1413990--9/13/2010--Portlogic_Systems

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Risks Relating To Our Business The independent accountant s opinion on the financial statements for the fiscal years ended May 31, 2010 and May 31, 2009, and for the period from inception, June 22, 2004, to May 31, 2010, includes an explanatory paragraph about our ability to continue as a going concern and, if we cannot obtain additional financing, we may have to curtail operations and may ultimately cease to exist. We have a limited operating history and may never achieve or sustain profitable operations. We depend on our officers and directors to perform our business activities and our ability to recruit and retain the qualified individuals needed to operate and develop our business is unknown. We have limited cash which we anticipate will be insufficient to fund our plan of operations for the twelve months ending May 31, 2011 and if we are unable to raise additional capital, our business may fail and stockholders may lose their entire investment. Our President, Secretary, and Treasurer, Jueane Thiessen, and our Chief Technology Officer, Edvard Halupa, also serve as directors. These interrelationships may create conflicts of interest that might be detrimental to us. We may be subject to foreign currency fluctuation and such fluctuation may adversely affect our financial position and results. We do not own patents on our products and, if other companies copy our products, our revenues may decline which may result in a decrease in our stock price. We do not carry any insurance and we may be subject to significant lawsuits which could substantially increase our expenses. Amendments to telecommunications regulations could have a material adverse effect on our business by increasing the cost of our operations or the costs that customers must incur to use our products and services. Equipment loss or malfunctions and telecommunication service interruptions or delays may adversely affect our ability to provide our products and services. Substantially all of our revenue has been derived from short-term contract engagements. If these customers do not enter into additional contracts with us, you may lose your entire investment because we may be unable to obtain new revenues that generate sufficient cash to meet our obligations. Risks Relating To Our Stock Penny Stock rules may make buying or selling our securities difficult which may make our stock less liquid and make it harder for investors to buy and sell our shares. Existing and prospective shareholders may experience significant dilution if we enter into a business combination with a private concern or public company and issue securities to shareholders of such private company. One of our shareholders, Fern Fair, controls 52.3% of our shares of common stock as of May 31, 2010, and she may not vote her shares in a manner that benefits minority shareholders. Our common stock has experienced in the past, and is expected to experience in the future, significant price and volume volatility, which substantially increases the risk that our stockholders may not be able to sell their shares at or above the price that they paid for the shares. Our directors have the right to authorize the issuance of preferred stock and additional shares of our common stock. If we fail to remain current on our reporting requirements, we could be removed from the OTC Bulletin Board which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market. As a result of being a public company, we will incur increased costs that will adversely affect our liquidity and increase the risk that we will become insolvent.

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1413990--9/13/2010--Portlogic_Systems_Inc.