospectus from and after the date on which it shall have been first used, and (ii) in the event any supplement to or amendment of such prospectus is made after the date on which the Registration Statement is declared effective and on or prior to the Closing Date, the term “Prospectus” shall also mean (with respect to any supplement, from and after the date such supplement is first used or, with respect to any amendment, the date such amendment is effective under the Securities Act) such prospectus as so supplemented or amended; and the term “Effective Date” means (i) if the Company and the Representative have determined not to proceed pursuant to Rule 430A under the Securities Act, the date on which the Registration Statement becomes effective, or (ii) if the Company and the Representative have determined to proceed pursuant to Rule 430A under the Securities Act, the date of this Agreement.

2. AGREEMENTS TO SELL AND PURCHASE.

The Company agrees to issue and sell through you, as its exclusive sales agent, and upon the basis of the representations, warranties, covenants and agreements of the Company herein contained but subject to all the terms and conditions of this Agreement, you shall sell to the public on behalf of the Company, 1,000,000 Shares on a “best efforts all or none” basis and up to an additional 333,334 Shares on a “best efforts” basis at a purchase price of $6.00 per Share. The Company shall pay to you a commission of $0.48 for each Share sold. You shall use your best efforts to effect sales of such Shares for a period of ninety (90) days from the date hereof, subject to extension at your option for an additional ninety (90) days (the “Offering Period”).

If a minimum of 1,000,000 Shares have not been sold and the proceeds have not been placed in escrow with the Escrow Agent (as defined below) during the Offering Period and the American Stock Exchange (“AMEX”) has not confirmed that the Shares will be listed on AMEX, this Agreement shall terminate at the expiration of such period and the Escrow Agent (as defined below) shall promptly refund to each person who has subscribed for any of the Shares the full amount paid by such person, without deduction and without interest, and neither party to this Agreement shall have any obligation to the other party hereunder, except as hereinafter provided. The Company and you shall make appropriate arrangements for the prompt deposit in escrow with Signature Bank (the “Escrow Agent”), of all monies received in payment for the Shares. All escrow fees and expenses shall be paid by the Company. The escrow agreement (the “Escrow Agreement”) shall make appropriate provision for refunds to subscribers for the Shares as set forth above and if at least 1,000,000 Shares are sold during the Offering Period and AMEX has confirmed that the Shares will be listed on AMEX, for payment to the Company by the Escrow Agent of an amount equal to the public offering price of the Shares less the amounts required to be paid to you pursuant to this Section 2.

The Underwriters will offer the Shares for sale at the initial public offering price set forth on the cover of the Prospectus.

3. DELIVERY AND PAYMENT.

Delivery of and payment for the Shares shall be made at the offices of Lehman & Eilen, 20283 State Road 7, Suite 300, Boca Raton, FL 33498 (or such other place as shall be mutually agreed upon) at such time and date established by you following notification by you of the sale during the Offering period of not less than 1,000,000 Shares and up to 1,333,334 Shares, the Company’s compliance with all of the covenants set forth in this Agreement, the receipt by the Escrow Agent of collected funds in payment of such Shares and the receipt of confirmation from AMEX that the Shares will be listed on AMEX (the “Closing Date”).

The Closing Date and the time and place of delivery of and payment for the Shares may be varied by agreement among the Representative and the Company. Delivery of certificates for the Shares (in definitive form and registered in such names and in such denominations as the Representative shall request at least two business days prior to the Closing Date, as the case may be, by written notice to the Company) shall be made to the

Representative for the accounts of the several Underwriters against payment of the purchase price therefor by wire transfer, certified or official bank check or checks payable in New York Clearing House funds to the order of the Company. The Company agrees to make a list of names of all individuals and entities that will be entered into the book entry system available for inspection at the offices of the Representative at least 24 hours prior to the Closing Date.

On the Closing Date, at the time of the delivery and payment for the Shares, the Company shall: cause the Escrow Agent to (i) pay to the Representative as a non-accountable expense allowance a sum equal to 3% of the gross proceeds of the offering by wire transfer, certified or official bank check or checks payable in New York Clearing House funds payable to the order of the Representative in accordance with instructions from the Representative; and (ii) issue, sell and deliver to the Representative or its designees warrants to purchase up to an aggregate of 50,000 Shares (if the minimum is sold) or 66,667 Shares (if the maximum is sold), for an aggregate purchase price of $10 (the “Representative’s Warrants”), substantially in the form filed as an exhibit to the Registration Statement. The shares of Common Stock included in the Representative’s Warrants are hereinafter referred to collectively as the “Representative’s Warrant Shares.” The Representative’s Warrants will be exercisable at an initial exercise price of $9.00 per warrant at any time and from time to time, in whole or in part, during a four (4) year period commencing one (1) year following the Effective Date. In accordance with subparagraph (g) (1) of Rule 2710 of the NASD Rules, the Representative’s Warrants shall not be sold during the offering, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness of the Registration Statement or commencement of sales of the public offering, except as provided in subparagraph (g)(2) of Rule 2710 of the NASD Rules.

4. COVENANTS AND AGREEMENTS OF THE COMPANY.

The Company covenants and agrees with the several Underwriters as follows:

(a) The Company will notify the Representative promptly by telephone and (if requested by the Representative) will confirm such advice in writing, (1) when the Registration Statement has become effective and when any post-effective amendment thereto becomes effective, (2) if Rule 430A under the Securities Act is used, or the Prospectus is otherwise required to be filed with the Commission pursuant to Rule 424(b) under the Securities Act, when the Prospectus is filed with the Commission pursuant to Rule 424(b) under the Securities Act, (3) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus or for additional information, (4) of the issuance by the Commission of any stop order (“Stop Order” ) suspending the effectiveness of the Registration Statement, preventing or suspending the use of the Preliminary Prospectus, the Prospectus, the Registration Statement or any amendment or supplement thereto, or refusing to permit the effectiveness of the Registration Statement, or the initiation of any proceedings for any of those purposes, (5) of the happening of any event during the period mentioned in paragraph (f) below which in the reasonable judgment of the Company makes any statement made in the Registration Statement or the Prospectus untrue or which requires the making of any changes in the Registration Statement or the Prospectus in order to make the statements therein not misleading, and (6) of the receipt of any comments from the Commission or the Blue Sky or securities authorities of any jurisdiction regarding the Registration Statement, any post-effective amendment thereto, the Preliminary Prospectus, the Prospectus, or any amendment or supplement thereto. The Company will use its best efforts to prevent the issuance of any Stop Order by the Commission or any notification from the Blue Sky or securities authorities of any jurisdiction suspending the qualification or registration of the Shares or shares of Common Stock issuable upon exercise of the Warrants (the Shares together with the Representative’s Warrant Shares, the “Securities”) for sale in such jurisdictions, and if at any time the Commission shall issue any Stop Order, or if the Blue Sky or securities authorities of any jurisdiction shall issue notification suspending the qualification or registration of the Securities, the Company will make every reasonable effort to obtain the withdrawal of such Stop Order or notification at the earliest possible moment. The Company will promptly advise the Representative of its receipt of any notification with respect to the suspension of the qualification or registration of the Securities for offer or sale in any jurisdiction or the initiation or threatening of any action or proceeding for such purpose. The Company will use its best efforts to effectuate the listing of its shares on the AMEX.

(b) Prior to any public offering of the Shares by the Underwriters, the Company will endeavor in good faith, in cooperation with the Representative and its counsel, to register or qualify the Securities for offer or sale, as may be required under the Blue Sky or securities laws, rules or regulations of such jurisdictions as the Representative may request; provided that in no event shall the Company be obligated to register or qualify to do business as a foreign corporation in any jurisdiction where it is not now so registered or qualified or to take any action which would subject it to general service of process, or to taxation as a foreign corporation doing business, in any jurisdiction where it is not now so subject. The Company will pay all fees and expenses relating to the registration or qualification of the Securities under such Blue Sky or securities laws of such jurisdictions as the Representative may designate (including legal fees of counsel for the registration or qualification of the Securities, and in all cases, all disbursements and expenses incurred by such counsel in connection therewith). After registration, qualification or exemption of the Securities for offer and sale, in such jurisdictions, and for as long as any offering pursuant to this Agreement continues, the Company, at the Representative’s request, will file and make such statements or reports, and pay the fees applicable thereto, at such times as are or may be required by the laws, rules or regulations of such jurisdictions in order to maintain and continue in full force and effect the registration, qualification or exemption for offer or sale of the Securities, in such jurisdictions. After the termination of the offering contemplated hereby, and as long as any of the Securities are outstanding, the Company will file and make, and pay all fees applicable thereto, such statements and reports and renewals of registration as are or may be required by the laws, rules or regulations of such jurisdictions to maintain and continue in full force and effect the registration, qualification or exemption for secondary market transactions in the Shares in the various jurisdictions in which the Shares were originally registered, qualified or exempted for offer or sale.

(c) The Company will furnish to the Representative and its counsel, without charge, two copies (one of which shall be manually signed) of the Registration Statement as originally filed on Form S-1 and of any amendments (including post-effective amendments thereto), including financial statements and schedules, if any, and all consents, certificates and exhibits (including those incorporated therein by reference to the extent not previously furnished to the Representative), heretofore or hereafter made, signed by or on behalf of its officers whose signatures are required thereon and a majority of its board of directors, and will furnish to the Representative, without charge, for transmittal to each of the other Underwriters a copy of the Registration Statement and each post-effective amendment thereto, including financial statements and schedules, if any, but without exhibits.

(d) The Company will use its best efforts to cause the Registration Statement to become effective under the Securities Act. Upon such effectiveness, if the Company and the Representative have determined not to proceed pursuant to Rule 430A under the Securities Act, the Company will timely file a Prospectus pursuant to, and in conformity with, Rule 424(b), if required, and if the Company and the Representative have determined to proceed pursuant to Rule 430A under the Securities Act, the Company will timely file a Prospectus pursuant to, and in conformity with, Rules 424(b) and 430A under the Securities Act.

(e) The Company will give the Representative and its counsel advance notice of its intention to file any amendment to the Registration Statement or any amendment or supplement to the Prospectus, whether before or after the effective date of the Registration Statement, and will not file any such amendment or supplement unless the Company shall have first delivered copies of such amendment or supplement to the Representative and its counsel and the Representative and its counsel shall have given consent to the filing of such amendment or supplement, which consent shall not be unreasonably withheld. Any such amendment or supplement shall comply with the Securities Act.

(f) From and after the Effective Date, the Company will deliver to each of the Underwriters, without charge, as many copies of the Prospectus or any amendment or supplement thereto as the Representative may reasonably request. The Company consents to the use of the Prospectus or any amendment or supplement thereto by the several Underwriters and by all dealers to whom the Shares may be sold, both in connection with the offering or sale of the Shares for such period of time thereafter as the Prospectus is required by law to be delivered in connection therewith. If during such period of time any event shall occur which in the judgment of the Company or counsel to the Representative should be set forth in the Prospectus in order to make the statements therein, in light of the circumstances under which they were made, not misleading, or if it is necessary to supplement or amend the Prospectus to comply with law, the Company will forthwith prepare and duly file with the Commission an appropriate supplement or amendment thereto, and will deliver to each of the Underwriters, without charge, such number of copies thereof as the Representative may reasonably request.

(g) The Company will promptly pay all expenses in connection with (1) the preparation, printing, filing, distribution and mailing (including, without limitation, express delivery service) of the Registration Statement, each Preliminary Prospectus, the Prospectus, and the preliminary and final forms of Blue Sky memoranda (if any); (2) the issuance and delivery of the Shares; (3) the fees and expenses of legal counsel and independent accountants for the Company relating to, among other things, opinions of counsel, audits, review of unaudited financial statements and cold comfort review; which fees shall not exceed $75,000 (4) the fees and expenses of any registrar, transfer agent for the Shares; (5) the printing, filing, distribution and mailing (including, without limitation, express delivery service) of this Agreement, the Agreement Among Underwriters, the Selected Dealer Agreement, and the Underwriters’ Questionnaire; (6) furnishing such copies of the Registration Statement, the Prospectus and any Preliminary Prospectus, and all amendments and supplements thereto, as may be requested for use in connection with the offering and sale of the Shares by the Underwriters or by dealers to whom the Shares may be sold; (7) any fees with respect to filings required to be made by the Underwriters with the FINRA; and (8) the expenses of tombstone advertisements, due diligence meetings and lucite cubes. The Company will also pay all expenses in connection with the Company’s application to list the Shares on the American Stock Exchange (“AMEX”). In addition, the Company hereby agrees to pay to the Representative a non-accountable expense allowance set forth in Section 3 above.

(h) On the Closing Date, the Company shall sell to the Representative (or its designees), Representative’s Warrants described in Section 3 above.

(i) If (I) this Agreement (a) shall not become effective, or (b) if the Representative terminates this Agreement, in either case due to a breach or non-fulfillment of obligations of Section 7 hereof by the Company, which shall include a breach of the representations and warranties of the Company contained in this Agreement, or for the failure of the Company to perform any of the covenants contained in this Agreement or (II) if the Company elects to terminate this Agreement pursuant to Section 8 hereof, the Company will reimburse the several Underwriters for their out-of-pocket expenses (including fees and expenses of counsel to the Representative) reasonably incurred by them in connection with this Agreement or the proposed offer, sale, and delivery of the Shares limited to an aggregate amount of fifty thousand dollars ($50,000) in total.

(j) Until ninety (90) days after the Effective Date, without the prior written consent of the Representative, the Company will not offer, issue, sell, contract to sell, grant any option for the sale of, or otherwise dispose of, directly or indirectly, any securities of the Company, except as provided for and as contemplated by this Agreement.

(k) On or prior to the Closing Date, the Company shall obtain from each of Joe Hines and Michael Kirksey his enforceable written agreement, in form and substance satisfactory to counsel to the Representative, that for a period of one year after the Closing Date (or any longer period required by any jurisdiction in which the offer and sale of the Shares is to be registered or qualified), he will not offer for sale, sell, contract to sell, assign, pledge, transfer, grant any option for the sale of, or otherwise dispose of, directly or indirectly, any securities of the Company (including without limitation any shares of Common Stock), owned by him as of the Closing Date without the prior written consent of the Company (the “Offering Restrictions”) and the Company agrees not to release such persons from the restrictions without prior written consent of the Representative. In addition, the Company will instruct the transfer agent accordingly and the certificates representing these securities will bear a legend to the foregoing effect.

(l) The Company has reserved and shall continue to reserve and keep available the maximum number of shares of its authorized but unissued Common Stock and other securities for issuance upon exercise of the Representative’s Warrants.

(m) For a period of five (5) years after the date of this Agreement, the Company shall:

(i) retain Farber, Hass Hurley LLP or another nationally recognized firm of independent public accountants, as its auditors, and at its own expense, shall cause such independent certified public accountant to review (but not audit) the Company’s financial statements for each of the first three (3) fiscal quarters of each fiscal year prior to the announcement of quarterly financial information, the filing of the Company’s Form 10-Q quarterly reports and the mailing of quarterly financial information to its stockholders, provided this shall not require the inclusion of such a review report in the Company’s quarterly filings.

(ii) cause the Company’s Board of Directors to meet not less frequently than quarterly, upon proper notice, and cause an agenda and minutes of the preceding meeting to be distributed to directors prior to each such meeting;

(iii) distribute to its security holders, within 120 days after the end of each fiscal year, an annual report (containing certified financial statements) prepared in accordance with, and satisfying the substantive disclosure requirements of Rule 14a-3(b) of Regulation 14A promulgated by the Commission under the Securities Exchange Act of 1934, as amended; and

(iv) appoint a transfer agent for the Common Stock, acceptable to the Representative.

(n) For a period of five (5) years after the date of this Agreement, the Company shall furnish each of the Underwriters without charge, the following:

(i) within ninety (90) days after the end of each fiscal year, financial statements certified by the independent certified public accountants referred to in Section 4(m)(i) above, including a balance sheet, statement of operations, statement of stockholders’ equity and statement of cash flows, in each case for the Company and its then existing subsidiaries (if any), with, supporting schedules, prepared in accordance with generally accepted accounting principles, as at the end of such fiscal year and for the twelve (12) months then ended, accompanied by a copy of the certificate or report thereon of such independent certified public accountants;

(ii) (x) for so long as the Company is a reporting company under any of Sections 12(b), 12(g) or 15(d) of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder (collectively, the “Exchange Act”), promptly after filing with the Commission, copies of all reports and proxy soliciting material which the Company is required to file under the Exchange Act, or (y) at such times as the Company is not a reporting company under the aforesaid provisions of the Exchange Act, as soon as practicable after the end of each of the first three fiscal quarters of each fiscal year, financial statements of the Company, including a balance sheet, statement of operations, statement of stockholders’ equity and statement of cash flows as at the end of, or for each such fiscal quarter and the comparable period of the preceding year, which statements need not be audited.

(iii) as soon as practicable after they have first been distributed to stockholders of the Company, copies of each annual and interim financial or other report or communication sent by the Company to its stockholders (except to the extent duplicative of information pursuant to any other clause of this Section 4(n));

(iv) as soon as practicable following release or other dissemination, copies of every press release and every material news item and article in respect of the Company or its affairs and released or otherwise disseminated by the Company;

(v) promptly following receipt thereof, copies of the Company’s daily transfer sheets prepared by the Company’s transfer agent and a list of stockholders; and

(vi) such additional documents and information with respect to the Company and its affairs and the affairs of its subsidiaries, if any, as the Representative may from time to time reasonably request.

(o) On or prior to the Effective Date, the Company will have confirmed the listing of the Shares on AMEX, subject only to notice of issuance and the registration of such securities under the Exchange Act. For a period of five (5) years from the date of this Agreement, the Company agrees, at its sole cost and expense, to take all necessary and appropriate action such that its securities continue to be listed on the AMEX, provided that the Company otherwise complies with the prevailing requirements of the AMEX.

(p) Within sixty (60) days of the Closing Date, the Company shall prepare and deliver (at its own cost and expense) to the Representative one velobinder and to counsel to the Representative three velobinders containing copies of all documents and correspondence filed with, or received from, the Commission, FINRA and the AMEX relating to the offering of the Shares and the closing thereof, including related matters.

(q) For a period of six (6) months from the Closing Date, the Company will maintain a current prospectus satisfying the requirements of Section 10(a)(3) of the Securities Act and, in connection therewith, expeditiously file with the Commission, at its own expense, any post-effective amendments to the Registration Statement which may be required and cause such post-effective amendments to become effective in compliance with

the Securities Act, without lapse of time between the effectiveness of any such post-effective amendments, and cause a copy of the Prospectus, as then amended or supplemented, and furnish to each Underwriter and dealer as many copies of each such Prospectus as such Underwriter or dealer may reasonably request.

(r) The Company will make generally available to its security holders and deliver to the Representative as soon as it is practicable to do so, but in no event later than ninety days after the end of its first four (4) full fiscal quarters following the effective date of the Registration Statement occurs, an earnings statement (which need not be audited) covering a period of at least twelve consecutive months commencing after the effective date of the Registration Statement, which shall satisfy the requirements of Section 11(a) of the Securities Act.

(s) The Company will, promptly upon the Representative’s request, prepare and file with the Commission any amendments or supplements to the Registration Statement, any Preliminary Prospectus or the Prospectus and take any other action, which in the reasonable opinion of Lehman & Eilen LLP, counsel to the Representative, may be reasonably necessary or advisable in connection with the distribution of the Shares, and will use its best efforts to cause the same to become effective as promptly as possible.

(t) The Company will furnish to the Representative as early as practicable prior to the Closing Date, but no less than two (2) full business days prior thereto, a copy of the latest available unaudited interim financial statements of the Company which have been reviewed by the Company’s independent certified public accountants, as stated in their letters to be furnished pursuant to Section 7(d) hereof.

(u) The Company will apply the net proceeds from the issuance and sale of the securities for the purposes and in the manner set forth under the caption “Use of Proceeds” in the Prospectus, and will file on a timely basis such reports with the Commission with respect to the sale of the securities and the application of the proceeds therefrom as may be required pursuant to Rule 463 under the Securities Act. The Company will operate its business in such a manner and, pending application of the net proceeds of the offering for the purposes and in the manner set forth under the caption “Use of Proceeds” in the Prospectus, will invest such net proceeds in certain types of securities so as not to become an “investment company” as such term is defined under the Investment Company Act of 1940, as amended (the “Investment Company Act”).

(v) The Company has filed a registration statement on Form 8-A covering the Shares, pursuant to Section 12(b) of the Exchange Act and will use its best efforts to cause said registration statement to become effective on the Effective Date. The Company will comply with all registration, filing and reporting requirements of the Exchange Act, which may from time to time be applicable to the Company. The Company shall comply with the provisions of all undertakings contained in the Registration Statement.

(w) Prior to the Closing Date, the Company shall neither issue any press release or other communication, directly or indirectly, nor hold any press conference with respect to the offering of the securities of the Company or its business, results of operations, condition (financial or otherwise), property, assets, liabilities or prospects, without the prior written consent of the Representative.

(x) For a period of ninety (90) days after the date hereof, the Company will not, directly or indirectly, take any action designed, or which will constitute or which might reasonably be expected to cause or result in, stabilization or manipulation of the market price of the Shares.

(y) The Company will maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to cash and cash equivalents is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for cash and cash equivalents is compared with the existing cash and cash equivalents at reasonable intervals and appropriate action is taken with respect to any differences.

(z) There are no business relationships or related party transactions of the nature described in Item 404 of Regulation S-K involving the Company and any person referred to in said Item 404, except as required to be described in the Prospectus and as so described.

(aa) For a period of six months from the Closing Date, the Company will not grant any person or entity registration rights with respect to any of its securities, except such rights as are pari passu to the registration rights contained in the Representative’s Warrants and registered or qualified for sale under the Blue Sky or state securities law, rules or regulations of the jurisdictions in which such securities are to be offered for sale.

5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each Underwriter that:

(a) When the Registration Statement becomes effective, and at all times subsequent thereto to and including the Closing Date, and during such longer period as the Prospectus may be required to be delivered in connection with sales by the Underwriters or any dealer, and during such longer period until any post-effective amendment thereto shall become effective, the Registration Statement (and any post-effective amendment thereto) and the Prospectus (as amended or as supplemented if the Company shall have filed with the Commission any amendment or supplement to the Registration Statement or the prospectus) will contain all statements which are required to be stated therein in accordance with the Securities Act, will comply with the Securities Act, and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and no event will have occurred which should have been set forth in an amendment or supplement to the Registration Statement or the Prospectus which has not then been set forth in such an amendment or supplement if a Rule 430A Prospectus is included in the Registration Statement at the time it becomes effective, the Prospectus filed pursuant to Rules 430A and 424(b)(1) or (4) will contain all Rule 430A Information and all statements which are required to be stated therein in accordance with the Securities Act, will comply with the Securities Act, and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and each Preliminary Prospectus, as of the date filed with the Commission, did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except as such statements are corrected in subsequent Preliminary Prospectus filing); except that no representation or warranty is made in this Section 5(a) with respect to statements or omissions made in reliance upon and in conformity with written information furnished to the Company as stated in Section 6(b) with respect to any Underwriter by or on behalf of such Underwriter through the Representative expressly for inclusion in any Preliminary Prospectus, the Registration Statement, or the Prospectus or any amendment or supplement thereto.

(b) Neither the Commission nor the Blue Sky or securities authorities of any jurisdiction has issued an order suspending the effectiveness of the Registration Statement, preventing or suspending the use of any Preliminary Prospectus, the Prospectus, the Registration Statement, or any amendment or supplement thereto, refusing to permit the effectiveness of the Registration Statement, or suspending the registration or qualification of the Shares or Representative’s Warrants, nor has the Commission or any of such authorities instituted or threatened to institute any proceedings with respect to such an order.

(c) The Company is a corporation duly incorporated and validly existing in good standing under the laws of Nevada, its jurisdiction of incorporation. The Company has full corporate power and authority and has obtained all material consents, authorizations, approvals, orders, licenses, certificates, declarations and permits of and from, and has made all required filings with, all federal, state, local and other governmental authorities and all courts and other tribunals, to own, lease, license and use its properties and assets and to carry on its business in the manner described in the Prospectus. All such consents, authorizations, approvals, orders, licenses, certificates, declarations, permits and filings are in full force and effect and the Company is in all material respects complying therewith. The Company is duly registered or qualified to do business as a foreign corporation and is in good standing in each other jurisdiction in which its ownership, leasing, licensing, or use of property and assets or the conduct of its business requires such registration or qualification, except where the failure to so register or qualify would not individually or in aggregate, either (i) have a material adverse effect on the condition (financial or otherwise), results of operations, business, property, assets or liabilities of the Company from the latest information set forth in the Registration Statement or the Prospectus, (ii) prevent or materially interfere with the consummation of the transactions contemplated hereby or (iii) result in the delisting of Shares from the AMEX (the occurrence of such effect or such prevention described in the foregoing clauses (i), (ii) or (iii) being herein referred to as a “Material Adverse Effect”).

(d) The authorized capital stock of the Company consists of fifty million (50,000,000) shares of Common Stock par value $0.001 per shares of which 4,842,850 shares are outstanding, and five million (5,000,000) shares of blank check preferred stock, par value $0.001 per share (the “Preferred Stock”), of which no shares are outstanding. Each outstanding share of Common Stock is duly authorized, validly issued, fully paid, and non-assessable, without any personal liability attaching to the ownership thereof, and has not been issued and is not owned or held in violation of any preemptive rights of stockholders. There is no commitment, plan or arrangement to issue, and no outstanding option, warrant or other right calling for the issuance of, any share of capital stock of the Company or any security or other instrument which by its terms is convertible into, exercisable for, or exchangeable for capital stock of the Company, except as disclosed in the Prospectus. There is outstanding no security or other instrument which by its terms is convertible into or exchangeable for capital stock of the Company.

(e) The financial statements of the Company included in the Registration Statement and the Prospectus fairly present the financial position, the results of operations and the other information purported to be shown therein at the respective dates and for the respective periods to which they apply. Such financial statements have been prepared in accordance with generally accepted accounting principles and are prepared in accordance with the books and records of the Company. The accountants whose reports on the audited financial statements are filed with the Commission as a part of the Registration Statement are, and during the periods covered by their report(s) included in the Registration Statement and the Prospectus were, independent certified public accountants with respect to the Company and within the meaning of the Securities Act. No other financial statements are required by Form S-1 or otherwise to be included in the Registration Statement or the Prospectus. Except as disclosed in the Prospectus, there has at no time been a material adverse change in the condition (financial or otherwise), results of operations, business, property, assets or liabilities of the Company from the latest information set forth in the Registration Statement or the Prospectus (a “Material Adverse Change”).

(f) There is no litigation, arbitration, claim, governmental or other proceeding (formal or informal), or investigation pending, or to the Company’s knowledge, threatened (or any basis therefore known to the Company), with respect to the Company, its operations, business, property or assets, except as disclosed in the Prospectus or such as individually or in the aggregate do not now have and are not expected to have a material adverse effect upon the operations, business, property, assets or condition (financial or otherwise) of the Company. The Company is not in violation of, or in default with respect to, any material law, rule, regulation, order judgment, or decree, except as disclosed in the Prospectus or such as individually or in the aggregate do not now have and are not expected to have material adverse effect upon the operations, business, property, assets, condition (financial or otherwise) of the Company; nor is the Company required to take any action in order to avoid any such violation or default.

(g) The Company has good and marketable title in fee simple absolute to all real properties and good title to all other properties and assets which the Prospectus indicates are owned by it, free and clear of all liens, security interests, pledges, charges, mortgages and other encumbrances (except as may be required to be disclosed in the Prospectus). The properties held under lease by the Company are held by it under valid and enforceable leases and the interests of the Company in such leases are free and clear of all liens, encumbrances and defects, except as disclosed in the Prospectus, and the Company is in full compliance with all material terms and conditions thereunder and such leases are in full force and effect. No real property owned, leased, licensed or used by the Company is situated in an area which is, or to the knowledge of the Company, will be, subject to zoning, use, or building code restrictions which would prohibit (and no state of facts relating to the actions or inaction of another person or entity or his or its ownership, leasing, licensing, or use of any real or personal property exists or will exist which would prevent) the continued effective ownership, leasing, licensing, or use of such real property in the business of the Company as presently conducted or as the Prospectus indicates any of them contemplate conducting.

(h) Neither the Company nor any other party is now in violation or breach of, or in default with respect to complying with, any material provision of any indenture, mortgage, deed of trust, debenture, note or other evidence of indebtedness, contract, agreement, instrument, lease or license, or arrangement or understanding which is material to the Company, and each such indenture, mortgage, deed of trust, debenture, note or other evidence of indebtedness, contract, agreement, instrument, lease or license is in full force and is the legal, valid and binding obligation of the Company, and to the knowledge of the Company, of the other contracting party and is enforceable as to the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and by equitable principles affecting the availability of remedies in the nature of specific performance. The Company is not a party to nor bound by any contract, agreement, instrument, lease, license, arrangement or understanding, or subject to any

charter or other restriction, which has had or is expected in the future to have a material adverse effect on the condition (financial or otherwise), results of operations, business, property, assets or liabilities of the Company. The Company is not in violation or breach of, or in default with respect to, any term of its Certificate of Incorporation or By-laws.

(i) Except as disclosed in the Prospectus, the Company does not own or have any licensed rights to, in or under any patents, patent applications, trademarks, trademark applications, trade names, service marks, copyrights, technology, know-how or other intangible properties or assets (all of the foregoing being herein called “Intangibles”) that are material to the business of the Company. Except as disclosed in the Prospectus, there is no right under any Intangibles of the Company necessary to the business of the Company as presently conducted or as proposed to be conducted as indicated in the Prospectus. The Company has not received notice of infringement with respect to asserted Intangibles of others. To the knowledge of the Company, there is no infringement by others of Intangibles of the Company. To the knowledge of the Company, there is no Intangible of others which has had or may in the future have a materially adverse effect on the condition (financial or otherwise), results of operations, business, property, assets or liabilities of the Company.

(j) None of the Company, any director or officer of the Company, or to the knowledge of the Company, any agent, employee, or other person authorized to act on behalf of the Company has, directly or indirectly: used any corporate funds of the Company for unlawful contributions, gifts, entertainment, or other unlawful expenses relating to political activity; made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate funds of the Company; violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, as relates to the business of the Company; or made any bribe, rebate, payoff, influence payment, kickback, or other unlawful payment in connection with the business of the Company.

(k) Any material contract, agreement, instrument, lease or license required to be described in the Registration Statement or the Prospectus has been properly described therein in all material respects. Any material contract, agreement, instrument, lease or license required to be filed as an exhibit to the Registration Statement has been filed with the Commission as an exhibit to or has been incorporated as an exhibit by reference into the Registration Statement.

(l) The Company has all requisite corporate power and authority to execute, deliver and perform under the terms and conditions of this Agreement. All necessary corporate proceedings of the Company have been duly taken to authorize the execution, delivery and performance by the Company of this Agreement. This Agreement has been duly authorized, executed and delivered by the Company, and assuming the valid execution thereof by the other parties thereto, is a legal, valid, and binding agreement of the Company, and is enforceable as to the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and by equitable principles affecting the availability of remedies in the nature of specific performance. Each of the Representative’s Warrants has been duly authorized by the Company and, when executed, issued and delivered by the Company and paid for by the Underwriters or the Representative (or its executive officers), as the case may be, in accordance with the provisions of the Representative’s Warrants, as the case may be, will be legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and by equitable principles affecting the availability of remedies in the nature of specific performance. No consent, authorization, approval, order, license, certificate, declaration or permit of or from, or filing with, any governmental or regulatory authority, agent, board or other body is required for the execution, delivery or performance by the Company of this Agreement, or the Representative’s Warrants (except filings with and orders of the Commission pursuant to the Securities Act which have been or will be made or obtained prior to the Closing Date, and such filings, consents or permits as are required under Blue Sky or securities laws in connection with the transactions contemplated by this Agreement). No consent of any party to any material contract, agreement, instrument, lease, license, arrangement or understanding to which the Company is a party, or to which any of its property or assets are subject, is required for the execution, delivery or performance of this Agreement or the Representative’s Warrants (except as described in the exhibits to the Registration Statement); and the execution, delivery and performance of this Agreement and the Representative’s Warrants will not violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under any such material contract, agreement, instrument, lease, license, arrangement or understanding,

result in the creation or imposition of, any lien, security interest, pledge, charge, or other encumbrance upon any of the material property or assets of the Company pursuant to the terms of any indenture, mortgage, deed of trust, loan or credit agreement, lease or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the material property or assets of the Company is subject or violate or result in a breach of any term of the Certificate of Incorporation or By-laws of the Company, or violate, result in a material breach of, or conflict with any law, rule, regulation, order, judgment or decree binding on the Company or to which any of its operations, businesses, properties or assets are subject.

(m) The Shares are validly authorized. The Shares, when issued, paid for and delivered in accordance with this Agreement, will be validly issued, fully paid and non-assessable, without any personal liability attaching to the ownership thereof, and will not be issued in violation of any preemptive rights of stockholders. The Underwriters will receive good title to the Securities purchased by them, upon payment of the purchase price therefor in accordance with the provisions of this Agreement, free and clear of all liens, security interests, pledges, charges, encumbrances, stockholders’ agreements and voting trusts (collectively, “Encumbrances”). The Representative (or its executive officers or its designees) will receive good title to the Representative’s Warrants purchased by them, upon payment of the purchase price thereof in accordance with the provisions of this Agreement, free and clear of all Encumbrances.

(n) The Representative’s Warrant Shares are duly authorized and reserved for issuance and, when issued, paid for and delivered upon exercise of the Representative’s Warrants in accordance with the provisions of the Representative’s Warrants will be validly issued, fully paid and non-assessable and will not be issued in violation of any preemptive rights of stockholders; and the holders of the Representative’s Warrant Shares will receive good title to them, free and clear of all Encumbrances.

(o) The Shares and the Representative’s Warrants conform in all material respects to all statements relating thereto contained in the Registration Statement and the Prospectus.

(p) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, and except as otherwise may be stated therein, (i) the Company has not entered into any transaction or incurred any liability or obligation, contingent or otherwise, which is material to the Company, except in the ordinary course of business, (ii) there has not been any change in the outstanding capital stock of the Company or any issuance of options, warrants or rights to purchase the capital stock of the Company or any material increase in the long-term debt of the Company or any material adverse change in the business, condition (financial or otherwise) or results of operations of the Company, (iii) no loss or damage (whether or not insured) to the properties of the Company have been sustained which is material to the Company, (iv) the Company has not paid or declared any dividend or other distribution with respect to its capital stock, and (v) there has not been any change, contingent or otherwise, in the direct or indirect control of the Company nor, to the knowledge of the Company, do there exist any circumstances which would likely result in such a change.

(q) Neither the Company nor any of its officers, directors or Affiliates (as defined in Rule 405 of the Rules and Regulations), has taken or will take, directly or indirectly, prior to the termination of the offering contemplated by this Agreement, any action designed to stabilize or manipulate the price of any security of the Company, or which has caused or resulted in, or which might in the future reasonably be expected to cause or result in, stabilization, or manipulation of the price of any security of the Company, to facilitate the sale or resale of any of the Shares.

(r) The Company has not incurred, directly or indirectly, any liability for a fee, commission or other compensation on account of the employment of a broker or finder in connection with the offering of the Shares contemplated by this Agreement.

(s) The Company is not, and does not intend to conduct its business in a manner in which it would become, an “investment company” as defined in Section 3(a) of the Investment Company Act.

(t) The Offering Restrictions are in full force and effect and certificates representing the Securities subject to such restrictions bear an appropriate legend.

(u) No person or entity has the right to require registration of shares of Common Stock or other securities of the Company because of the filing or effectiveness of the Registration Statement who has not waived such right.

(v) The Company has filed all federal, state and local tax returns required to be filed (or has obtained extensions therefor) and has paid all taxes shown on such returns and all assessments received by it to the extent that payment has become due. The Company has made adequate accruals for all taxes which may be owed by it, but have not been paid.

(w) The Company has adequately insured its properties against loss or damage by fire, maintains adequate insurance against liability for negligence and maintains such other insurance in such amounts as is usually maintained by companies engaged in the same or similar businesses, including product liability insurance.

6. INDEMNIFICATION AND CONTRIBUTION.

(a) The Company agrees to indemnify and hold harmless each Underwriter, its officers, directors, partners, employees, agents and counsel, and each person, if any, who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, against any and all loss, liability, claim, damage, and expense whatsoever (which shall include, for all purposes of this Section 6, but not be limited to, attorneys’ fees and any and all expenses whatsoever incurred in investigating, preparing, or defending against any investigation, litigation or proceeding, commenced or threatened, or any claim whatsoever and any and all amounts paid in settlement of any claim or litigation) as and when incurred arising out of, based upon, or in connection with (i) any untrue statement or alleged untrue statement of a material fact contained (A) in any Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement, or the Prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto, or (B) in any application or other document or communication (in this Section 6 collectively called an “application”) executed by or on behalf of the Company or based upon written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify the Shares under the Blue Sky or securities laws thereof (or the rules and regulations promulgated thereunder) or filed with the Commission or any securities exchange or automated quotation system; or any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, unless such statement or omission was made in reliance upon and in conformity with written information furnished to the Company as stated in Section 6(b) with respect to any Underwriter by or on behalf of such Underwriter through the Representative for inclusion in any Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement, or the Prospectus or any amendment or supplement thereto, or in any application, as the case may be, or (ii) any breach of any representation, warranty, covenant or agreement of the Company contained in this Agreement. The foregoing agreement to indemnify shall be in addition to any liability the Company may otherwise have, including liabilities arising under this Agreement.

If any investigation is initiated or action is brought against an Underwriter or any of its officers, directors, partners, employees, agents or counsel, or any controlling persons of an Underwriter (each, an “Indemnified or Indemnifying Party” and collectively “Indemnified Parties”) in respect of which indemnity may be sought against the Company pursuant to the foregoing paragraph, such Indemnified Party or Indemnified Parties shall promptly notify the Company in writing of the institution of such action (but the failure so to notify shall not relieve the Company from any liability it may have pursuant to this Section 6(a)) and the Company shall promptly assume the defense of such action, including the employment of counsel (reasonably satisfactory to such Indemnified Party or Indemnified Parties) and payment of expenses. Such Indemnified Party or Indemnified Parties shall have the right to employ its or their own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Indemnified Parties, unless the employment of such counsel shall have been authorized in writing by the Company in connection with the defense of such action or the Company shall not have promptly employed counsel reasonably satisfactory to such Indemnified Party or Indemnified Parties to have charge of the defense of such action or such Indemnified Party or Indemnified Parties shall have reasonably concluded that there may be one or more legal defenses available to it or them or to other Indemnified Parties which are different from or additional to those available to the Company, in any of which events such reasonable fees and expenses shall be borne by the Company and the Company shall not have the right to direct the defense of such action on behalf of the Indemnified Party or Indemnified Parties. Anything in this paragraph to the contrary notwithstanding, the Company shall not be liable for any settlement of any such claim or action effected without its prior written consent. The Company agrees promptly to notify the Underwriters of the commencement of any litigation or proceedings against

the Company or any of its officers or directors in connection with the sale of the Shares, any Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or any application.

(b) Each Underwriter severally agrees to indemnify and hold harmless the Company, each director of the Company, each officer of the Company who shall have signed the Registration Statement, and each other person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, to the same extent as the foregoing indemnity from the Company to the several Underwriters in Section 6(a), but only with respect to statements or omissions, if any, made in any Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement, or the Prospectus (as from time to time amended and supplemented), or any amendment or supplement thereto, or in any application, in reliance upon and in conformity with written information furnished to the Company with respect to any Underwriter by or on behalf of such Underwriter through the Representative expressly for inclusion in any Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or in any application, as the case may be; provided, however, that the obligation of each Underwriter to provide indemnity under the provisions of this Section 6(b) shall be limited to the amount which represents the product of the number of Shares underwritten by such Underwriter, hereunder and the underwriting discount per Share set forth on the cover page of the Prospectus. For all purposes of this Agreement, the public offering price, the amounts of the selling concession and re-allowance set forth in the Prospectus, the information in the first and seventh paragraph under “Underwriting” and the risk factor “The Underwriter has limited experience in conducting public equity offerings” constitute the only information furnished in writing by or on behalf of any Underwriter expressly for inclusion in any Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement or the Prospectus (as from time to time amended or supplemented), or any amendment or supplement thereto, or in any application, as the case may be. If any action shall be brought against the Company or any other person so indemnified based upon any Preliminary Prospectus, the Rule 430A Prospectus, the Registration Statement, or the Prospectus, or any amendment or supplement thereto, or any application, and in respect of which indemnity may be sought against any Underwriter pursuant to this Section 6(b), such Underwriter shall have the rights and duties given to the Company, and the Company and each other person so indemnified shall have the rights and duties given to the Indemnified Parties, by the provisions of Section 6(a).

(c) To provide for just and equitable contribution, if (i) an Indemnified Party makes a claim for indemnification pursuant to Section 6(a) or 6(b) (subject to the limitations thereof) but it is found in a final judicial determination, not subject to further appeal, that such indemnification may not be enforced in such case, even though this Agreement expressly provides for indemnification in such case, or (ii) any Indemnified Party or Indemnifying Party seeks contribution under the Securities Act, the Exchange Act, or otherwise, then the Company (including for this purpose any contribution made by or on behalf of any director of the Company, any officer of the Company who signed the Registration Statement, and any controlling person of the Company), as one entity, and the Underwriters in the aggregate (including for this purpose any contribution by or on behalf of an Indemnified Party), as a second entity, shall contribute to the losses, liabilities, claims, damages and expenses whatsoever to which any of them may be subject, so that the Underwriters are responsible for the proportion thereof equal to the percentage which the underwriting discount per Share set forth on the cover page of the Prospectus represents of the initial public offering price of such securities set forth on the cover page of the Prospectus and the Company is responsible for the remaining portion, provided, however, that if applicable law does not permit such allocation, then other relevant equitable considerations such as the relative fault of the Company and the Underwriters in the aggregate in connection with the facts which resulted in such losses, liabilities, claims, damages and expenses shall also be considered. The relative fault, in the case of an untrue statement, alleged untrue statement, omission, or alleged omission, shall be determined by, among other things, whether such statement, alleged statement, omission, or alleged omission relates to information supplied by the Company or by the Underwriters, and the parties’ relative intent, knowledge, access to information, and opportunity to correct or prevent such statement, alleged statement, omission or alleged omission. The Company and the Underwriters agree that it would be unjust and inequitable if the respective obligations of the Company and the Underwriters for contribution were determined by pro rata or per capita allocation of the aggregate losses, liabilities, claims, damages and expenses (even if the Underwriters and the other Indemnified Parties were treated as one entity for such purpose) or by any other method of allocation that does not reflect the equitable considerations referred to in this Section 6(c). In no case shall any Underwriter be responsible for a portion of the contribution obligation imposed on all Underwriters in excess of its pro rata share

based on the number of Shares underwritten by it as compared to the number of Shares underwritten by all Underwriters. No person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. For purposes of this Section 6(c), each person, if any, who controls an Underwriter within the meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company, shall have the same rights to contribution as the Company, subject in each case to the provisions of this Section 6(c). Anything in this Section 6(c) to the contrary notwithstanding, no party shall be liable for contribution with respect to the settlement of any claim or action effected without its written consent. This Section 6(c) is intended to supersede any right to contribution under the Securities Act, the Exchange Act or otherwise.

7. CONDITIONS OF UNDERWRITERS’ OBLIGATIONS.

The obligations of each Underwriter hereunder are subject to the continuing accuracy of the representations and warranties of the Company contained herein and in each certificate and document contemplated under this Agreement to be delivered to the Representative, as of the date hereof, as of the Closing Date, to the performance by the Company of its obligations hereunder, and to the following additional conditions:

(a) Notification that the Registration Statement has become effective shall be received by the Representative not later than 6:30 p.m., New York City time, on the date of this Agreement or at such later date and time as shall be consented to in writing by the Representative. If the Company has elected to rely upon Rule 430A of the Rules and Regulations, the price of the Shares and any price related information previously omitted from the effective Registration Statement pursuant to such Rule 430A shall have been transmitted to the Commission for filing pursuant to Rule 424(b) of the Rules and Regulations within the prescribed time period, and prior to the Closing Date the Company shall have provided evidence satisfactory to the Representative of such timely filing, or a post-effective amendment providing such information shall have been promptly filed and declared effective in accordance with the requirements of Rule 430A of the Rules and Regulations.

(b) The Commission shall not have issued a Stop Order and no Blue Sky or securities authority of any jurisdiction shall have issued an order suspending the registration or qualification of the Securities, and no proceedings for such purpose shall have been instituted or shall be pending, or to the knowledge of the Company, be threatened or contemplated by the Commission or the Blue Sky or securities authorities of any such jurisdiction.

(c) The Representative shall have received an opinion, dated the Closing Date and satisfactory in form and substance to counsel for the Representative from Quarles & Brady LLP, counsel to the Company, to the effect that:

(i) The Company is a corporation duly incorporated and validly existing in good standing under the laws of Nevada, its jurisdiction of incorporation, with full corporate power and authority to own its property and conduct its business in the manner described in the Prospectus. To the knowledge of such counsel, the Company has obtained all necessary consents, authorizations, approvals, orders, licenses, certificates, declarations and permits of and from, and has made all required filings with, all federal, state, local and other governmental authorities and all courts and other tribunals, to own, lease, license and use its property and assets and to carry on the business in the manner described in the Prospectus. The Company is duly registered or qualified to do business as a foreign corporation and is in good standing in each other jurisdiction in which its ownership, leasing, licensing, or use of property and assets or the conduct of its business requires such registration or qualification, except where the failure to so qualify would not have a material adverse effect on the operations, business, property, assets or condition (financial or otherwise) of the Company. The Company has no subsidiaries.

(ii) The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, of which 4,842,850 shares are outstanding, and 5,000,000 shares of Preferred Stock, of which no shares are outstanding. Each outstanding share of Common Stock is validly authorized, validly issued, fully paid, and non-assessable, with no personal liability attaching to the ownership thereof, has not been issued and is not owned or held in violation of any preemptive right of stockholders. There is no commitment, plan or arrangement to issue, and no outstanding option, warrant or other right calling for the issuance of, any share of capital stock of the Company or any security or other instrument which by its terms is convertible into,

exercisable for, or exchangeable for capital stock of the Company, except as disclosed in the Prospectus. There is outstanding no security or other instrument which by its terms is convertible into or exchangeable for capital stock of the Company.

(iii) To the knowledge of such counsel, there is no litigation, arbitration, claim, governmental or other proceeding (formal or informal), or investigation pending or threatened, with respect to the Company or any of its operations, business, property or assets, except as disclosed in the Prospectus or such as individually or in the aggregate do not now have and are not expected to have a material adverse effect on the operations, business, property, assets or condition (financial or otherwise) of the Company. The Company is not in violation of, or in default with respect to, any law, rule, regulation, order, judgment or decree, except as disclosed in the Prospectus or such as individually or in the aggregate do not now have and are not expected to have a material adverse effect on the operations, business, property, assets or condition (financial or otherwise) of the Company; nor is the Company required to take any action in order to avoid any such violation or default.

(iv) Except as disclosed in the Prospectus, neither the Company nor to the knowledge of such counsel, any other party, is now in violation or breach of, or in default with respect to complying with, any material provision of any indenture, mortgage, deed of trust, debenture, note or other evidence of indebtedness, contract, agreement, instrument, lease or license, or arrangement or understanding known to such counsel which is material to the Company, and each such indenture, mortgage, deed of trust, debenture, note or other evidence of indebtedness, contract, agreement, instrument, lease or license is in full and force and is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and by equitable principles affecting the availability of remedies in the nature of specific performance.

(v) The Company is not in violation or breach of, or in default with respect to, any term of its Articles of Incorporation or By-laws.

(vi) The Company has all requisite corporate power and authority to execute, deliver and perform this Agreement. All necessary corporate proceedings of the Company have been taken to authorize the execution, delivery, and performance by the Company of this Agreement. This Agreement has been duly authorized, executed and delivered by the Company, and constitutes the legal, valid and binding agreement of the Company, enforceable as to the Company in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and by equitable principles affecting the availability of remedies in the nature of specific performance, and except as the enforceability of the indemnification and contribution provisions of this Agreement may be limited under applicable securities laws. The Representative’s Warrants have been duly authorized by the Company and, when executed, issued and delivered by the Company and paid for by the Underwriters in accordance with the provisions of this Agreement will be legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the rights and remedies of creditors generally and by equitable principles affecting the availability of remedies in the nature of specific performance.

(vii) All legally required proceedings in connection with the authorization, issue and sale of the Shares by the Company in accordance with the provisions of this Agreement have been taken, and no material consent, authorization, approval, order, license, certificate, declaration or permit of or from, or filing with, any governmental or regulatory authority, agency, board, bureau or other body is required for the execution, delivery or performance by the Company of this Agreement or each of the Representative’s Warrants (except filings with and orders of the Commission pursuant to the Securities Act which have been made or received and matters under Blue Sky or state securities laws, rules or regulations, as to which such counsel need not express an opinion).

(viii) No consent of any party to any material contract, agreement, instrument, lease or license, or arrangement or understanding known to such counsel, to which the Company is a party, or to which any of its property or assets are subject, is required for the execution, delivery or performance of this Agreement or the Representative’s Warrants (except as set forth in the exhibits to the Registration Statement); and the execution, delivery and performance of this Agreement and each of the Representative’s Warrants will not violate, result

in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under any such contract, agreement, instrument, lease, license, arrangement or understanding, result in the creation or imposition of any lien, security interest, pledge, charge or other encumbrance upon any of the material property or assets of the Company pursuant to the terms of any indenture, mortgage, deed of trust, loan or credit agreement, lease or other agreement or instrument to which the Company is a party or by which the Company is bound or to which any of the material property or assets of the Company is subject, known to such counsel, or violate or result in a breach of any term of the Certificate of Incorporation or By-laws of the Company, or violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment or decree binding on the Company or to which any of its operations, business, property or assets are subject.

(ix) The Shares are validly authorized. Upon payment of the purchase price thereunder in accordance with the provisions of this Agreement, the Representative’s Warrants will be duly delivered. The Shares, when issued, paid for and delivered in accordance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable, without any personal liability attaching to the ownership thereof, and will not be issued in violation of any preemptive rights of stockholders. Upon payment of the purchase price therefor in accordance with the provisions of this Agreement, the Underwriters will receive good title to the Shares purchased by them from the Company, free and clear of all Encumbrances, and the Representative (and its executive officers) will receive good title to the Representative’s Warrants purchased by them from the Company, free and clear of all Encumbrances.

(x) The Representative’s Warrant Shares are validly authorized and have been duly and validly reserved for issuance, and when issued, paid for and delivered upon exercise of the Representative’s Warrants in accordance with the provisions of the Representative’s Warrants will be validly authorized, validly issued, fully paid, and non-assessable, with no personal liability attaching to the ownership thereof, and will not have been issued in violation of any preemptive rights of stockholders, and the holders of the Representative’s Warrant Shares will receive good title to them, free and clear of all Encumbrances.

(xi) The Shares and the Representative’s Warrants conform to all statements relating thereto contained in the Registration Statement and the Prospectus.

(xii) To the knowledge of such counsel, any material contract, agreement, instrument, lease or license required to be described in the Registration Statement or the Prospectus has been properly described therein. To the knowledge of such counsel, any material contract, agreement, instrument, lease, or license required to be filed as an exhibit to the Registration Statement has been filed with the Commission as an exhibit to or has been incorporated as an exhibit by reference into the Registration Statement.

(xiii) To the knowledge of such counsel, no person or entity has the right to require registration of shares of Common Stock or other securities of the Company because of the filing or effectiveness of the Registration Statement who has not waived such right.

(xiv) The Company is not an “investment company” by reason of its assets and operations as defined in Section 3(a) of the Investment Company Act.

(xv) To the knowledge of such counsel, none of the Securities issued by the Company prior to the date hereof has been offered and sold by the Company in violation of the Securities Act or applicable Blue Sky or state securities laws or rules or regulations. All shares of Common Stock outstanding as of the date hereof have been duly authorized and validly issued, and are fully paid and non-assessable, with no personal liability attaching to the ownership thereof, and have not been issued in violation of any preemptive rights of stockholders.

(xvi) The statements in the Prospectus under captions “Prospectus Summary”, “Description of Business”, Risk Factors”, “Description of Property”, “Use of Proceeds”, “Management”, “Legal Proceedings”, “Executive Compensation”, “Transactions with Related Persons, Promoters and Certain Control Persons”, and “Description of Securities” have been reviewed by such counsel and insofar as such statements refer to descriptions of agreements, instruments or leases, summarize the status of litigation or other proceedings, or the provisions of orders, judgments or decrees, or constitute statements of law, descriptions of statutes, rules or regulations, or conclusions of law, such statements fairly present the information called for and are accurate and complete in all material respects.

(xvii) The Registration Statement has become effective under the Securities Act, and to the knowledge of such counsel, no Stop Order has been issued and no proceedings for that purpose have been instituted or threatened. AMEX has confirmed that the Shares will be listed on AMEX on the Closing Date.

(xviii) The Registration Statement, any Rule 430A Prospectus, and the Prospectus, and any amendment or supplement thereto (except for the financial statements and the notes and schedules related thereto, and other financial information and statistical data contained therein or omitted therefrom, as to which such counsel need express no opinion), comply as to form in all material respects with the applicable requirements of the Securities Act.

(xix) Such counsel has participated in the preparation of the Registration Statement and the Prospectus and any amendments or supplements thereto, and in the course thereof participated in conferences with officers and other representatives of the Company, representatives of the independent certified public accountants for the Company and representatives of the Underwriters at which the contents of the Registration Statement and Prospectus and related matters were discussed and, although such counsel is riot passing upon and does not assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Registration Statement and Prospectus, or any amendment or supplement thereto, on the basis of the foregoing, no facts have come to the attention of such counsel which lead them to believe that either the Registration Statement or any amendment thereto at the time such Registration Statement or such amendment became effective or the Prospectus as of its date of any amendment or supplement thereto as of its date contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading (it being understood that such counsel need express no comment with respect to the financial statements, and the notes and schedules related thereto, and other financial information and statistical data included in the Registration Statement or Prospectus).

(xx) To the knowledge of such counsel, since the effective date of the Registration Statement, no event has occurred which should have been set forth in an amendment or supplement to the Registration Statement or the Prospectus which has not been set forth in such an amendment or supplement.

In rendering such opinion, counsel for the Company may rely (A) as to matters involving the application of laws other than the laws of the United States and the General Corporation Law of the State of Nevada, to the extent counsel for the Company deems proper and to the extent specified in such opinion, upon opinion or opinions of local counsel (in form and substance satisfactory to counsel for the Representative) acceptable to counsel for the Representative, familiar with the applicable laws, in which case the opinion of counsel for the Company shall state that the opinion or opinions of such other counsel are satisfactory in scope, form and substance to counsel for the Company and that reliance thereon by counsel for the Company is reasonable; (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company; and (C) to the extent they deem proper, upon written statements or certificates of officers of departments of various jurisdictions having custody of documents respecting the corporate existence or good standing of the Company, provided that copies of any such statements or certificates shall be delivered to counsel for the Representative.

(d) You shall have received letters addressed to you and dated the date hereof and the Closing Date from Farber Hass Hurley LLP, independent registered public accounting firm for the Company, addressed to you, and in form and substance satisfactory to you, to the effect that:

(i) Such accountants are independent public accountants as required by the Securities Act and the rules and regulations of the Commission thereunder and no information need be supplied with respect to them in answer to Item 10 of Form S-1.

(ii) In their opinion, the financial statements and related notes of the Company examined by them, at all dates and for all periods referred to in their report therein, and included in the Registration Statement and the Prospectus on their authority as experts comply as to form in all material respects with the applicable accounting requirements of the Securities Act and the Rules and Regulations of the Commission promulgated thereunder.

(iii) On the basis of limited procedures not constituting an audit, including a reading of the latest available unaudited interim financial statements of the Company and the financial data and accounting records of the Company, inquiries of officials of the Company and others responsible for financial and accounting matters, a reading of the minute books of the Company, including without limitation the minutes (if any) of meetings or consents in lieu of meetings of the shareholders and of the Board of Directors (and any

committees thereof) of the Company, and other specified procedures and inquiries requested by you, if any, nothing has come to their attention which causes them to believe that:

(A) except as disclosed in or contemplated by the Registration Statement and the Prospectus, during the period from the date of the last audited balance sheet of the Company included in the Registration Statement and Prospectus to a specified date not more than five (5) days prior to the date of such letter, there were no any decreases, as compared with the corresponding period of the preceding year, in net sales, earnings from operations, the total or per share amounts of net earnings, or the weighted average number of shares outstanding and no increases in cost of goods sold, operating, selling, general and administrative expenses;

(B) except as disclosed in or contemplated by the Registration Statement and the Prospectus, during the period from the date of the last audited balance sheet of the Company included in the Registration Statement and Prospectus to a specified date not more than five (5) days prior to the date of such letter, there has been any change in the capital stock or other securities of the Company or any payment or declaration of any dividend or other distribution in respect thereof or in exchange therefore, or any increase in the long-term debt of the Company or any decrease in the net current assets or net assets of the Company as compared with the amounts shown on the last audited balance sheet of the Company, included in the Registration Statement and the Prospectus (other than in the ordinary course of business); and

(C) On the basis of their examinations referred to in their report and consent included in the Registration Statement and Prospectus and the indicated procedures and inquiries referred to above, nothing has come to their attention which, in their judgment, would cause them to believe or indicate that the financial statements and related notes and schedules of the Company included in the Registration Statement and Prospectus do not present fairly the financial position and results of operations of the Company, as at the dates and for the periods indicated, in conformity with generally accepted accounting principles applied on a consistent basis, and are not in all material respects a fair presentation of the information purported to be shown.

(iv) In addition to their examination referred to in their report included in the Registration Statement and the Prospectus and the inquiries and limited procedures referred to in clause (iii) of this Section 7(d), they have performed other procedures, not constituting an audit, with respect to certain numerical data, percentages, dollar amounts and other financial information appearing in the Registration Statement and the Prospectus, which are derived from the general accounting records of the Company, and have compared certain of such data and information with the accounting records of the Company and found them to be in agreement.

(v) Such other matters as you may have reasonably requested.

(e) The representations and warranties of the Company in this Agreement shall be true and correct with the same effect as if made on and as of the Closing Date and the Company shall have complied with all agreements and satisfied all conditions on its part to be performed or satisfied at or prior to the Closing Date.

(f) The Registration Statement and the Prospectus and any amendments or supplements thereto shall contain all statements which are required to be stated therein in accordance with the Securities Act and the Rules and Regulations, and shall in all material respects conform to the requirements thereof, and neither the Registration Statement nor the Prospectus nor any amendment or supplement thereto shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading.

(g) There shall have been, since the respective dates as of which information is given in the Registration Statement and the Prospectus, no material adverse change in the business, property, condition (financial or otherwise), results of operations, capital stock, long-term or short-term debt or general affairs of the Company, except changes which the Registration Statement and the Prospectus indicate might occur after the effective date of the Registration Statement, and the Company shall not have incurred any material liabilities or entered into any agreements not in the ordinary course of business, except as disclosed in the Registration Statement and the Prospectus.

(h) No action, suit or proceeding, at law or in equity, shall be pending or, to the knowledge of the Company, threatened against the Company which would be required to be set forth in the Registration Statement, and no proceedings shall be pending or, to the knowledge of the Company, threatened against the Company before or by any commission, board or administrative agency in the United States or elsewhere, wherein an unfavorable decision, ruling or finding would have a materially adverse effect on the business, property, condition (financial or otherwise), results of operations or general affairs of the Company.

(i) The Representative shall have received an officers’ certificate, dated as of the Closing Date, signed by each of the President and chief financial officer of the Company and in form and substance satisfactory to the Representative, to the effect set forth in Sections 7(a), (b), (e), (f), (g) and (h).

(j) FINRA, upon review of the terms of the public offering of the Shares, shall have indicated that it has no objections to the underwriting arrangements pertaining to the sale of the Shares and the participation by the Underwriters in such sale.

(k) Prior to or on the Closing Date, the Company shall have delivered to the Representative executed copies of the agreements related to the Offering Restrictions.

(l) Subsequent to the date hereof, there shall not have occurred any change, or any development affecting particularly the business or financial affairs of the Company which, in your opinion as Representative of the several Underwriters, would materially and adversely affect the market for the Shares.

(m) Subsequent to the date hereof, no executive officer of the Company listed as such in the Prospectus shall have died, become physically or mentally disabled, resigned or have been removed or discharged.

(n) The Company shall furnish the Representative with such further certificates and documents as the Representative or its counsel shall have reasonably requested. All opinions, certificates, letters and other documents required by this Section 7 to be delivered to the Representative by the Company will be in compliance with the provisions hereof only if they are satisfactory in form and substance to the Representative and its counsel. The Company will furnish the Representative with such conformed copies of such opinions, certificates, letters and other documents as the Representative shall reasonably request.

(o) A minimum of 1,000,000 Shares shall have been sold and the proceeds thereof placed in escrow with the Escrow Agent during the Offering Period and AMEX shall have confirmed during the Offering Period that the Shares will be listed on AMEX.

8. EFFECTIVE DATE OF AGREEMENT; TERMINATION.

(a) The Representative and the Company agree that unless a minimum of 1,000,000 Shares are subscribed to and the proceeds thereof are placed in with the Escrow Agent on or prior to the termination of the Offering Period and on or prior to the termination of the Offering Period, AMEX has confirmed that on the Closing Date, the Shares will be listed on AMEX, this Agreement will terminate. In such event all proceeds that have been paid for Shares will be returned to investors. This Agreement shall become effective at 9:30 a.m., New York City time, on the first full business day following the day on which the Registration Statement becomes effective or at the time of the initial public offering by the Underwriters of the Shares, whichever is earlier. The time of the initial public offering shall mean the time, after the Registration Statement becomes effective, of the release by the Representative for publication of the first newspaper advertisement which is subsequently published relating to the Shares or the time, after the Registration Statement becomes effective, when the Shares are first released by the Representative for offering by the Underwriters and dealers by letter or telegram, whichever shall first occur. The Representative or the Company may prevent this Agreement from becoming effective without liability of any party to any other party, except as noted below in this Section 8, by giving the notice indicated in Section 8(c) before the time this Agreement becomes effective.

(b) In addition to the right to terminate this Agreement pursuant to Sections 7 hereof by reason of the Company’s failure, refusal or inability to perform all obligations and satisfy all conditions on its part to be performed or satisfied hereunder prior to the Closing Date the Representative shall have the right to terminate this Agreement at any time prior to the Closing Date by giving notice to the Company, if the Company shall have sustained a material loss or material adverse interference with its business or properties from fire, flood, accident,

hurricane, earthquake, theft, sabotage, or other calamity or malicious act, whether or not covered by insurance, or from any labor dispute or any court or governmental action, order or decree, of such a character as to have a material adverse effect with the conduct of the business and operations of the Company; or if there shall have been a general suspension of, trading in securities on the New York Stock Exchange, the AMEX or in the over-the-counter market; or if a banking moratorium has been declared by a state or federal authority; or if there shall have been an outbreak of major hostilities between the United States and any foreign power, or any other insurrection, armed conflict or national calamity, which in the judgment of a majority-in-interest of the underwriters, makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the Shares.

(c) If the Representative elects to prevent this Agreement from becoming effective as provided in this Section 8, or to terminate this Agreement pursuant to Section 7 or this Section 8, the Representative shall notify the Company promptly by telephone, telecopier, telex, or telegram, confirmed by letter. If, as so provided in this Section 8, the Company elects to prevent this Agreement from becoming effective, the Company shall notify the Representative promptly by telephone, telecopier, telex, or telegram, confirmed by letter.

(d) Anything in this Agreement to the contrary notwithstanding other than Section 8(e), if (I) this Agreement (a) shall not become effective, or (b) if the Representative terminates this Agreement, in either case due to a breach or non-fulfillment of obligations of Section 7 hereof by the Company, which shall include a breach of the representations and warranties of the Company contained in this Agreement, or for the failure of the Company to perform any of the covenants contained in this Agreement or (II) if the Company elects to terminate this Agreement pursuant to Section 8 hereof, the sole liability of the Company to the several Underwriters, in addition to the obligations the Company assumed pursuant to Section 4(g) and 4(i), will be to reimburse the Underwriters for such out-of-pocket expenses (including the reasonable fees and disbursements of their counsel) as shall have been incurred by them in connection with this Agreement or the proposed offer, sale, and delivery of the Shares; and upon demand the Company agrees to pay promptly the full amount thereof to the Underwriters, provided that, such reimbursement amount shall be limited to an aggregate amount of fifty thousand dollars ($50,000) in total; and provided further, that the $25,000 advance payment that the Underwriter received for out-of pocket expenses to be incurred in connection with the offering will be returned to the Company to the extent of any out-of pocket expenses not actually incurred by the Underwriter; in all other instances that this Agreement shall not become effective or shall be terminated or otherwise not be carried out within the time specified herein, each of the parties shall be responsible for their own out-of-pocket expenses (including the reasonable fees and disbursements of their own counsel) as shall have been incurred by them in connection with this Agreement or the proposed offer, sale, and delivery of the Shares.

(e) Notwithstanding any election hereunder or any termination of this Agreement, and whether or not this Agreement is otherwise carried out, the provisions of Sections 4(b), 4(g), 4(i), 6, and 8 shall not be in any way affected by such election or termination or failure to carry out the terms of this Agreement or any part hereof.

9. MISCELLANEOUS.

(a) Notices required to be in writing shall be mailed or delivered (i) to the Company at its office at Spheric Technologies, Inc., 4708 East Van Buren Street, Phoenix, Arizona 85008, with copies to Quarles & Brady LLP, One Renaissance Square, Two North Central Avenue, Phoenix, Arizona 85004, Attention: Christian J. Hoffmann, III, Esq. or (ii) to the Representative or Underwriters, at the office of Midtown Partners & Co., LLC, 4218 West Linebaugh Avenue, Tampa, Florida 33624 Attention: Bruce Jordan with copies to Lehman & Eilen LLP, 20283 State Road 7, Suite 300, Boca Raton, FL 33498 Attention: Hank Gracin, Esq., and shall be deemed given when received. Any notice not required to be in writing, may be made by telex, telecopier or telephone and shall be deemed given at the time the telex, or telecopied communication is received or the telephone call is made, but if so made shall be subsequently confirmed in writing.

(b) The covenants, agreements, representations and warranties of the Company, and the indemnity and contribution agreements, contained in Sections 4, 5 and 6 of this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of any Underwriter, the Company or any of its officers or directors or any controlling persons of any Underwriter or the Company and will survive acceptance of and payment for any of the Shares and the termination of this Agreement.

(c) This Agreement has been and is made solely for the benefit of the several Underwriters and the Company and the controlling persons, directors and officers referred to in Section 6 hereof and their respective successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement. The term “successors and assigns” as used in this Agreement shall not include a purchaser, as such purchaser, of Shares from any of the several Underwriters.

(d) This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, applicable to contracts made and to be performed entirely with such State, without regard to conflict of laws provisions thereof.

Please confirm that the foregoing correctly sets forth the agreement among the Company and the Representative.

SPHERIC TECHNOLOGIES, INC.

By:

Name:

Title:

Confirmed, as of the date first above mentioned.

MIDTOWN PARTNERS & CO., LLC

By:

Name:

Title:

SCHEDULE I

Underwriting Agreement, dated                   , 2009

Underwriter

EX-4.7

Exhibit 4.7

NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE ON EXERCISE OF THIS WARRANT MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) A POST-EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT ON FORM S-1 FILE NO. PURSUANT TO WHICH SUCH SECURITIES HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES LAWS (THE “ACTS”) (ii) ANOTHER EFFECTIVE REGISTRATION STATEMENT FOR THIS WARRANT OR COMMON STOCK PURCHASABLE HEREUNDER, AS APPLICABLE, UNDER THE ACTS, OR (iii) AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACTS.

SPHERIC TECHNOLOGIES, INC.

WARRANT AGREEMENT

VOID AFTER 5:00 P.M. NEW YORK TIME,                         , 2014

Issue Date:                         , 2009

1. Basic Terms. This Warrant Agreement (the “Warrant”) certifies that, for value received, the registered holder specified below or its registered assigns (“Holder”) is the owner of a warrant of Spheric Technologies, Inc., a Nevada corporation having its principal place of business at 4708 East Van Buren Street, Phoenix, Arizona 85008 (the “Corporation”), subject to adjustments as provided herein, to purchase                          (            ) shares of the Common Stock, $0.001 par value, of the Corporation (the “Common Stock”) from the Corporation at the price per share shown below (the “Exercise Price”).

Holder:
Exercise Price per share:	$	9.00

Except as specifically provided otherwise, all references in this Warrant to the Exercise Price and the number of shares of Common Stock purchasable hereunder shall be to the Exercise Price and number of shares after any adjustments are made thereto pursuant to this Warrant. This Warrant is one of a series of Warrants issued pursuant to an underwriting agreement dated                         , 2008 between the Corporation and Midtown Partners & Company, LLC (the “Agreement”) relating to the public offering pursuant to a registration statement on Form S-1, as amended (File No. ) (the “Registration Statement”) of up to 1,333,334 shares of Common Stock.

2. Corporation’s Representations/Covenants. The Corporation represents and covenants that the shares of Common Stock issuable upon the exercise of this Warrant shall at delivery be fully paid and non-assessable and free from taxes, liens, encumbrances and charges with respect to their purchase. The Corporation shall take any necessary actions to assure that the par value per share of the Common Stock is at all times equal to or less than the then current Exercise Price per share of Common Stock issuable pursuant to this Warrant. The Corporation shall at all times reserve and hold available sufficient shares of Common Stock to satisfy all conversion and purchase rights of outstanding convertible securities, options and warrants of the Corporation, including this Warrant.

3. Method of Exercise; Fractional Shares. This Warrant is exercisable at the option of the Holder at any time by surrendering this Warrant, on any business day during the period (the “Exercise Period”) beginning after the one year anniversary of the effective date of the Registration Statement and ending at 5:00 p.m. (New York time) five (5) years after the issue date. To exercise this Warrant, the Holder shall surrender this Warrant at the principal office of the Corporation or that of the duly authorized and acting transfer agent for its Common Stock, together with the executed exercise form (substantially in the form of that attached hereto) and together with payment for the Common Stock purchased under this Warrant. The principal office of the Corporation is located at the address specified in Section 1 of this Warrant; provided, however, that the Corporation may change its principal office upon notice to the Holder. Payment shall be made by check payable to the order of the Corporation or by wire transfer or the Holder may elect to exercise this Warrant by means of a cashless exercise pursuant to Section 12 hereof. This Warrant is not exercisable with respect to a fraction of a share of Common Stock. In lieu of issuing a fraction of a share remaining after exercise of this Warrant as to all full shares covered by this Warrant, the Corporation shall either at its option (a) pay for the fractional share cash equal to the same fraction at the fair market

price for such share; or (b) issue scrip for the fraction in the registered or bearer form which shall entitle the Holder to receive a certificate for a full share of Common Stock on surrender of scrip aggregating a full share.

4 Protection Against Dilution.

(a) If the Corporation, with respect to the Common Stock, (1) pays a dividend or makes a distribution on shares of Common Stock that is paid in shares of Common Stock or in securities convertible into or exchangeable for Common Stock (in which latter event the number of shares of Common Stock initially issuable upon the conversion or exchange of such securities shall be deemed to have been distributed), (2) subdivides outstanding shares of Common Stock, (3) combines outstanding shares of Common Stock into a smaller number of shares, or (4) issues by reclassification of common stock any shares of capital stock of the Corporation, the Exercise Price in effect immediately prior thereto shall be adjusted so that each Holder thereafter shall be entitled to receive the number and kind of shares of Common Stock or other capital stock of the Corporation that it would have owned or been entitled to receive in respect of this Warrant immediately after the happening of any of the events described above had this Warrant been converted immediately prior to the happening of that event. An adjustment made in accordance with this section shall become effective immediately after the record date, in the case of a dividend, and shall become effective immediately after the effective date, in the case of a subdivision, combination, or reclassification. If, as a result of an adjustment made in accordance with this Section 4, the Holder becomes entitled to receive shares of two or more classes of capital stock or shares of Common Stock and other capital stock of the Corporation, the board of directors (whose determination shall be conclusive) shall determine the allocation of the adjusted Exercise Rate between or among shares of such classes of capital stock or shares of Common Stock and other capital stock.

5. Adjustment for Reorganization, Consolidation, Merger, Etc.

(a) In the event of any consolidation or merger to which the Corporation is a party other than a consolidation or merger in which the Corporation is the continuing corporation, or the sale or conveyance to another corporation of the property of the Corporation as an entirety or substantially as an entirety or any statutory exchange of securities with another corporation (including any exchange effected in connection with a merger of a third corporation into the Corporation) (each such transaction referred to herein as “Reorganization”), no adjustment of exercise rights or the Exercise Price shall be made; provided, however, that the Holder shall thereupon be entitled to receive and provision shall be made therefor in any agreement relating to a Reorganization, the kind and number of securities or property (including cash) of the Corporation resulting from such consolidation or surviving such merger or to which such properties and assets shall have been sold or otherwise transferred or with whom securities have been exchanged, which the Holder would have owned or been entitled to receive as a result of such Reorganization had this Warrant been exercised immediately prior to such Reorganization (and assuming the Holder failed to make an election, if any was available, as to the kind or amount of securities, property or cash receivable by reason of such Reorganization; provided, that if the kind or amount of securities, property or cash receivable upon such Reorganization is not the same for each share of Common Stock in respect of which such rights of election shall not have been exercised (“non-electing share”) then, for the purpose of this section, the kind and amount of securities, property or cash receivable upon such Reorganization for each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). In any case, appropriate adjustment shall be made in the application of the provisions herein set forth with respect to the rights and interests thereafter of the Holder, to the end that the provisions set forth herein (including the specified changes and other adjustments to the conversion rate) shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares, other securities or property thereafter receivable upon exercise of this Warrant. The provisions of this section similarly apply to successive Reorganizations.

(b) In addition, if the Corporation, at any time while this Warrant is outstanding, shall issue shares of Common Stock or rights, warrants, options or other securities or debt that is convertible into or exchangeable for shares of Common Stock (“Common Stock Equivalents”), entitling any person to acquire shares of Common Stock at a price per share less than the Exercise 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 at a price less than the prevailing Exercise Price, such issuance shall be deemed to have occurred for less than the Exercise Price), then 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 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 Exercise Price, 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, provided, that for purposes hereof, all shares of Common Stock that are issuable upon conversion, exercise or exchange of Common Stock Equivalents shall be deemed outstanding immediately after the issuance of such Common Stock Equivalents. Such adjustment shall be made whenever such Common Stock or Common Stock Equivalents are issued. However, upon the expiration of any Common Stock Equivalents the issuance of which resulted in an adjustment in the Exercise Price pursuant to this Section, if any such Common Stock Equivalents shall expire and shall not have been exercised, the Exercise Price shall immediately upon such expiration be recomputed and effective immediately upon such expiration be increased to the price which it would have been (but reflecting any other adjustments in the Exercise Price made pursuant to the provisions of this Section after the issuance of such Common Stock Equivalents) had the adjustment of the Exercise Price made upon the issuance of such Common Stock Equivalents been made on the basis of offering for subscription or purchase only that number of shares of the Common Stock actually purchased upon the exercise of such Common Stock Equivalents actually exercised. Notwithstanding anything herein to the contrary, the following shall not be subject to the provisions of this Section 5: (1) issuances of any stock or stock options under any employee benefit plan of the Corporation whether now existing or approved by the Board of Directors of the Corporation, provided that no such issuances shall be at less than six dollars ($6.00) for a period commencing on the date hereof and ending six (6) months thereafter, and (2) issuances of any stock under any convertible securities, rights, options and warrants outstanding prior to the date of issuance of this Warrant, but not any modifications thereof.

6. Notice of Adjustment. On the happening of an event requiring an adjustment of the Exercise Price or the shares purchasable under this Warrant, the Corporation shall, within ten (10) days, give written notice to the Holder stating the adjusted Exercise Price and the adjusted number and kind of securities or other property purchasable under this Warrant resulting from the event and setting forth in reasonable detail the method of calculation and the facts upon which the calculation is based. The Holder shall have the right to make an inspection regarding information in the notice.

7. Dissolution, Liquidation. In case of the voluntary or involuntary dissolution, liquidation or winding up of the Corporation (other than in connection with reorganization, consolidation, merger, or other transaction covered by paragraph 5 above) is at any time proposed; the Corporation shall give at least thirty (30) days prior written notice to the Holder. Such notice shall contain: (a) the date on which the transaction is to take place; (b) the record date (which shall be at least thirty (30) days after the giving of the notice) as of which holders of Common Stock will be entitled to receive distributions as a result of the transaction; (c) a brief description of the transaction, (d) a brief description of the distributions to be made to holders of Common Stock as a result of the transaction; and (d) an estimate of the fair value of the distributions. On the date of the transaction, if it actually occurs, this Warrant and all rights under this Warrant shall terminate.

8. Rights of Holder. The Corporation shall deliver to the Holder all notices and other information provided to its holders of shares of Common Stock or other securities which may be issuable hereunder concurrently with the delivery of such information to the holders. This Warrant does not entitle the Holder to any voting rights or, except for the foregoing notice provisions, any other rights as a shareholder of the Corporation. No dividends are payable or will accrue on this Warrant or the shares of Common Stock purchasable under this Warrant until, and except to the extent that, this Warrant is exercised. Upon the surrender of this Warrant and payment of the Exercise Price as provided above, the person or entity entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the record holder of such shares as of the close of business on the date of the surrender of this Warrant for exercise as provided above. Upon the exercise of this Warrant, the Holder shall have all of the rights of a shareholder in the Corporation.

9. Exchange for Other Denominations. This Warrant is exchangeable, on its surrender by the Holder to the Corporation, for a new Warrant of like tenor and date representing in the aggregate the right to purchase the balance of the number of shares purchasable under this Warrant in denominations and subject to restrictions on transfer contained herein, in the names designated by the Holder at the time of surrender.

10. Substitution. Upon receipt by the Corporation of evidence satisfactory (in the exercise of reasonable discretion) to it of the ownership of and the loss, theft or destruction or mutilation of the Warrant, and (in the case or loss, theft or destruction) of indemnity satisfactory (in the exercise of reasonable discretion) to it, and (in the case of

mutilation) upon the surrender and cancellation thereof, the Corporation will issue and deliver, in lieu thereof, a new Warrant of like tenor.

11. Restrictions on Transfer. Neither this Warrant nor the shares of Common Stock issuable on exercise of this Warrant have been registered under the Acts. Neither this Warrant nor the shares of Common Stock purchasable hereunder may be sold, transferred, pledged or hypothecated in the absence of (a) a post effective amendment to the registration statement pursuant to which such securities have been registered under the Acts, (b) another effective registration statement for the securities under the Acts or (b) an opinion of counsel reasonably satisfactory to the Corporation that registration is not required under such Acts. If the Holder seeks an opinion as to transfer without registration from Holder’s counsel, the Corporation shall provide such factual information to Holder’s counsel as Holder’s counsel reasonably requests for the purpose of rendering such opinion. Each certificate evidencing shares of Common Stock purchased hereunder will bear a legend describing the restrictions on transfer contained in this paragraph unless, in the opinion of counsel reasonably acceptable to the Corporation, the shares need no longer to be subject to the transfer restrictions. In addition, in accordance with subparagraph (g) (1) of Rule 2710 of the NASD Rules, this Warrant shall not be sold during the offering, or sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the date of effectiveness of the Registration Statement or commencement of sales of the public offering, except as provided in subparagraph (g)(2) of Rule 2710 of the NASD Rules.

12. Cashless Exercise.

(a) The Holder may, upon any full or partial exercise of this Warrant, pay the Exercise Price applicable to such exercise by delivering this Warrant and receiving from the Corporation in return therefor the number of shares of Common Stock as to which the Warrant is being exercised which have a fair market value on the date of exercise equal to the fair market value of the Warrant as established in paragraph 4(b).

(b) The fair market value of this Warrant shall mean the fair market value of the Common Stock purchasable under this Warrant minus the Exercise Price of this Warrant.

(c) The fair market value of the Common Stock is, if the Common Stock is traded on a national securities exchange or in the over-the-counter market as reported by the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), the average of the daily market prices of such stock on the ten (10) trading days immediately preceding the date as of which such value is to be determined. The market price for each such trading day shall be average of the closing prices on such day of the Common Stock on all domestic exchanges on which the Common Stock is then listed, or if there have not been sales on any such exchange on such day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if the Common Stock is not so listed, the average of the high and low bid and asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization. If at any time the Common Stock is not listed on any domestic exchange or quoted in the NASDAQ System or the domestic over-the-counter market, the fair market value shall be reasonably determined by the Corporation in good faith as of a date which is within fifteen (15) days of the date as of which the determination is to be made.

13. Registration Rights.

(a) Mandatory Registration. The Corporation shall prepare, and, as soon as practicable, but in no event later than sixty (60) days after the date that a Holder of the Warrant provides a written request, file with the Securities and Exchange Commission (the “SEC”) a post effective amendment to the Registration Statement covering the resale of all or a portion of the securities or shares of Common Stock into which the securities are convertible that are owned by the Holder as are specified in the request. Within five (5) days of the request, the Corporation shall give notice to any other Holder of warrants issued in connection with the Registration Statement advising that the Corporation is proceeding with such registration statement and offering to include therein the securities of such Holders. The Corporation shall not be obligated to such other Holders to include them in the registration statement unless such other Holder shall have accepted such offer by written notice to the Corporation within ten (10) days. No other securities of the Corporation shall be entitled to participate in such registration. The Holder and each Holder that accepts such notice may elect to include in such registration all or a part of the securities of the Corporation he or she holds. Such election shall apply to the shares owned by each as well as any shares of Common Stock or securities issued upon any stock split, stock dividend, recapitalization or similar event

of the shares (all such shares shall be referred to as “Registrable Securities”). The Corporation shall use its best efforts to have filed and cause to become effective a post effective amendment, registration statement or offering statement as promptly as practicable and for the period of two (2) years thereafter to reflect in the post effective amendment, registration statement or offering statement financial statements that are prepared in accordance with Section 10(a)(3) of the Act and any facts or events arising that individually or in the aggregate represent a fundamental and/or material change in the information set forth in the post effective amendment, registration statement or offering state to enable the holder of the Warrant to exercise and sell the Warrant during such two (2) year period. If any registration is an underwritten registration the Corporation will select an underwriter approved by the Holder.

(b) Piggyback Registration. If at any time or from time to time, the Corporation shall determine to register any of its securities, either for its own account or the account of a security holder other than a registration relating solely to employee benefit plans, the Corporation will:

(i) promptly give to the Holder written notice thereof; and

(ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests made within twenty (20) days after receipt of such written notice from the Holder.

If the registration of which the Corporation gives notice is for a registered public offering involving an underwriting, the Corporation shall so advise the Holder as a part of the written notice given pursuant to clause (i) above. In such event the right of the Holder to registration pursuant to this Agreement shall be conditioned upon the inclusion of the Holder’s Registrable Securities in the underwriting to the extent provided herein. All stockholders proposing to distribute their securities through such underwriting shall (together with the Corporation) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by the Corporation with the approval of the Holder. If the underwriter shall determine in good faith and advise the Corporation in writing that it is its opinion that the number of Registrable Securities requested to be included exceeds the number that can be sold in the offering without materially adversely affecting the distribution of such securities, the Corporation will include in such registration (i) first, the securities that the Corporation proposes to sell and (ii) second, the Holder’s securities requested to be included in such registration pro rata among the Holders and (iii) third, securities of the holders of other securities requesting registration. If a piggyback registration consists only of underwritten secondary registration on behalf of holder’s of the Corporation’s securities and the underwriter shall determine in good faith and advise the Corporation in writing that it is its opinion that the number of Registrable Securities requested to be included exceeds the number that can be sold in the offering without materially adversely affecting the distribution of such securities, the Corporation will include in such registration (i) first, the Holder’s securities requested to be included in such registration pro rata among the Holders and (ii) second, the securities of the holders of other securities requesting registration. If the Holder disapproves of the terms of any such underwriting, he or she may elect to withdraw therefrom by written notice to the Corporation and the underwriter. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

(c) Expenses of Registration. All expenses incurred in connection with registrations pursuant to Section 13 shall be borne by the Corporation, including but not limited to legal, accounting and printing fees.

(d) In the case of each registration effected by the Corporation pursuant to this Agreement, the Corporation will keep the Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Corporation will:

(i) Use its best efforts to keep such registration effective for a period of two (2) years or until the Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs; provided, however, that in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such two (2) year period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that Rule 415, or any successor rule under the Acts permit an offering on a continuous or delayed basis, and provided further that applicable rules under the Acts governing the obligation to file a post-effective amendment, permit, in lieu of filing a post-effective amendment which (y) includes any prospectus required by Section 10(a)(3) of the Securities Act of 1933 or (z) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of

information required to be included in (y) and (z) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 in the registration statement;

(ii) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to reflect facts or events representing material or fundamental change in the information set forth therein or otherwise necessary to comply with the provisions of the Acts with respect to the disposition of all securities covered by such registration statement;

(iii) Furnish such number of prospectuses and other documents incident thereto, including any amendment of or supplement to the prospectus, as the Holders from time to time may reasonably request;

(iv) Notify the Holders at any time when a prospectus relating thereto is required to be delivered under the Acts of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing, and at the request of any such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in the light of the circumstances then existing;

(v) Cause all such Registrable Securities to be listed on each securities exchange (including, if applicable, NASDAQ) on which similar securities issued by the Corporation are then listed;

(vi) Provide a transfer agent and registrar for all Registrable Securities and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

(vii) Make available for inspection by the Holder, any underwriter participating in any disposition pursuant to such registration statement, and any attorney or accountant retained by the Holder or underwriter, all financial and other records, pertinent corporate documents and properties of the Corporation, and cause the Corporation’s officers and directors to supply all information reasonably requested by the Holder, underwriter, attorney or accountant in connection with such registration statement, provided such information is kept confidential by the recipient thereof;

(viii) If requested by the Holder, furnish to each a signed counterpart, addressed to each, of:

(1) an opinion of counsel for the Corporation, dated the effective date of the registration statement, and

(2) “comfort” letters signed by the Corporation’s independent public accountants who have examined and reported on the Corporation’s financial statements included in the registration statement, to the extent permitted by the standards of the AICPA, covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and (in the case of the accountants’ “comfort” letters) with respect to events subsequent to the date of the financial statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ “comfort” letters delivered to the underwriters in underwritten public offerings of securities;

(ix) If requested by the Holder, furnish to each a copy of all documents filed with and all correspondence from or to the SEC in connection with any such offering; and

(x) Use its best efforts to register the securities of the Holder for offer or sale under the state securities or blue sky laws of such jurisdictions as the Holder may request and do any and all other acts and things which may be necessary or advisable to enable the Holder to consummate the proposed transfer, sale or other disposition of the securities in any jurisdiction.

(e) The Corporation will indemnify the Holder, with respect to which registration, qualification or compliance has been effected pursuant to this Agreement, against all claims, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on any untrue statement (or alleged

untrue statement) of a material fact contained in any prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Corporation of the Acts or any rule or regulation thereunder applicable to the Corporation and relating to action or inaction required of the Corporation in connection with any such registration, qualification or compliance, and will reimburse the Holder, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability or action, provided that the Corporation will not be liable in any such case to the extent that any such claim, loss, damage, liability or expense arises out of or is based on any untrue statement or omission based upon written information furnished to the Corporation by the Holder and stated to be specifically for use therein.

(f) The Holder will, if Registrable Securities held by it are included in the securities as to which such registration, qualification or compliance is being effected, indemnify the Corporation, each of its directors and officers and each underwriter, if any, of the Corporation’s securities covered by such a registration statement, each person who controls the Corporation or such underwriter within the meaning of the Acts and the rules and regulations thereunder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Corporation and its, directors, officers, partners, persons, underwriters or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Corporation by the Holder specifically for use therein.

(g) Each party entitled to indemnification under this Agreement, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim is to be made against an indemnifying party under this Agreement, notify the indemnifying party of the commencement of such action, suit or proceeding, enclosing a copy of all papers served, but the omission so to notify the indemnifying party of such action, suit or proceeding shall not relieve the indemnifying party from any liability which it may have to any indemnified party under this Agreement unless the rights of the indemnifying party are materially impaired by such failure to notify. In case any such action, suit or proceeding shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall wish, to assume the defense thereof, with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to such indemnified party of its election to assume the defense, the indemnifying party shall not be liable to such indemnified party in connection with any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. Such indemnified party shall have the right to employ its own counsel in any such action, but the fees and expenses of such counsel shall be at its expense unless: (i) the employment of counsel by it has been authorized by the indemnifying party; (ii) the indemnified party shall have reasonably concluded that there may be a conflict of interest between the indemnifying party and the indemnified party in the conduct of the defense of such action (in which case the indemnifying party shall not have the right to direct the defense of such action on such indemnified party’s behalf); (iii) the defendants in, or targets of, any such litigation include any indemnified party and the indemnifying party, and such indemnified party shall have reasonably concluded that there may be legal defenses available to it which are different from or additional to those available to the indemnifying party; or (iv) the indemnifying party shall not in fact have employed counsel to assume the defense of such action within a reasonable time after notice of the institution of such litigation, in each of which cases the fees and expenses of counsel shall be at the expense of the indemnifying party; provided, however, that the indemnifying party shall not be liable for the fees and expense of more than one such separate counsel in connection with any one action or separate but substantially similar or related actions in the same jurisdiction arising out of the same allegations or circumstances. The indemnifying party shall not be liable for any settlement of any action or claim effected without its written consent.

(h) From and after the date of this Agreement, the Corporation shall not enter into any agreement with any holder or prospective holder of any securities of the Corporation giving such holder or prospective holder any registration rights the terms of which are more favorable than the registration rights granted to the Holder hereunder.

(i) The rights to cause the Corporation to register securities granted to the Holder under this Agreement may be transferred or assigned by each to a transferee or assignee of any warrants or shares of Common Stock, provided that the Corporation is given written notice at the time of or within a reasonable time after said transfer or assignment, stating the name and address of said transferee or assignee and identifying the securities with respect to which such registration rights are being transferred or assigned.

14. Transfer. Except as otherwise provided in this Warrant, this Warrant is transferable only on the books of the Corporation by the Holder in person or by attorney, on surrender of this Warrant, properly endorsed.

15. Recognition of Holder. Prior to due presentment for registration of transfer of this Warrant, the Corporation shall treat the Holder as the person exclusively entitled to receive notices and otherwise to exercise rights under this Warrant. All notices required or permitted to be given to the Holder shall be in writing and shall be given by first class mail, postage prepaid, addressed to the Holder at the address of the Holder appearing in the records of the Corporation.

16. Payment of Taxes. The Corporation shall pay all taxes and other governmental charges, other than applicable income taxes, that may be imposed with respect to the issuance of shares of Common Stock pursuant to the exercise of this Warrant.

17. Headings. The headings in this Warrant are for purposes of convenience in reference only, shall not be deemed to constitute a part of this Warrant and shall not affect the meaning or construction of any of the provisions of this Warrant.

18. Miscellaneous. This Warrant may not be changed, waived, discharged or terminated except by an instrument in writing signed by the Corporation and the Holder. This Warrant shall inure to the benefit of and shall be binding upon the successors and assigns of the Corporation. Under no circumstances may this Warrant be assigned by the Holder.

19. Governing Law. This Warrant shall be governed by and construed in accordance with the laws of the State of Nevada without giving effect to its principles governing conflicts of law.

SPHERIC TECHNOLOGIES, INC.
By:
	Joseph Hines
	Chief Executive Officer and President

SPHERIC TECHNOLOGIES, INC.

Form of Transfer

(To be executed by the Holder to transfer the Warrant)

For value received the undersigned registered holder of the attached Warrant hereby sells, assigns, and transfers the Warrant to the Assignee(s) named below:

Names of Assignee Address Taxpayer ID No. Number of shares subject to transferred Warrant

The undersigned registered holder further irrevocably appoints                                                               attorney (with full power of substitution) to transfer this Warrant as aforesaid on the books of the Corporation.

Date:
	Signature

SPHERIC TECHNOLOGIES, INC.

Exercise Form

(To be executed by the Holder to purchase

Common Stock pursuant to the Warrant)

The undersigned holder of the attached Warrant hereby irrevocably elects to exercise purchase rights represented by such Warrant for, and to purchase,              shares of Common Stock of Spheric Technologies, Inc, a Nevada corporation.

The undersigned intends that payment of the exercise price shall be made as (check one)

Cash exercise             

Cashless exercise             

If the Holder has elected a Cash exercise, the Holder shall pay the sum of $             by certified or official bank check or by wire transfer to the Corporation in accordance with the terms of the Warrant

If the Holder has elected a Cashless exercise, a certificate shall be issued to the Holder for the number of shares calculated in accordance with the terms of the Warrant.

The undersigned requests that if such number of shares is not all of the shares purchasable under this Warrant, that a new Warrant of like tenor for the balance of the remaining shares purchasable under this Warrant be issued.

Date:
	Signature

EX-5.1

Exhibit 5.1

January 16, 2009

Spheric Technologies, Inc.

Attn: Joseph Hines, Chairman and President

4708 East Van Buren Street

Phoenix, Arizona 85008

Re: Registration Statement on Form S-1 for Spheric Technologies, Inc.

Dear Mr. Hines:

You have requested our opinion, as counsel for Spheric Technologies, Inc., a Nevada corporation (the “Company”), in connection with a Registration Statement on Form S-1 (the “Registration Statement”) to be filed by the Company with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933 (the “Act”), as amended, regarding the legality of the 1,400,001 shares of common stock, par value $0.001 per share, (the “Common Stock”) of the Company which are being registered in the Registration Statement, of which 66,667 shares are issuable upon exercise of warrants issued to the underwriter representative in the primary offering.

We have made such legal examination and inquiries as we have deemed advisable or necessary for the purpose of rendering this opinion and have examined originals or copies of the following documents and corporate records:

1. Articles of Incorporation;

2. Bylaws;

3. Resolutions of the Board of Directors authorizing the issuance of the Shares; and

4. Such other documents and records as we have deemed relevant in connection with this opinion.

In rendering this opinion, we have relied upon, with the consent of the Company and its Board of Directors: (i) the representations of the Company, its officers and directors as set forth in the aforementioned documents as to factual matters; and (ii) assurances from the officers and directors of the Company as we have deemed necessary for purposes of expressing the opinions set forth herein. We have not undertaken any independent investigation to determine or verify any information and representations made by the Company, its officers and directors in the aforementioned documents and have relied upon such information and representations as being accurate and complete in expressing our opinion.

We have assumed in rendering the opinions set forth herein that no person or entity has taken any action inconsistent with the terms of the aforementioned documents or prohibited by law. This opinion letter is limited to the matters set forth herein and no opinions may be implied or inferred beyond the matters expressly stated herein. We undertake no, and hereby disclaim any, obligation to make any inquiry after the date hereof or to advise you of any changes in any matter set forth herein, whether based on a change in the law, a change in any fact relating to the Company or any other person or any other circumstance.

It is our opinion that each issued and outstanding share of Common Stock registered pursuant to the Registration Statement is legally issued, fully paid, and non-assessable under Nevada law.

We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to our law firm under the caption “Interest of Named Experts and Counsel” in the Registration Statement.

Sincerely yours,
	/s/ Quarles & Brady LLP
	QUARLES & BRADY LLP

EX-10.30

Exhibit 10.30

ESCROW DEPOSIT AGREEMENT

This ESCROW DEPOSIT AGREEMENT (this “Agreement”) dated as of this day of                     , 2009, by and among SPHERIC TECHNOLOGIES, INC., a Delaware corporation (the “Company”), having an address at 4708 East Van Buren Street, Phoenix, Arizona 85008, MIDTOWN PARTNERS & CO. LLC, a Florida limited liability company (“Underwriter”), having an address at 4218 West Linebaugh Avenue, Tampa, Florida 33624, and SIGNATURE BANK (the “Escrow Agent”), a New York State chartered bank, having an office at 261 Madison Avenue, New York, NY 10016. All capitalized terms not herein defined shall have the meaning ascribed to them in that certain Prospectus, dated                     , 2009, as amended or supplemented from time-to-time, including all attachments, schedules and exhibits thereto (the “Prospectus”).

WITNESSETH:

WHEREAS, pursuant to the terms of the Prospectus, the Company desires to sell (the “Offering”) a minimum of 1,000,000 (“Minimum Amount”) shares of common stock, $0.001 par value (“Shares”) in the amount of $6,000,000 (“Minimum Amount”) and a maximum of 1,333,334 of such shares in the amount of $8,000,000 (“Maximum Amount”). Each Share is being sold at a price of $6.00 per Share; and

WHEREAS, unless the Minimum Amount is sold by                      (the “Termination Date”), or by                      (the “Final Termination Date”) if the Termination Date has been extended by Company and the Underwriter, the Offering shall terminate and all funds shall be returned to the Investors in the Offering; and

WHEREAS, the Company and Underwriter desire to establish an escrow account with the Escrow Agent into which the Company and Underwriter shall instruct Investors introduced to the Company by Underwriter (the “Investors“) to deposit checks and other instruments for the payment of money made payable to the order of “Signature Bank as Escrow Agent for Spheric Technologies, Inc.,” and Escrow Agent is willing to accept said checks and other instruments for the payment of money in accordance with the terms hereinafter set forth; and

WHEREAS, the Company and Underwriter represent and warrant to the Escrow Agent that they have not stated to any individual or entity that the Escrow Agent’s duties will include anything other than those duties stated in this Agreement; and

WHEREAS, the Company and Underwriter warrant to the Escrow Agent that a copy of each document that has been delivered to Investors and third parties that include Escrow Agent’s name and duties, has been attached hereto as Schedule I.

NOW, THEREFORE, IT IS AGREED as follows:

1. Delivery of Escrow Funds.

(a) Underwriter and the Company shall instruct Investors to deliver to Escrow Agent checks made payable to the order of “Signature Bank, as Escrow Agent for Spheric Technologies, Inc.,” or wire transfer to Signature Bank, 261 Madison Avenue, New York, NY 10016, ABA No. 026013576 for credit to Signature Bank, as Escrow Agent for Spheric Technologies, Inc., Account No., in each case, with the name, address and social security number or taxpayer identification number of the individual or entity making payment. In the event any Subscriber’s address and/or social security number or taxpayer identification number are not provided to Escrow Agent by the Subscriber, then Underwriter and/or the Company agree to promptly provide Escrow Agent with such information in writing. The checks or wire transfers shall be deposited into a non interest-bearing account at Signature Bank entitled “Signature Bank, as Escrow Agent for Spheric Technologies, Inc.” (the “Escrow Account”). The Underwriter shall promptly deliver to the Escrow Agent all monies which it receives from prospective purchasers of the Shares by noon of the next business day following receipt of such monies by the Underwriter.

(b) The collected funds deposited into the Escrow Account are referred to as the “Escrow Funds.”

(c) The Escrow Agent shall have no duty or responsibility to enforce the collection or demand payment of any funds deposited into the Escrow Account. If, for any reason, any check deposited into the Escrow Account shall be returned unpaid to the Escrow Agent, the sole duty of the Escrow Agent shall be to return the check to the Subscriber and advise the Company and Underwriter promptly thereof.

2. Release of Escrow Funds. The Escrow Funds shall be paid by the Escrow Agent in accordance with the following:

(a) In the event that the Company and Underwriter advise the Escrow Agent in writing that the Offering has been terminated (the “Termination Notice”), the Escrow Agent shall promptly return the funds paid by each Subscriber to said Subscriber without interest or offset.

(b) If prior to 3:00 P.M. Eastern time on the Termination Date, the Escrow Agent receives written notice, in the form of Exhibit A, attached hereto and made a part hereof, and signed by the Company and Underwriter, stating that the Termination Date has been extended to the Final Termination Date, then the Termination Date shall be so extended.

(c) Provided that the Escrow Agent does not receive the Termination Notice in accordance with paragraph 2(a) and there is the Minimum Amount deposited into the Escrow Account on or prior to later of the Termination Date or the date stated in the Extension Notice, if any, received by the Escrow Agent in accordance with paragraph 2(b) above, the Escrow Agent shall promptly notify the Company and the Underwriter that the Minimum Amount has been deposited and cleared banking channels, and then upon receipt of written instructions, in the form of Exhibit B, attached hereto and made a part hereof, or in a form and substance satisfactory to the Escrow Agent, received from the Company and Underwriter, pay the Escrow Funds in accordance with such written instructions, such payment or payments to be made by wire transfer within one (1) business day of receipt of such written instructions. Such instructions must be received by the Escrow Agent no later than 3:00 PM Eastern Time on a Banking Day for the Escrow Agent to process such instructions that Banking Day. Such instructions will not be provided by the Company and Underwriter unless they have received confirmation from the American Stock Exchange that the securities that are the subject of the Prospectus will be listed on the American Stock Exchange.

(d) If by (x) 3:00 pm Eastern time on the Termination Date or the date stated in the Extension Notice, if any, that the Escrow Agent has received in accordance with paragraph 2(b) above, the total amount of the Escrow Funds is less than the Minimum Amount, or (y) 3:00 pm Eastern Time on the tenth day after the Termination Date or the date stated in the Extension Notice, if any, that the Escrow Agent has received in accordance with paragraph 2(b) above, the Escrow Agent has not received written instructions from the Company and the Underwriter regarding the disbursement of the Escrow Funds, then the Escrow Agent shall

promptly return the Escrow Funds to the Investors without interest or offset. The Escrow Funds returned to each Subscriber shall be free and clear of any and all claims of the Escrow Agent.

(e) The Escrow Agent shall not be required to pay any uncollected funds or any funds that are not available for withdrawal.

(f) If the Termination Date, Final Termination Date or any date that is a deadline under this Agreement for giving the Escrow Agent notice or instructions or for the Escrow Agent to take action is not a Banking Day, then such date shall be the Banking Day that immediately preceding that date. A Banking Day is any day other than a Saturday, Sunday or a day that a New York State chartered bank is not legally obligated to be opened.

3. Acceptance by Escrow Agent. The Escrow Agent hereby accepts and agrees to perform its obligations hereunder, provided that:

(a) The Escrow Agent may act in reliance upon any signature believed by it to be genuine, and may assume that any person who has been designated by Underwriter or the Company to give any written instructions, notice or receipt, or make any statements in connection with the provisions hereof has been duly authorized to do so. Escrow Agent shall have no duty to make inquiry as to the genuineness, accuracy or validity of any statements or instructions or any signatures on statements or instructions. The names and true signatures of each individual authorized to act singly on behalf of the Company and Underwriter are stated in Schedule II, which is attached hereto and made a part hereof. The Company and Underwriter may each remove or add one or more of its authorized signers stated on Schedule II by notifying the Escrow Agent of such change in accordance with this Agreement, which notice shall include the true signature for any new authorized signatories.

(b) The Escrow Agent may act relative hereto in reliance upon advice of counsel in reference to any matter connected herewith. The Escrow Agent shall not be liable for any mistake of fact or error of judgment or law, or for any acts or omissions of any kind, unless caused by its willful misconduct or gross negligence.

(c) Underwriter and the Company agree to indemnify and hold the Escrow Agent harmless from and against any and all claims, losses, costs, liabilities, damages, suits, demands, judgments or expenses (including but not limited to reasonable attorney’s fees) claimed against or incurred by Escrow Agent arising out of or related, directly or indirectly, to this Escrow Agreement unless caused by the Escrow Agent’s gross negligence or willful misconduct.

(d) In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder, the Escrow Agent shall be entitled to (i) refrain from taking any action other than to keep safely the Escrow Funds until it shall be directed otherwise by a court of competent jurisdiction, or (ii) deliver the Escrow Funds to a court of competent jurisdiction.

(e) The Escrow Agent shall have no duty, responsibility or obligation to interpret or enforce the terms of any agreement other than Escrow Agent’s obligations hereunder, and the Escrow Agent shall not be required to make a request that any monies be delivered to the Escrow Account, it being agreed that the sole duties and responsibilities of the Escrow Agent shall be to the extent not prohibited by applicable law (i) to accept checks or other instruments for the payment of money and wire transfers delivered to the Escrow Agent for the Escrow Account and deposit said checks and wire transfers into the non-interest bearing Escrow Account, and (ii) to disburse or refrain from disbursing the Escrow Funds as stated above, provided that the checks received by the Escrow Agent have been collected and are available for withdrawal.

4. Resignation and Termination of the Escrow Agent. The Escrow Agent may resign at any time by giving 30 days’ prior written notice of such resignation to Underwriter and the Company. Upon providing such notice, the Escrow Agent shall have no further obligation hereunder except to hold as depositary the Escrow Funds that it receives until the end of such 30-day period. In such event, the Escrow Agent shall not take any action, other than receiving and depositing Investors checks and wire transfers in accordance with this Agreement, until the Company has designated a banking corporation, trust company, attorney or other person as successor. Upon receipt of such written designation signed by Underwriter and the Company, the Escrow Agent shall promptly deliver the Escrow Funds to such successor and shall thereafter have no further obligations hereunder. If such instructions are not received within 30 days following the effective date of such resignation, then the Escrow Agent may deposit the Escrow Funds held by it pursuant to this Agreement with a clerk of a court of competent jurisdiction pending the

appointment of a successor. In either case provided for in this paragraph, the Escrow Agent shall be relieved of all further obligations and released from all liability thereafter arising with respect to the Escrow Funds.

5. Termination. The Company and Underwriter may terminate the appointment of the Escrow Agent hereunder upon written notice specifying the date upon which such termination shall take effect, which date shall be at least 30 days from the date of such notice. In the event of such termination, the Company and Underwriter shall, within 30 days of such notice, appoint a successor escrow agent and the Escrow Agent shall, upon receipt of written instructions signed by the Company and Underwriter, turn over to such successor escrow agent all of the Escrow Funds; provided, however, that if the Company and Underwriter fail to appoint a successor escrow agent within such 30-day period, such termination notice shall be null and void and the Escrow Agent shall continue to be bound by all of the provisions hereof. Upon receipt of the Escrow Funds, the successor escrow agent shall become the escrow agent hereunder and shall be bound by all of the provisions hereof and Signature Bank shall be relieved of all further obligations and released from all liability thereafter arising with respect to the Escrow Funds and under this Agreement.

6. Investment. All funds received by the Escrow Agent shall be invested only in non-interest bearing bank accounts at Signature Bank.

7. Compensation. Escrow Agent shall be entitled, for the duties to be performed by it hereunder, to a fee of $3,500, which fee shall be paid by the Company upon the signing of this Agreement. In addition, the Company shall be obligated to reimburse Escrow Agent for all fees, costs and expenses incurred or that become due in connection with this Agreement or the Escrow Account, including reasonable attorney’s fees. Neither the modification, cancellation, termination or rescission of this Agreement nor the resignation or termination of the Escrow Agent shall affect the right of Escrow Agent to retain the amount of any fee which has been paid, or to be reimbursed or paid any amount which has been incurred or becomes due, prior to the effective date of any such modification, cancellation, termination, resignation or rescission. To the extent the Escrow Agent has incurred any such expenses, or any such fee becomes due, prior to any closing, the Escrow Agent shall advise the Company and the Company shall direct all such amounts to be paid directly at any such closing.

8. Notices. All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall be deemed to have been duly given if sent by hand-delivery, by facsimile (followed by first-class mail), by nationally recognized overnight courier service or by prepaid registered or certified mail, return receipt requested, to the addresses set forth below:

If to Underwriter:

Midtown Partners & Co. LLC

4218 West Linebaugh Avenue

Tampa, Florida 33624

Attention: Bruce Jordan

Fax: 561-892-8040

If to the Company:

Spheric Technologies, Inc.

4708 East Van Buren Street

Phoenix, Arizona 85008

Attention: Joseph Hines

Fax:

If to Escrow Agent:

Signature Bank

261 Madison Avenue

New York, NY 10016

Attention: Cliff Broder, Group Director and Senior Vice President

Fax: 646-822-1359

9. General.

(a) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York applicable to agreements made and to be entirely performed within such State, without regard to choice of law principles and any action brought hereunder shall be brought in the courts of the State of New York, located in the County of New York. Each party hereto irrevocably waives any objection on the grounds of venue, forum nonconveniens or any similar grounds and irrevocably consents to service of process by mail or in any manner permitted by applicable law and consents to the jurisdiction of said courts. Each of the parties hereto hereby waives all right to trial by jury in any action, proceeding or counterclaim arising out of the transactions contemplated by this Agreement.

(b) This Agreement sets forth the entire agreement and understanding of the parties with respect to the matters contained herein and supersedes all prior agreements, arrangements and understandings relating thereto.

(c) All of the terms and conditions of this Agreement shall be binding upon, and inure to the benefit of and be enforceable by, the parties hereto, as well as their respective successors and assigns.

(d) This Agreement may be amended, modified, superseded or canceled, and any of the terms or conditions hereof may be waived, only by a written instrument executed by each party hereto or, in the case of a waiver, by the party waiving compliance. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect its right at a later time to enforce the same. No waiver of any party of any condition, or of the breach of any term contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other term of this Agreement. No party may assign any rights, duties or obligations hereunder unless all other parties have given their prior written consent.

(e) If any provision included in this Agreement proves to be invalid or unenforceable, it shall not affect the validity of the remaining provisions.

(f) This Agreement and any modification or amendment of this Agreement may be executed in several counterparts or by separate instruments and all of such counterparts and instruments shall constitute one agreement, binding on all of the parties hereto.

10. Form of Signature. The parties hereto agree to accept a facsimile transmission copy of their respective actual signatures as evidence of their actual signatures to this Agreement and any modification or amendment of this Agreement; provided, however, that each party who produces a facsimile signature agrees, by the express terms hereof, to place, promptly after transmission of his or her signature by fax, a true and correct original copy of his or her signature in overnight mail to the address of the other party.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date first set forth above.

Spheric Technologies, Inc.	Midtown Partners & Co. LLC
By:	By:
Name:	Name:
Title:	Title:

SIGNATURE BANK

By:

Name:

Title:

By:

Name:

Title:

Schedule I

OFFERING DOCUMENTS

Schedule II

The Escrow Agent is authorized to accept instructions signed or believed by the Escrow Agent to be signed by any one of the following on behalf of the Company and Underwriter.

Spheric Technologies, Inc.

Name	True Signature
Midtown Partners & Co. LLC
Name	True Signature

Exhibit A

Extension Notice

Date:                         

Signature Bank

261 Madison Avenue

New York, NY 10016

Attention : Cliff Broder, Group Director and Senior Vice President

Dear Mr. Broder:

In accordance with the terms of paragraph 2(b) of an Escrow Deposit Agreement dated                         , by and among Spheric Technologies, Inc. (the “Company”), Midtown Partners & Co. LLC (“Underwriter”), and Signature Bank (the “Escrow Agent”), the Company and Underwriter hereby notifies the Escrow Agent that the Termination Date has been extended to                  , the Final Termination Date.

Very truly yours,

Spheric Technologies, Inc.

By:

Name:

Title:

Midtown Partners & Co. LLC

By:

Name:

Title:

Exhibit B

FORM OF ESCROW RELEASE NOTICE

Date:

Signature Bank

261 Madison Avenue

New York, NY 10016

Attention : Cliff Broder, Group Director and Senior Vice President

Dear Mr. Broder:

In accordance with the terms of paragraph 2(c) of an Escrow Deposit Agreement dated as of                     , 2009 (the “Escrow Agreement”), by and between Spheric Technologies, Inc. (the “Company”), Signature Bank (the “Escrow Agent”) and Midtown Partners & Co. LLC (“Underwriter”), the Company and Underwriter hereby notify the Escrow Agent that all conditions necessary for release of the funds have been met and the          closing will be held on              for gross proceeds of $        .

PLEASE DISTRIBUTE FUNDS BY WIRE TRANSFER AS FOLLOWS (wire instructions attached):

:	$
:	$
:	$

Very truly yours,

Spheric Technologies, Inc.

By:

Name:

Title:

Midtown Partners & Co. LLC

By:

Name:

Title:

EX-10.31

Exhibit 10.31

SYNOTHERM

SYNOTHERM

SYNOTHERM corporation

M3-3 National High-tech Industrial Development Zone Changsha, Hunan, P. R. China 410013

Tel: 86-731-8803398 8803368 8803358 Fax: 86-731-8803318 E-mail: slf@synotherm.corn

Dec 16, 2008

Certificate

To whom it may concern,

This is to certify that the Sales Agency Agreement (No. SAA0712) signed between SPHERIC TECHNOLGIES, INC. and SYNOTHERM CORPORATION (previously named CHANGSHA SYNO-THERM CO., LTD) is still valid until Dec.14, 2010.

HU PENG

Vice President

SYNOTHERM CORPORATION

EX-10.32

Exhibit 10.32

ALLONGE NO. 2 TO

PROMISSORY NOTES

TO JOSEPH HINES

This Allonge No. 2 to Promissory Notes (the “Allonge No. 2”), dated as of December 31, 2008, is attached to and forms a part of the following Promissory Notes (collectively, the “Notes”), made by SPHERIC TECHNOLOGIES, INC., a Nevada corporation (the “Company”), payable to the order of JOSEPH HINES, an individual residing in the state of Arizona (the “Holder”):

1. Promissory Note dated December 31, 2006, in the original principal amount of $447,000.

2. Promissory Note dated March 31, 2007, in the original principal amount of $63,600.

3. Promissory Note dated December 31, 2007, in the original principal amount of $55,000.

The Notes are hereby amended to provide that they are due and payable in full on June 30, 2009.

In all other respects, the Notes are confirmed, ratified, and approved and, as amended by this Allonge No. 2, shall continue in full force and effect. This Allonge No. 2 replaces the Allonge to Promissory Notes dated March 31, 2008, which shall have no further force or effect.

IN WITNESS WHEREOF, the Company and Holder have caused this Allonge No. 2 to Promissory Notes to be executed and delivered by their respective duly authorized officers as of the date and year first above written.

SPHERIC TECHNOLOGIES, INC.
By:	/s/ Michael Kirksey
Its:	Michael Kirksey Executive Vice President and COO

Accepted and agreed to:

JOSEPH HINES

/s/ Joseph Hines

EX-10.33

Exhibit 10.33

ALLONGE NO. 2 TO

PROMISSORY NOTE

TO JH REALTY, LLC

This Allonge No. 2 to Promissory Note (the “Allonge No. 2”), dated as of December 31, 2008, is attached to and forms a part of the Promissory Note dated December 31, 2007 (the “Note”) and the Allonge to Promissory Note dated March 31, 2008, made by SPHERIC TECHNOLOGIES, INC., a Nevada corporation (the “Company”), payable to the order of J H Realty, an Arizona limited liability company (the “Holder”), in the original principal amount of $62,000.

1. The Note is hereby amended to provide that it is due and payable in full on June 30, 2009.

2. In all other respects, the Note and the Allonge are confirmed, ratified, and approved and, as amended by this Allonge No. 2, shall continue in full force and effect.

IN WITNESS WHEREOF, the Company and Holder have caused this Allonge No. 2 to Promissory Note to be executed and delivered by their respective duly authorized officers as of the date and year first above written.

SPHERIC TECHNOLOGIES, INC.
By:	/s/ Michael Kirksey
Its:	Michael Kirksey Executive Vice President and COO

Accepted and agreed to: JH REALTY, LLC
By:	/s/ Joseph Hines
Its:	Joseph Hines President

EX-10.34

Exhibit 10.34

ADDENDUM TO LEASE

Pursuant to Clause 1 of the Lease Agreement between JH Realty LLC, the “Lessor”, and Spheric Technologies, Inc., the “Lessee” where such Clause state:

1. Term. This Lease shall be for a term of one (1) year, commencing on November 15, 2008, but may be renewed by the Lessee as provided herein.

No additional Clause or portion of the original Lease Agreement contains language or provision regarding extension or renewal of the lease term, so the parties agree to that language as follows:

23. The Lease may be renewed past the one year term (ending November 14, 2009) for periods to be agreed upon but typically not less than twelve months. Upon renewal after the initial one year term, rent may be adjusted by Lessor to the current market rate upon similar premises for 85008 zip code for the initial renewal period and to escalate at no greater than 5% per annum each twelve month period following the initial renewal. All other Clauses, Terms and Conditions of this Lease will remain constant and in force upon renewal unless alteration is jointly agreed by both Lessor and Lessee. Lessee agrees to provide Lessor minimum 90 day notice from end of Lease of intention to renew for further periods.

EXECUTED this 15 day of November, 2008 to be effective immediately.

LESSOR:
	JH REALTY, LLC
	By:	/s/ Joseph Hines
		Joseph Hines, President
LESSEE:
	SPHERIC TECHNOLOGIES, INC.
	By:	/s/ Michael Kirksey
		Michael Kirksey, Vice President

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We hereby consent to the use in this Registration Statement on Form S-1 of our report (which contains an explanatory paragraph relating to the ability of Spheric Technologies, Inc. to continue as a going concern as described in Note 3 to the financial statements) dated July 22, 2008, relating to the financial statements of Spheric Technologies, Inc. as of December 31, 2007, which appears in such Registration Statement. We also consent to the reference to us under the heading “Experts” in such Registration Statement.

/s/ Farber Hass Hurley LLP

Granada Hills, California

January 16, 2009

CORRESP

January 16, 2009

Ms. Jennifer Hardy

Division of Corporation Finance

U.S. Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re: Spheric Technologies, Inc.

Registration Statement on Form S-1 Filed October 15, 2008

File 333-154274

Dear Ms. Hardy:

We have reviewed your November 13, 2008 comment letter (the “Comment Letter”) regarding the registration statement on Form S-1 (the “S-1”) of Spheric Technology, Inc. (the “Registrant”) filed on October 15, 2008. On behalf of the Registrant, we submit this response letter along with Amendment No. 1 to the S-1. The S-1 has been revised in conformity with your comments.

For your convenience, we have provided our responses below in a question and answer format. Your original comment is provided below in bold text, followed by our response.

General

1. We reference the information found on the company’s blog. We note that the company references your registration statement and contains information that is not in the registration statement. We also note that you provide company and strategy information that is not in the prospectus. We also note that you encourage shareholders to contact you about the offering. Please note that Section 5(b)(1) of the Securities Act prohibits a written offer unless it is in a statutory prospectus. Please file the information on your blog with the SEC as a free writing prospectus. Tell us your analysis as to why the blog does not represent a violation of Section 5 and how you will ensure that telephonic conversations with shareholders regarding the offering do not violate Section 5. Please see Rule 164 under the Securities Act of 1933.

In response to the Staff’s comment, we have provided a supplemental response to the Staff by separate letter dated November 24, 2008. After telephonic conversations with the Staff, we [have filed] a free-writing prospectus with the Commission containing the information presented on the Company’s blog.

2. We note that you state that the statements on the blog are covered by Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Please note that these sections only apply to public companies and do not cover statements made in connection with an initial public offering. Please revise accordingly.

In response to the Staff’s comment, we have provided a supplemental response to the Staff by separate letter dated November 24, 2008.

Forepart of the Registration Statement and Outside of Front Cover Page of the Prospectus

3. Please limit the outside cover page of the prospectus to one page.

In response to the Staff’s comment, the Company has revised the outside cover page of the prospectus in accordance with the Staff’s instructions.

4. Please clarify in the first paragraph on the cover page that you are also registering the shares underlying the underwriter warrants for resale.

In response to the Staff’s comment, the Company has revised the first paragraph on the cover page of prospectus in accordance with the Staff’s instructions.

Inside Front and Outside Back Cover Pages of Prospectus

5. Please be advised that the prospectus delivery obligation language must be included on the back outside cover of the prospectus, unless the dealers are not required to deliver it. See Item 502 of Regulation S-K.

In response to the Staff’s comment, the Company has included the prospectus delivery obligation language on the back cover of the prospectus in accordance with the Staff’s instructions.

Prospectus Summary, page 1

6. Please disclose that you will use a portion of the proceeds to repay indebtedness to your CEO.

In response to the Staff’s comment, the Company has revised the disclosure on page 1 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

7. On pages 9-10, please revise your disclosure to identify the patent to which you have a non-exclusive license and disclose the importance of the license to your operations (e.g. is the license vital to your operations?). Please further discuss the impact it would have on your business if other licensees exercise their rights to use the license to compete with you.

In response to the Staff’s comment, the Company has revised the disclosure on pages 9-10 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Use of Proceeds, page 17

8. We note your disclosure in footnote 1 that the net proceeds will be applied among all of the listed categories in your discretion. As required under Instruction 1 to Item 504 of Regulation S-K, please indicate the order of priority as to the use of proceeds.

In response to the Staff’s comment, the Company has revised the disclosure on pages 17-18 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Description of Business, page 21

Microwave Furnaces, page 22

9. You state that the furnaces vary in price based on the size of the furnace. In light of this fact, please further disclose how you will determine which microwave furnaces to order from your supplier to meet your minimum commitment in the event that you continue to have no purchase orders from customers.

In response to the Staff’s comment, the Company has revised the disclosure on page 23 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Market and Industry Overview, page 25

10. Please disclose the source of the published research and tests results to which you refer in making your claims in the last paragraph on page 24 and the first paragraph on page 25. Please tell us whether this information and the information from Global Industry Analysts, Supplier Relations US and the Freedonia Group is publicly available or whether you commissioned it for a fee.

In response to the Staff’s comment, the Company has revised the disclosure on pages 24-25 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions. We have utilized information from Global Industry Analysts, BCC Research, Supplier Relations US, and The Freedonia Group in analyzing our markets and potential markets. We purchased this information from these companies as parts of studies that were generally available to any interested party, and did not commission any of these companies to perform any analysis or market report for a fee.

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Employees, page 29

11. Please disclose whether the three employees are full-time employees of your company.

In response to the Staff’s comment, the Company has revised the disclosure on page 29 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Market Price of and Dividends on the Registrant’s Common Equity . . ., page 31

Securities Authorized for Issuance under Equity Compensation Plan, page 31

12. Please present the required information in tabular form as instructed in Item 201(d) of Regulation S-K.

In response to the Staff’s comment, the Company has revised the disclosure on page 31 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Management’s Discussion and Analysis of Financial Condition . . . , page 32

Results from Operations, page 33

13. Please discuss whether you expect your revenues to continue to remain at $0 for 2008 and disclose the basis for your expectation.

In response to the Staff’s comment, the Company has revised the disclosure on pages 33-34 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to further discuss the Company’s expected 2008 revenues.

14. Please disclose whether you expect your operating losses to continue to increase for 2008.

In response to the Staff’s comment, the Company has revised the disclosure on page 34 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to further discuss the Company’s expected continued operating losses in 2008.

Liquidity and Capital Resources, page 35

15. Please include a discussion that follows the guidance in SEC Financial Reporting Release 16, Uncertainty about an Entity’s Continued Existence. Please revise your filing to provide a more robust discussion of your going concern issues, including but not limited to the following:

• Prominent disclosures of your financial difficulties and viable plans to overcome these difficulties;

• Disclosures of any known demand, commitments or uncertainties that will result in your liquidity increasing or decreasing in any material way;

• Detailed cash flow discussions for the twelve-month period following the date of the latest balance sheet presented; and

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• A reasonable, detailed discussion of your ability or inability to generate sufficient cash to support operations.

In response to the Staff’s comment, the Company has revised the disclosure on pages 35-37 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to more fully discuss the Company’s plan’s regarding our continued existence.

16. On page 35, you indicate that you are obligated to purchase $300,000 in goods for inventory during 2008 from Syno-Therm. You disclose that you will need to commit to purchase $206,829 in additional goods for inventory in 2008 to comply with the terms of the lease. Please disclose and tell us what impact the failure of purchasing additional goods for inventory will have on your license agreement, liquidity and overall results of operations. Please consider whether this should be considered as a risk factor for your business. Please revise your disclosure accordingly.

In response to the Staff’s comment, the Company has revised the disclosure on page 37 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Critical Accounting Policies, page 37

17. Please expand your critical accounting policies to address the following areas:

• Types of assumptions underlying the most significant and subjective estimates;

• Any known trends, demands, commitments, events or uncertainties that are reasonably likely to occur and materially affect the methodology or the assumptions described;

• If applicable, why different estimates that would have had a material impact on your financial presentation could have been used in the current period;

• If applicable, why the accounting estimate is reasonably likely to change from period to period with a material impact on the financial presentation;

• A quantitative discussion of changes in overall financial performance and, to the extent material, line items in the financial statements if you were to assume that the accounting estimate were changed, either by using reasonably possible near-term changes in the most material assumption(s) underlying the accounting estimate or by using the reasonably possible range of the accounting estimate. If those changes could have a material effect on your liquidity or capital resources, then you also would have to explain that effect; and

• A quantitative and qualitative discussion of any material changes made to the accounting estimate in the past two years, the reasons for the changes, and the effect on line items in the financial statements and overall financial performance.

Refer to SEC Releases 33-8098 and 33-8040. See section V of the Commission Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations dated December 29, 2003.

In response to the Staff’s comment, the Company has revised the disclosure on pages 39-41 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to more fully discuss the Company’s critical accounting policies.

Executive Compensation, page 45

Compensation Components, page 45

18. The employment agreements of Mr. Hines and Mr. Kirksey state that each executive’s annual salary beginning October 1, 2008 is $96,000 and $120,000, respectively. Please disclose the role of the

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compensation committee and any other individuals in setting each executive’s annual salary and discuss the salary increases in light of your recent financial performance, including discussing your compensation policy and other factors considered in setting each executive’s salary.

In response to the Staff’s comment, the Company has revised the disclosure on page 47 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Stock Option Plan, page 45

19. Please identify any named executive officers that received options and disclose the number that each received.

In response to the Staff’s comment, the Company has revised the disclosure on page 47 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to clarify that no named executive officers received options.

Transactions with Related Persons, Promoters and Certain Control Persons, page 47

20. Please disclose the use of proceeds of each of Mr. Hines’ loans to the company.

In response to the Staff’s comment, the Company has revised the disclosure on page 49 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Underwriting, page 49

21. If Midtown Partners is a “new underwriter” as described in Item 508(b) of Regulation S-K, please provide the information required by that section.

In response to the Staff’s comment, Midtown is not a new underwriter as described in Item 508(b). Midtown was formed in 2000 under the name CB Capital and became an NASD Broker dealer. In 2001, CB Capital was sold and renamed Innovation Capital, which was subsequently sold in 2004 and renamed Midtown Partners.

22. Please revise your disclosure to provide a brief description of the indemnification provisions as provided in Section 6 of the Underwriting Agreement. See Item 508(g) of Regulation S-K.

In response to the Staff’s comment, the Company has supplemented the disclosure on page 51 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Share Eligible for Future Sale, page 54

Sales of Restricted Securities, page 54

23. Please disclose how you accounted for piggy-back registration rights and any other registrations rights granted. Please also include this disclosure in your financial statements for the year ended December 31, 2007. Please also disclose if there are any cash penalties related to these registration rights. Refer to paragraph 12 of FSP EITF 00-19-2.

In response to the Staff’s comment, the Company has revised the disclosure on page 56 and the related disclosure on page F-19 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Interest of Named Experts and Counsel, page 55

24. We note that you presented Farber Hass Hurley LLP’s review report related to your June 30, 2008 interim financial statements on page F-1. As required by AU Section 711.09, please expand your disclosures to clarify that this review report is not a “report” or “part” of the registration statement within the meaning of sections 7 and 11 of the Securities Act of 1933.

In response to the Staff’s comment, the Company has revised the disclosure on page 57 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

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Financial Statements

General

25. Please note the updating requirements of Rule 3-12 of Regulation S-X.

In response to the Staff’s comment, the Company has revised the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to include the financial statements of the Company for the period ended September 30, 2008.

Statement of Stockholders’ Equity, page F-5

26. Reconcile the disclosures provided on page 47 regarding your transactions with Mr. Hines to the information presented in your statement of stockholders’ equity. In particular, we do not see the 2005 conversion of $940,000 in debt to equity or the 2007 conversion of preferred stock into common stock. Also clarify and quantify the amount of dividends paid on the Preferred Stock that Mr. Hines declined. Address these comments as they relate to necessary supplemental noncash disclosures in your statement of cash flows as well.

In response to the Staff’s comment, the Company notes that conversion of Mr. Hines’ debt to equity occurred in 2005, a period not presented in the accompanying financial statements contained in the Amendment No. 1 to the S-1. As such, the Company did not revise any disclosures in the Amendment No. 1 to the S-1. In response to the Staff’s comment regarding the conversion of Mr. Hines preferred shares to common shares, the Company notes that all the preferred shares converted were disclosed as one item on the statement of stockholders’ deficit at December 31, 2007. Mr. Hines converted 470,000 preferred shares into 940,000 common shares and one other shareholder converted 50,000 preferred shares and $20,250 of unpaid preferred dividends into 120,250 common shares. The Company clarified its disclosure on page F-19 of the Amendment No. 1 to the S-1.

Statement of Cash Flows, page F-6

27. Please tell us how you determined that your payment of licensing fee was a financing activity in accordance with paragraph 18 of SFAS 95 instead of an operating activity.

In response to the Staff’s comment, the Company notes that the licensing fee was originally incurred by the issuance of a long-term payable for the intangible asset. In the period the license was acquired, the offsetting inflow from the of issuance of a long-term payable and the outflow of the acquisition of the intangible asset were disclosed as a non-cash financing activity. In subsequent periods when the long-term payable was reduced with cash payments, the change was also reflected as a financing activity as it was the reduction of a long-term payable.

Note 1. Nature of Operations, page F-7

Organization, page F-7

28. You disclose that from February 1, 2004 to December 31, 2007, you were a development stage enterprise. Please tell us how you determined that you were not a development stage enterprise after December 31, 2007. Refer to paragraphs 8 and 9 of SFAS 7 and address the need to revise your financial statements to provide all the disclosures of a development stage enterprise.

In response to the Staff’s comment, the Company has revised the disclosure on page F-7 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Note 3. Summary of Significant Accounting Practices, page F-7

Shipping and Handling Charges, page F-7

29. You disclose that you record shipping and handling charges, which are invoiced to customers with actual shipping and handling costs recorded as part of cost of goods sold in the statement of operations. Please clarify whether shipping and handling charges invoiced to customers are recorded in cost of goods sold or in revenues. Please revise your disclosure accordingly. Refer to EITF 00-10.

In response to the Staff’s comment, the Company has revised the disclosure on page F-7 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

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Stock-Based Compensation, page F-8

30. Please provide us an analysis of the stock-based compensation, including warrants, that you granted from January 1, 2007 through the date of your response letter. Tell us how you determined fair value at each relevant date. To the extent applicable, please reconcile the fair values you determined for your common stock to contemporaneous equity transactions and the anticipated TO price of $6.00.

In response to the Staff’s comment, the Company has revised the disclosure on F-8, F-11, and F-12 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Loss per Share, page F-8

31. You indicate that basic EPS is “computed as net loss is based on weighted average shares outstanding.” Please revise your accounting policy to clarify how basic and diluted earnings per share are calculated. Refer to SFAS 128.

In response to the Staff’s comment, the Company has revised the disclosure on page F-8 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to clarify the calculation of basic and diluted EPS.

Notes to the Financial Statements – December 31, 2007

Intangible Assets

32. Please provide your accounting policy for intangible assets, including patent costs, and provide a footnote to include all disclosures required by paragraph 45 of SFAS 142 including but not limited to the gross carrying amount and accumulated amortization, in total and by major intangible asset class and the estimated aggregate amortization expense for each of the five succeeding fiscal years.

In response to the Staff’s comment, the Company has revised the disclosure on pages F-10 and F-18 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

33. Disclose the transaction that resulted in the $100,742 non-cash acquisition of licenses and permits as disclosed in the supplemental disclosures to your statements of cash flows.

In response to the Staff’s comment, the Company notes the discussion above on comment 27. The licensing fee was originally incurred by the issuance of a long-term payable for the intangible asset. In the period the license was acquired, the offsetting inflow from the of issuance of a long-term payable and the outflow of the acquisition of the intangible asset were disclosed as a non-cash financing activity. In subsequent periods when the long-term payable was reduced with cash payments, the change was also reflected as a financing activity as it was the reduction of a long-term payable. The Company has revised pages F-6 and F-18 of the Amendment No. 1 to the S-1 to reflect a clarification of the payable in the statement of cash flows.

Revenue Recognition, page F-13

34. On page 32, you indicate that revenue recorded in 2007 includes revenue from the furnace sale, as well as amounts for freight, duty and customs clearance, and installation of the microwave furnace. Please tell us how you determined that freight, duty and customs clearance should be included as revenue. Please cite the accounting literature used to support your conclusion.

In response to the Staff’s comment, the Company cites EITF Issue No. 00-10, “Accounting for Shipping and Handling Fees and Costs,” addresses the income statement classification of shipping and handling fees and costs by reporting entities that recognize revenue based on the gross amount billed to customers under EITF Issue 99-19. The EITF consensus for this Issue is that all amounts billed to a customer in a sale transaction related to shipping and handling, if any, represent revenues for the goods provided. Accordingly, those amounts have been classified as revenue.

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35. Please expand your revenue recognition policy to address all the criteria necessary for revenue recognition as set forth in SAB 104.

In response to the Staff’s comment, the Company has revised the disclosure on page F-15 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions.

Loss per Share, page F-14

36. On page F-17, you indicate that cumulative unpaid dividends on preferred stock totaled $221,143 and $137,943 at December 31, 2007 and 2006 prior to conversion. Please tell us what consideration you gave to your cumulative unpaid dividends in calculating basic earnings per share for the periods ended December 31, 2007 and 2006. Refer to paragraph 9 of SFAS 128. Income or loss applicable to common stock should also be reported on the face of the income statement when it is materially different in quantitative terms from reported net income or loss. Please advise or revise to include net loss available to common shareholders on the face of the statement of operations for each period presented, if applicable. Refer to SAB Topic 6:B.

In response to the Staff’s comment, the Company has revised the disclosure on pages F-4, F-8, F-10, F-16 and F-19 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to present the net loss available to common shareholders in accordance with SFAS 128.

Stock Transactions, page F-17

Preferred Stock, page F-17

37. You indicate that your President forgave his right to dividends totaling approximately $200,000. Please tell us how you accounted for the forgiveness of cumulative unpaid dividends on preferred stock. Please cite the accounting literature used to support your conclusion.

In response to the Staff’s comment, the Company has revised the disclosure on page F-19 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to clarify the conversion of the preferred shares into common shares. The Company notes that, in accordance with Generally Accepted Accounting Principles, the Company accounted for the forgiveness of the unpaid dividends to the Company’s President by recording an entry to debit dividends payable (an equity account) and credit APIC (an equity account). This was the reverse of the entry made to record the dividends when declared, in accordance with Generally Accepted Accounting Principles. Forgiven equity transactions, such as unpaid dividends, do not carry the same accounting implications as forgiven debt, which must be recorded as revenue. As dividends, such amounts are entries to equity and not to Operating Statement accounts. No specific accounting literature is apparent that covers forgiveness of unpaid dividends.

38. Revise to clarify, if true, that the preferred stock and redeemable common stock purchase warrants are only redeemable at your option. Otherwise, address the appropriateness of your accounting for these warrants within equity.

In response to the Staff’s comment, the Company has revised the disclosure on page F-19 of the Amendment No. 1 to the S-1 in accordance with the Staff’s instructions to clarify that the stock and purchase warrants were redeemable solely at the Company’s discretion.

Sincerely,

/s/ Christian J. Hoffmann III

Christian J. Hoffmann III

cc: Joseph Hines

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