In the event of any liquidation, dissolution or winding up of
the Company, holders of SeriesA Preferred Stock will be
entitled to receive, out of assets available therefor, an
amount equal to 115% of the Stated Value of their shares plus
115% of any accrued but unpaid dividends.

The SeriesA Preferred Stock is convertible at the option of the
holder, in whole or in part, into shares of Common Stock at any
time after the earlier of (i)the date the Registration
Statement is declared effective by the SEC or (ii)six months
after the date of the closing. If no conversion has taken place
within nine months after the date of the closing, the SeriesA
Preferred Stock, plus any accrued but unpaid dividends, will
automatically convert into shares of Common Stock.

The conversion price per share of Common Stock in either event
is the lesser of (i)$2.75 per share (subject to adjustment in
certain circumstances), or (ii)80% of the lowest closing price
during 21 consecutive trading days ending on the trading day
immediately prior to the conversion date, subject to a floor of
$0.25 per share (which floor is subject to full ratchet
adjustment in certain circumstances if we issue Common Stock
(or Common Stock equivalents) in the aggregate amount of not
less than $1,000,000 at a price below $0.25 per share of Common
Stock, and to proportionate adjustment in certain other
circumstances).

Except in certain limited circumstances affecting the rights of
the holders of SeriesA Preferred Stock or as required by law,
holders of the SeriesA Preferred Stock will not have voting
rights.

Until the date that is six months following the date of the
closing, the Company will not authorize or create any class of
stock ranking as to dividends, redemption or distribution of
assets upon a liquidation senior to the SeriesA Preferred
Stock, without the consent of holders of no less than 662/3% of
the then-outstanding shares of SeriesA Preferred Stock.

We also agreed in the Subscription Agreements that until the
date that is 12 months following the closing, we will not
create or allow to be created any security interest, lien,
charge or other encumbrance on any of our or our subsidiaries
rights under or interests in the Hydrocarbon Production Sharing
Contract between SCS Corporation Ltd. and the Republic of
Guinea, dated September22, 2006, as amended to date or
hereafter, that secures the repayment of indebtedness of the
Company or any of its subsidiaries for money borrowed.

Katalyst Securities, LLC (the Placement Agent), a U.S.
registered broker-dealer, was engaged by the Company as
placement agent for the Offering, on a reasonable best effort
basis. We agreed to pay to the Placement Agent (and any sub
agent) a cash commission of 9% of the gross purchase price paid
by the Subscribers for the Units (including for Units that may
be issued upon exercise of the Subscriber Option), and to issue
to the Placement Agent (and any sub agent) warrants to purchase
a number of shares of Common Stock equal to 7% of the number of
shares of Common Stock initially issuable upon conversion of
the shares of SeriesA Preferred Stock contained in the Units
sold in Offering (including Units that may be issued upon
exercise of the Subscriber Option), at the exercise price of
$3.00 per share (the Placement Agent Warrants).

We also agreed to reimburse the Placement Agent for certain
expenses related to the Offering. At the closing, we paid the
Placement Agent $61,200 of cash fees and issued to the
Placement Agent or its designees Placement Agent Warrants to
purchase an aggregate of 18,002 shares of Common Stock. The
Placement Agency Agreement between the Company and the
Placement Agent contains customary representations, warranties
and covenants of and indemnifications by the parties.

The Investor Warrants and the Placement Agent Warrants have
provisions for the weighted average adjustment of their
exercise price in the event that we issue shares of Common
Stock (or Common Stock

equivalents) for a consideration per share less than the
exercise price then in effect, subject to certain exceptions.

In connection with the Offering, we also entered into a
Registration Rights Agreement (the Registration Rights
Agreement) with each of the Subscribers and the holders of the
Placement Agent Warrants, which requires the Company to file a
Registration Statement with the SEC within 45 days after the
closing, registering for resale (i)all shares of Common Stock
issued or issuable upon conversion of the SeriesA Preferred
Stock (including any shares of SeriesA Preferred Stock issued
to the Subscriber Option described above), and (ii)all shares
of Common Stock issued or issuable upon exercise of the
Investor Warrants (including any Investor Warrants issued to
the Subscriber Option described above) and the Placement Agent
Warrants (including any that may be issued upon exercise of the
Subscriber Option), and to use its commercially reasonable
efforts to cause the Registration Statement to be declared
effective no later than 135 days after the closing. We also
granted to the holders of the registrable shares certain
piggyback registration rights until two years after the
effectiveness of the Registration Statement.

If the Registration Statement is not filed with, or declared
effective by, the SEC within the specified deadlines set forth
above, or the Registration Statement ceases to be effective or
otherwise cannot be used for a period specified in the
Registration Rights Agreement, or trading of the Common Stock
on the Companys principal market is suspended or halted for
more than three consecutive trading days (each, a Registration
Event), monetary penalties payable by the Company to the
holders of registrable shares that are affected by such
Registration Event will commence to accrue at a rate equal to
12% per annum of the purchase price paid for each Unit
purchased, for the period that such Registration event
continues, but not exceeding in the aggregate 5% of such
purchase price.

The Certificate of Designations and forms of the Subscription
Agreement, the Investor Warrant, the Placement Agent Warrant
and the Registration Rights Agreement are filed as exhibits to
this Current Report on Form8-K, and the foregoing summaries of
the terms of such documents are subject to, and qualified in
their entirety by, the full text of such documents, which are
incorporated herein by reference.

The Subscription Agreement and the Registration Rights
Agreement are not intended to be, and should not be relied upon
as, making disclosures regarding any facts and circumstances
relating to the Company. These agreements are described in this
Current Report on Form8-K and attached as exhibits hereto only
to provide investors with information regarding the terms and
conditions of those agreements that establish and govern the
legal relationship among the parties thereto, and are not
intended to provide any other factual information regarding the
Company or the actual conduct of its business, or to modify or
supplement any factual disclosures about the Company contained
in any of the Companys public reports filed with the SEC.

The representations and warranties contained in those
agreements were made as of specific dates and only for purposes
of those agreements, not for the benefit of any investors or
other persons (other than the Subscribers), and are subject to
important exceptions and limitations. The parties reserve the
right to, but are not obligated to, amend or revise these
agreements. Accordingly, investors should not rely on
representations and warranties as characterizations of the
actual state of facts, or for any other purpose, at the time
they were made or otherwise.

Item 3.02. Unregistered Sales of
Equity Securities.

The information set forth above in Item1.01 is hereby
incorporated by reference into this Item3.02.

The Units, the shares of SeriesA Preferred Stock, the Investor
Warrants, the Placement Agent Warrants, and the shares of
Common Stock issuable upon conversion or exercise of the
SeriesA Preferred Stock, the Investor Warrants and the
Placement Agent Warrants are being issued in reliance upon the
exemption from registration provided by Section4(a)(2)of the
Securities Act and Rule506(b)of Regulation D promulgated by the
SEC thereunder. All of the Subscribers were persons who
represented themselves to be accredited investors as defined in
Regulation D.

This current report on Form8-K is issued in accordance with
Rule135c under the Securities Act, and is neither an offer to
sell any securities, nor a solicitation of an offer to buy, nor
shall there be any sale of any such securities in any state or
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.

Item 5.03. Amendments to Articles of
Incorporation or Bylaws; Change in Fiscal Year.

The information set forth above in Item1.01 with respect to the
Certificate of Designations is hereby incorporated by reference
into this Item5.03.

Item 7.01 Regulation FD
Disclosure.

The Press Release regarding the above matters is filed as
Exhibit99.1 to this Current Report.

Information in this Current Report on Form8-K furnished to this
Item7.01 shall not be deemed to be filed for purposes of
Section18 of the Exchange Act, or otherwise subject to the
liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities
Act or the Exchange Act.

Item 9.01. Financial Statements and
Exhibits.

(d)Exhibits.

The following exhibits are filed with this Report: