0001047469-04-030091.txt : 20040930 0001047469-04-030091.hdr.sgml : 20040930 20040930171815 ACCESSION NUMBER: 0001047469-04-030091 CONFORMED SUBMISSION TYPE: SB-2 PUBLIC DOCUMENT COUNT: 27 FILED AS OF DATE: 20040930 DATE AS OF CHANGE: 20040930 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GRANT VENTURES INC CENTRAL INDEX KEY: 0001210336 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 820490737 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SB-2 SEC ACT: 1933 Act SEC FILE NUMBER: 333-119425 FILM NUMBER: 041056010 BUSINESS ADDRESS: STREET 1: 56W 4005 S STREET 2: STE 220 CITY: SALT LAKE CITY STATE: UT ZIP: 84101 BUSINESS PHONE: 8013223401 SB-2 1 a2143868zsb-2.htm SB-2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

___________________________________

FORM SB-2

___________________________________

REGISTRATION STATEMENT

UNDER THE

SECURITIES ACT OF 1933

GRANT VENTURES, INC.

(Name of Small Business Issuer in Its Charter)

Nevada		3841		82-0490737
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

5511 Capital Center Drive, Suite 224

Raleigh, NC 27606

(919) 852-4482

(Address and Telephone Number of Principal Executive Offices)

5511 Capital Center Drive, Suite 224

Raleigh, NC 27606

(919) 852-4482

(Address of Principal Place of Business or Intended Principal Place of Business)

Corporation Service Company

327 Hillsborough Street

Raleigh, NC 27603

(Name, Address and Telephone Number of Agent for Service)

Copies to:

Steven S. Pretsfelder, Esq.

Brown Raysman Millstein Felder & Steiner, LLP

900 Third Avenue

New York, NY 10022

Approximate Date of Commencement of Proposed Sale to the Public:

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) 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(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. [ ] ____________________________________________

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [ ]

Title of each class of Securities to be Registered		Amount to be registered		Proposed Maximum Offering Price Per Unit (1)		Proposed Maximum Aggregate Offering Price		Amount of Registration Fee
Common Stock		24,268,495		$0.70		$16,987,946.50		$2,152.37

(1) Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based upon the average of the bid and asked prices of the Registrant’s common stock on September 24, 2004.

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 may not sell these securities until the registration statement filed with the Securities and Exchange Commission is 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.

Prospectus

Subject to Completion, dated September 30, 2004

GRANT VENTURES, INC.

24,268,495 Shares

Common Stock

This prospectus relates to the sale of up to 24,268,495 shares of our common stock by selling stockholders. The selling stockholders currently hold a total of 19,135,767 shares of our common stock. Certain of the selling stockholders will receive an additional 5,132,728 shares of our common stock upon conversion of our outstanding warrants that they own. The prices at which the selling stockholders may sell shares will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive any proceeds from the sale of our shares by the selling stockholders.

Our common stock is listed on the OTC Bulletin Board under the symbol “GRTV.OB.” On September 29, 2004, the last reported bid price of our common stock was $0.67 per share.

INVESTING IN OUR SECURITIES INVOLVES RISKS. 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 DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this Prospectus is September 30, 2004.

Grant Ventures, Inc.

5511 Capital Center Drive, Suite 224

Raleigh, NC 27606

(919) 852-4482

______________________________________________________________________________

TABLE OF CONTENTS

	Page

PROSPECTUS SUMMARY	1
RISK FACTORS	3
USE OF PROCEEDS	14
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	14
MARKET FOR COMMON STOCK	15
DESCRIPTION OF BUSINESS	16
DESCRIPTION OF PROPERTY	26
LEGAL PROCEEDINGS	26
DIRECTORS AND EXECUTIVE OFFICERS	26
INDEMNIFICATION OF OFFICERS AND DIRECTORS	30
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	31
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	34
SELLING STOCKHOLDERS	34
PLAN OF DISTRIBUTION	37
DESCRIPTION OF SECURITIES	38
LEGAL MATTERS	38
EXPERTS	39
FURTHER INFORMATION	39
CONSOLIDATED FINANCIAL STATEMENTS	40
PART II — INFORMATION NOT REQUIRED IN PROSPECTUS	62

PROSPECTUS SUMMARY

This summary does not contain all of the information that you should consider before investing in our common stock. You should carefully read the entire prospectus, including the section entitled “Risk Factors” and the consolidated financial statements and pro forma financial statements prior to making an investment decision.

About Grant Ventures

We are developing protein-based screening tests to screen woman for cervical cancer and pre-cancerous conditions that typically result in cervical cancer. Our tests detect the presence of certain antibodies that appear only when cervical cancer or certain pre-cancerous conditions are present in the body. Our tests are performed by analyzing a small amount of blood taken from the patient. In one of our tests, the blood sample is analyzed in a clinical testing laboratory using standard laboratory equipment and analytic software, which generally can produce test results in about 2 hours. Our second generation rapid test is designed to be administered by a health professional in a doctor’s office, hospital, clinic or even at home, and can provide easy-to-read results in approximately 15 minutes.

Invasive cervical cancer affects over 500,000 women worldwide annually, and approximately 300,000 women die each year from this disease. Cervical cancer is the second highest cause of cancer death among women. In the United States, Western Europe and other countries where there is widespread screening and a sophisticated testing infrastructure, cervical cancer is less prevalent. In China, India and many other developing countries, there is a much higher rate of cervical cancer because of the lack of testing and limited or non-standardized testing infrastructure.

Papanicalou tests, commonly known as Pap Tests, have been the most common method of screening for cervical cancer for over 50 years. Recently, DNA-based HPV tests (which we refer to as HPV tests) have been introduced as an adjunct to the Pap Test. Approximately 60 million Pap Tests are performed each year in the United States, and an additional 60 million Pap Tests are performed annually in the rest of the world, mostly in Canada, Western Europe, Japan and Australia. Outside of the United States, approximately 1.7 billion women do not undergo regular cervical cancer screening. In many cases this is due to lack of economic resources. In some countries, social, cultural and/or religious factors may also inhibit women from undergoing cervical cancer testing.

We believe that our tests will efficiently and accurately screen for cervical cancer. When completed, we believe that our tests will differ in several important respects from the Pap Tests and HPV tests that are currently in use:

· Our tests analyze a patient’s blood. Both the Pap Tests and HPV tests examine cervical cells that must be collected from a woman’s cervix.

· Our tests will be performed in a laboratory by a lab technician using standard, readily available laboratory equipment, or by a doctor or other healthcare provider at the point-of-care using a self-contained easy-to-use test. Cell specimens from Pap Tests are usually examined by a highly trained licensed cytotechnologist under a microscope to determine whether cancerous cells or pre-cancerous conditions are present. The most widely accepted HPV tests rely on sophisticated gene-based software and specialized laboratory equipment.

• Our tests will detect antibodies that are present only if a woman has cervical cancer or various pre-cancerous conditions that usually lead to cancer. In preliminary trials that used one version of our test to analyze blood samples of patients already diagnosed with cervical cancer or pre-cancerous conditions, our test was able to detect cervical cancer or pre-cancerous conditions when such conditions existed and was able to rule out cervical cancer and pre-cancerous conditions when they did not exist.

Pap Tests results may be limited by the visual limitations, sample distribution and other technical problems and the subjective nature of cytology. Woman who have abnormal Pap Tests typically undergo a colposcopy (visual examination of the cervix with the aid of a colposcope) and a biopsy. However, a colposcopy and biopsy do not reveal cervical cancer or pre-cancerous conditions in about 80% of the cases. In addition, in many cases, Pap Tests fail to diagnose cervical cancer or pre-cancerous conditions when, in fact, they are present. Further, Pap Tests alone sometimes are unable to differentiate some cancerous or pre-cancerous conditions from benign conditions that mimic them.

HPV Tests detect the presence of humanpapilloma virus, or HPV, which is present in almost all cases of cervical cancer. However, while there are more than 100 types of HPV, the scientific community believes only 7 to 15 actually cause most cervical cancers. While HPV Tests are generally able to accurately detect the presence of HPV, they typically are not able to accurately diagnose cervical cancer. Only 2% of patients who test positive for HPV will eventually contract cervical cancer.

When we have completed the development of our tests, we plan initially to market and sell them in the United States, Western Europe, Japan and certain other countries. In countries where Pap testing is routine, we believe that our tests may be used together with, or as an adjunct to, the Pap Test. In developing nations, we plan to market and sell our rapid test through local distributors to hospitals, clinics, physicians and other healthcare providers who we believe will use it as a low-cost point-of-care test.

We will require FDA approval before marketing and selling our tests to most laboratories and to hospitals, clinics, doctors and other healthcare providers. We also will require regulatory approval before we market and sell our tests in many foreign countries. We have not yet made any submissions to the FDA or any foreign regulatory agency or begun clinical trials that we anticipate will be required by these agencies as part of their review of our tests.

Our planned cervical cancer tests use proprietary technology to detect the presence of antibodies to specific HPV proteins. We believe that in the future we may be able to apply that technology to develop rapid tests for other diseases and certain other cancers.

History of our company

Our company was incorporated in Idaho in 1983 as Grant Silver Inc. In 2001 we reincorporated in Nevada. On July 30, 2004, we acquired Impact Diagnostics, Inc, a Utah corporation, through the merger of our wholly owned subsidiary into Impact Diagnostics. We sometimes refer to that transaction as the “Merger”. As a result of the Merger, Impact Diagnostics is a wholly owned subsidiary of our company. Impact Diagnostics was formed in 1998 and has been developing a cervical cancer test. For several years prior to our acquisition of Impact Diagnostics, our company engaged in no business.

For accounting purposes, the acquisition of Impact Diagnostics through the Merger is treated and presented as a recapitalization of Impact Diagnostics. Therefore, in this prospectus, unless otherwise indicated, all historical financial information presented about our company is historical financial information of Impact Diagnostics only, the historical audited and unaudited interim financial statements are the financial statements of Impact Diagnostics, and no historical financial information or financial statements of Grant Ventures are included.

Our Board of Directors and a majority of our stockholders, acting by written consent, have agreed to amend and restate our Articles of Incorporation. Our Amended and Restated Articles of

Incorporation will, among other things, change our name from Grant Ventures, Inc. to Grant Life Sciences, Inc., increase the number of shares of common stock that we may issue to 150,000,000 and authorize our Board of Directors to issue up to 20,000,000 shares of preferred stock. We have filed a preliminary information statement with the Securities and Exchange Commission that describes all the changes that will result from the amendment and restatement of our Articles of Incorporation as well as certain other actions taken by our board and stockholders. Once the SEC has completed its review of the information statement, we will send our definitive information statement (which we sometimes refer to as the Information Statement) to our stockholders. The actions taken, including our name change, will become effective 20 days after we mail the information statement to our stockholders.

The Offering by the Selling Stockholders

By this prospectus, the selling stockholders are offering up to 24,268,495 shares of our common stock, of which 19,135,767 are shares of common stock currently held by the selling stockholders and 5,132,728 are shares of common stock issuable upon exercise of warrants held by the selling stockholders. On September 24, 2004, there were 50,000,000 shares of our common stock outstanding and upon the exercise of the warrants described above, the number of shares offered by this prospectus represents 48.5% of our total common stock outstanding on September 24, 2004 (this percentage excludes a total of 7,464,950 shares of common stock that certain stock holders of Impact Diagnostics were entitled to receive in the Merger but which will not be issued until the increase in our authorized common stock is effective). The selling stockholders are not required to sell their shares, and any sales of common stock by the selling stockholders are entirely at the discretion of the selling stockholders.

We will receive no proceeds from the sale of the shares of common stock in this offering. However, if all of the warrants are exercised in full, we would receive $463,082.35 in proceeds. Any proceeds received upon exercise of the warrants will be used for general corporate purposes consistent with our business strategy.

RISK FACTORS

Investing in our securities involves a material degree of risk. Before making an investment decision, you should carefully consider the risk factors set forth in this prospectus and any accompanying prospectus supplement delivered with this prospectus, as well as other information we include in this prospectus and any accompanying prospectus supplement.

We are a development stage company and we have no meaningful operating history on which to evaluate our business or prospects.

We acquired Impact Diagnostics on July 30, 2004. For several years prior to that acquisition, we did not engage in any business. Impact Diagnostics was formed in 1998 and has been developing a cervical cancer screening test. This is now our only business. Impact Diagnostics has only a limited operating history and has generated no revenue. The limited operating history of Impact Diagnostics makes it difficult to evaluate our business prospects and future performance. Our business prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in new and rapidly evolving markets, such as the biotechnology market.

We have not completed the development of our planned cervical cancer tests and we are not currently developing any other products. We may not successfully develop our cervical cancer tests or any other products.

The cervical cancer tests are the only products we are developing. We have no other products. We may never successfully complete the development of our cervical cancer tests. If we do not complete the development of our cervical cancer tests or develop other products, we will not be able to generate any revenues or become profitable and you may lose your entire investment in our company.

We have incurred net losses to date and expect to continue to incur net losses for the foreseeable future. We may never become profitable.

We have had substantial operating losses since our inception and have never earned a profit. We incurred net losses of $646,201 in fiscal 2002, $253,881 in fiscal 2003, $464,247 for the six months ended June 30, 2004 and $1,935,237 from inception in 1998 through June 30, 2004. Our accumulated deficit at June 30, 2004 was $1,935,237.

Our losses have resulted principally from:

· expenses associated with our research and development programs and development or our cervical cancer tests;

· expenses associated with the Merger; and

· administrative and facilities costs.

We expect to incur significant and increasing operating losses for the next few years as we complete development of our cervical cancer tests, initiate clinical trials, seek regulatory approval, expand our research and development, advance other product candidates into development and, if we receive regulatory approval, market and sell our products. We may never become profitable.

We will need to raise substantial additional capital to fund our operations, and if we are unable to obtain funding when needed, we may need to delay completing the development of our planned cervical cancer tests, scale back our operations or close our business.

We believe we have sufficient cash to fund our planned operations through January 2005. Based on our current plan, we will need to raise at least $2,000,000 to fund our operation until the end of 2005. We plan to raise additional capital through the sale of equity and/or debt securities. We do not currently have any committed sources of financing and we cannot be certain that we will be able to obtain financing on acceptable terms or at all. If we are unable to raise sufficient funds, we may have to delay, scale-back or eliminate aspects of our operations or close our business. If we sell additional equity securities, we will dilute our current stockholders’ equity interest in our company.

Our auditors have qualified their opinion to our financial statements because of concerns about our ability to continue as a going concern. These concerns arise from the fact that we have not yet

established an ongoing source of revenues sufficient to cover our operating costs and that we must raise additional capital in order to continue to operate our business. If we are unable to continue as a going concern, you could lose your entire investment in our company.

We will not be able to sell our planned cervical cancer tests and generate revenues if laboratories and physicians do not accept them.

If we successfully complete development of our cervical cancer tests and obtain required regulatory approval, we plan to market and sell our tests initially to clinical testing laboratories in the United States, Western Europe and other countries in which there is widespread cervical cancer screening and a sophisticated testing infrastructure. We plan to market and sell the rapid test to physicians, hospitals, clinics and other healthcare providers in some developing countries where cervical cancer screening is not widespread and where there is limited or non-standardized testing infrastructure. In order to successfully commercialize our tests, we will have to convince both laboratories and healthcare providers that our proposed tests are an effective method of screening for cervical cancer, whether as an independent test, used in conjunction with Pap Tests and/or HPV Tests or as a follow-up screening method for women with equivocal Pap Tests. Pap Tests have been the principal means of cervical cancer screening for over 50 years and, in recent years, HPV Tests have been introduced primarily as an adjunct to Pap Tests.

Our planned cervical cancer tests rely on an approach that is different from the underlying technology of the Pap Tests and the HPV Tests. There is no assurance that healthcare professionals, women’s advocacy groups and other key constituencies will see our planned tests as an accurate means of detecting cervical cancer or pre-cancerous conditions. In addition, some parties may view using our proposed test along with the Pap Tests and/or HPV Tests for primary screening as adding unnecessary expense to the already accepted cervical cancer screening protocol.

If third-party health insurance payors do not adequately reimburse healthcare providers or patients for our proposed cervical cancer tests, we believe it will be more difficult for us to sell our tests.

We anticipate that if government insurance plans (including Medicare and Medicaid in the United States), managed care organizations and private insurers do not adequately reimburse users for use of our tests, it will be more difficult for us to sell our tests to laboratories and healthcare providers. Third-party payors and managed care entities that provide health insurance coverage to approximately 225 million people in the United States currently authorize almost universal reimbursement for the Pap Tests, and Pap Tests are nearly fully reimbursed in other markets where we plan to market and sell our proposed tests. HPV Tests also are almost fully reimbursed for certain uses. We will attempt to obtain reimbursement coverage in all markets in which we plan to sell our proposed cervical cancer tests to the same degree as the Pap Test.

Our management will be required to expand significant time, effort and expense to provide information about the effectiveness of our planned cervical cancer tests to health insurance payors who are willing to consider reimbursement for our tests. However, reimbursement has become increasingly limited for medical diagnostic products. We cannot be certain that health insurance payors will reimburse laboratories, healthcare providers or patients in the United States or elsewhere for the use of our planned tests, either as a stand-alone test or as an adjunct to Pap Tests or HPV Tests.

We currently have no sales force or distribution arrangement in any market where we intend to market and sell our tests.

We currently have no sales or marketing organization. When we complete the development of our cervical cancer tests and receive required regulatory approvals, we will attempt to market and sell our tests to laboratories and directly to physicians, hospitals, clinics and other healthcare providers. We plan to market and sell our tests to laboratories in the United States and globally through third party distributors. We do not currently have any arrangements with any distributors and we may not be able to enter into arrangements with qualified distributors on acceptable terms or at all. If we are unable to enter into distribution agreements with qualified distributors on acceptable terms, we may be unable to successfully commercialize our tests.

Our competitors are much larger and more experienced than we are and, even if we complete the development of our tests, we may not be able to successfully compete with them.

The diagnostic testing industry is highly competitive. When completed, we expect that our cervical cancer tests will compete with the Pap Tests, which have been widely accepted by the medical community for many years. Approximately 60 million Pap Tests are performed annually in the United States, and an additional 60 million Pap Tests are performed annually in the rest of the world. Manufacturers of Pap Tests include Cyctc Corporation and several other companies. Future improvements to the Pap Test could hinder our efforts to introduce our tests to the market.

Our cervical cancer tests also will compete with HPV Tests, which are becoming increasingly accepted in the medical community. Manufacturers of HPV Tests include Digene Corporation, Ventana Medical Systems, Roche Diagnostics, Abbott Laboratories, and Bayer Corporation. If market acceptance of HPV Tests becomes greater, it may be more difficult for us to introduce our tests to the market.

All of the companies who manufacture Pap Tests and HPV Tests are more established than we are and have far greater financial, technical, research and development, sales and marketing, administrative and other resources than we do. Even if we successfully complete the development of our tests, we may not be able to compete effectively with these much larger companies and their more established products.

We will need to obtain regulatory approval before we can market and sell our planned tests in the United States and in many other countries.

In the United States, our planned cervical cancer tests will be subject to regulation by the FDA under the Federal Food, Drug and Cosmetic Act. Governmental bodies in many other countries also regulate medical devices. These domestic and foreign regulations govern the majority of the commercial activities we plan to perform, including the purposes for which our proposed tests can be used, the development, testing, labeling, storage and use of our proposed tests with other products and the manufacturing, advertising and promotion of our proposed tests for the approved purposes. Compliance with these regulations will be expensive and time-consuming.

We have not yet submitted an application to the FDA or regulatory agencies in any other country to review and approve the cervical cancer tests we are developing. It is likely that we will have to conduct clinical trials and other studies to generate data that will be submitted to the FDA and other regulatory authorities in support of our application. We have not yet designed or initiated any of these

trials. We anticipate it will take at least one to two years to conduct these trials and complete the FDA review process, and it may take even longer.

In the United States, prior to approval by the FDA, under certain conditions, companies can sell investigational or research kits to laboratories under the Clinical Laboratory Improvement Amendment (CLIA) of 1988. Under CLIA, companies can sell diagnostic assays or tests to high complexity laboratories for validation as an analyte specific reagent. We intend to sell one version of our cervical cancer test to high complexity laboratories for validation as an analyte specific reagent or for use by the laboratories to produce their own homebrew diagnostic assays. However, there is no assurance that we will receive approval under CLIA for sales to these laboratories.

Medical devices that have been cleared or approved are subject to numerous post-market requirements. Should we be cleared or approved, we will be subject to inspection and marketing surveillance by the FDA to determine our compliance with regulatory requirements. If the FDA finds that we have failed to comply, it can institute a wide variety of enforcement actions, ranging from a public warning letter to more severe sanctions such as:

· withdrawal of approval;

· denial of requests for future approval;

· fines, injunctions and civil penalties;

· recall or seizure of the product;

· operating restrictions, partial suspension or total shutdown of production; and

· criminal prosecution.

Any enforcement action by the FDA may also affect our ability to commercially distribute our products in the United States.

Regardless of FDA approval, we expect that we will be required to obtain approval from comparable regulatory authorities in many other countries before we are able to market or sell our proposed tests in those countries. The amount of time necessary for foreign approval of our proposed cervical cancer tests varies between different countries. There is no assurance that acceptance by any one country will determine acceptance by another country. Additionally, implementation of more stringent requirements or the adoption of new requirements or policies could adversely affect our ability to sell our proposed tests in other countries in the world. We may be required to incur significant costs to comply with these laws and regulations.

In addition to the rules and regulations of the FDA and comparable foreign agencies, we may become subject to various other federal, state, provincial and local laws, regulations and recommendations. We may become subject to various laws and regulations relating to the use and disposal of hazardous or toxic chemicals or potentially hazardous substances, infectious disease agents and other materials, and laboratory and manufacturing practices used in connection with our research and development activities. If we fail to comply with these regulations, we could be fined, we may not be able to operate certain portions of our business, and we may suffer other consequences that could materially harm our business.

If we are unable to successfully protect our intellectual property or obtain certain licenses, our ability to develop, market and sell our tests and any other product we may develop in the future will be harmed.

Our success will partly depend on our ability to obtain patents and licenses from third parties and protect our trade secrets.

We have an exclusive license from Dr. Yao Xiong Hu for certain processes that we currently include in our cervical cancer tests. Some of the technology owned by Dr. Hu is covered by a United States patent that has been issued, and some of the technology is covered by a United States patent application that has been filed and is pending. The agreement with Dr. Hu also covers technology included in foreign applications presently pending as PCT applications in China and India. We plan to file patent applications for any additional technology that we create in the future. We cannot assure you that our patent applications will result in patents being issued in the United States or foreign countries. In addition, the U.S. Patent and Trademark Office may reverse its decision or delay the issuance of any patents that may be allowed. We also cannot assure you that any technologies or tests that we may develop in the future will be patentable. In addition, competitors may develop products similar to ours that do not conflict with patents we may receive. If our patents are issued, others may challenge these patents and, as a result, our patents could be narrowed or invalidated. From time to time, we may be required to obtain licenses from third parties for some of the technology or components used or included in our tests. We cannot be certain that we will be able to obtain these licenses on acceptable terms or at all. In certain instances, if we are unable to obtain a required license, our ability to develop or sell our tests may be impaired.

Our technology and tests may be dependent upon unpatented trade secrets. However, trade secrets are difficult to protect. In an effort to protect our trade secrets, we generally require our employees, consultants and advisors to sign confidentiality agreements. In addition, our employees are parties to agreements that require them to assign to us all inventions and other technology that they create while employed by us. However, we cannot guarantee that these agreements will provide us with adequate protection if confidential information is used or disclosed improperly. In addition, in some situations, these agreements may conflict with, or be limited by, the rights of third parties with whom our employees, consultants or advisors have prior employment or consulting relationships. Further, others may independently develop similar proprietary information and techniques, or otherwise gain access to our trade secrets.

Others could claim that we infringe on their intellectual property rights, which may result in costly and time-consuming litigation.

Our success will also depend partly on our ability to operate without infringing upon the proprietary rights of others, as well as our ability to prevent others from infringing on our proprietary rights. We may be required at times to take legal action in order to protect our proprietary rights. Despite our best efforts, we may be sued for infringing on the patent or other proprietary rights of others. Such litigation is costly, and, even if we prevail, the cost of such litigation could harm us. If we do not prevail, in addition to any damages we might have to pay, we could be required to stop the infringing activity or obtain a license. We cannot be certain that any required license would be available to us on acceptable terms, or at all. If we fail to obtain a license, or if the terms of a license are burdensome to us, our business could be materially harmed.

If we are able to market and sell our cervical cancer tests, we will be subject to product liability claims or face product recalls for which our insurance may be inadequate.

If we complete development of our cervical cancer tests and begin to sell them we will be exposed to the risk of product liability claims and product recalls. We are currently in the process of obtaining product liability insurance coverage. There can be no assurance that product liability insurance will be continually available to us on acceptable terms, or at all, or that insurance will be sufficient to protect us against product liability claims or recalls.

We do not have any manufacturing facilities and we have no arrangements with third party manufacturers.

We have no capacity to manufacture our proposed tests. We have not established any arrangements with third party manufacturers. We can not be certain that we will be able to enter into any such arrangements on favorable terms, or at all.

If we are unable to manage our anticipated future growth, we may not be able to implement our business plan.

We currently have 7 employees and retain consultants on a part-time basis. In order to complete development of our tests, obtain FDA and other regulatory approval, seek insurance reimbursement, begin to market and sell our tests, begin the production of our tests and continue and expand our research and development programs, we will need to hire significant additional qualified personnel and expand or implement our operating, administrative, information and other systems. We cannot guarantee that we will be able to do so or that, if we do so, we will be able to effectively integrate them into our existing staff and systems. We will also have to compete with other biotechnology companies to recruit, hire and train qualified personnel. If we are unable to manage our growth, we may not be able to implement our business plan.

Our future operations may be adversely affected by risks associated with international business.

We anticipate that, in the future, we may sell our cervical cancer tests in many countries outside the United States and potentially operate offices in certain of these countries. If we do so, we will be subject to certain risks that are inherent in an international business. These include:

· varying regulatory restrictions on sales of our tests to certain markets and unexpected changes in regulatory requirements;

· tariffs, customs, duties and other trade barriers;

· difficulties in managing foreign operations and foreign distribution partners;

· longer payment cycles and problems in collecting accounts receivable;

· fluctuations in currency exchange rates;

· political risks;

· foreign exchange controls that may restrict or prohibit repatriation of funds;

· varying laws relating to, among other things, employment and employment termination;

· export and import restrictions or prohibitions, and delays from customs brokers or government agencies;

· seasonal reductions in business activity in certain parts of the world; and

· potentially adverse tax consequences.

Depending on the countries involved, any or all of the foregoing factors could materially harm our business.

There is only a limited market for our common stock and the price of our common stock may be affected by factors that are unrelated to the performance of our business.

Our common stock has not actively traded during the past few years. If any of the risks described in these Risk Factors or other unseen risks are realized, the market price of our common stock could be materially adversely affected. Additionally, market prices for securities of biotechnology and diagnostic companies have historically been very volatile. The market for these securities has from time to time experienced significant price and volume fluctuations for reasons that are unrelated to the operating performance of any one company. In particular, and in addition to the other risks described elsewhere in these Risk Factors, the following factors can adversely affect the market price of our common stock:

· announcements of technological innovation or improved or new diagnostic products by others;

· general market conditions;

· changes in government regulation or patent decisions;

· changes in insurance reimbursement practices or policies for diagnostic products.

Our common shares have traded on the Over the Counter Bulletin Board at prices below $5.00 for several years. As a result, our shares are characterized as “penny stocks” which could adversely affect the market liquidity of our common stock.

The Securities Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure relating to the market for penny stocks in connection with trades in any stock defined as a penny stock. Securities and Exchange Commission regulations generally define a penny stock to be an equity security that has a market price of less than $5.00 per share, subject to certain exceptions. Such exceptions include any equity security listed on Nasdaq or a national securities exchange and any equity security issued by an issuer that has:

· net tangible assets in excess of $2,000,000, if such issuer has been in continuous operation for three years;

· net tangible assets in excess of $5,000,000, if such issuer has been in continuous operation for less than three years; or

· average revenue of at least $6,000,000, for the last three years.

Unless an exception is available, the regulations require, prior to any transaction involving a penny stock, that a disclosure schedule explaining the penny stock market and the risks associated therewith is delivered to a prospective purchaser of the penny stock. We currently do not qualify for an exception, and, therefore, our common stock is considered to be penny stock and is subject to these requirements. The penny stock regulations adversely affect the market liquidity of our common shares by limiting the ability of broker/dealers to trade the shares and the ability of purchasers of our common shares to sell in the secondary market. In addition, certain institutions and investors will not invest in penny stocks.

Nevada law provides certain anti-takeover provisions for Nevada companies that may prevent or frustrate any attempt to replace or remove our current management by the stockholders or discourage bids for our common stock. These provisions may also affect the market price of our common stock. We have chosen not to opt out of these provisions.

We are subject to provisions of Nevada corporate law that limit the voting rights of a person who, individually or in association with others, acquires or offers to acquire at least 20% of the outstanding voting power of our company unless a majority of our disinterested stockholders elects to grant voting rights to such person. We are also subject to provisions of Nevada corporate law that prohibit us from engaging in any business combination with an interested stockholder, which is a person who, directly or indirectly, is the beneficial owner of 10% or more of our common stock, for a period of three years following the date that such person becomes an interested stockholder, unless the business combination is approved by our board of directors in a prescribed manner. These provisions of Nevada law may make business combinations more time consuming or expensive and have the impact of requiring our board of directors to agree with a proposal before it is accepted and presented to stockholders for consideration. Although we have the ability to opt out of these provisions, we have not chosen not to do so. These anti-takeover provisions might discourage bids for our common stock.

Our board of directors has the authority, without further action by the stockholders, to issue, from time to time, up to 20,000,000 shares of preferred stock in one or more classes or series and to fix the rights and preferences of such preferred stock. The board of directors could use this authority to issue preferred stock to discourage an unwanted bidder from making a proposal to acquire the company.

Future sales of a significant number of shares of our common stock by existing stockholders may lower the price of our common stock, which could result in losses to our stockholders.

As of September 24, 2004, we had outstanding 50,000,000 voting shares, and after the increase in the number of our authorized shares of common stock is effective, we will have outstanding 53,590,821 voting shares. Some of our outstanding voting shares are eligible for sale under Rule 144, are otherwise freely tradable or will become freely tradable under Rule 144. Sales of substantial amounts of shares of our common stock into the public market could lower the market price of our common shares.

In general, under Rule 144 as currently in effect, a person (or persons whose shares are required to be aggregated) who has owned shares for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of (i) 1% of the number of our common shares then outstanding (which, after the increase in the number of our authorized shares of common stock is effective, will equal approximately 535,908 shares of common stock) or (ii) the average weekly trading volume of our common shares during the four calendar weeks preceding the filing of a Form 144 with respect to such sale. Sales under Rule 144 are public information about our company. Under Rule 144(k), a person who is not deemed to have been our affiliate at any time during the three months preceding a sale, and who has owned the shares proposed to be sold for at least two years, is entitled to sell his shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

FORWARD LOOKING STATEMENTS

This prospectus includes forward-looking statements. You can identify these forward-looking statements when you see us using words such as “expect,” “anticipate,” “estimate,” “believe,” “intend,” “may,” “predict,” and other similar expressions. These forward looking statements cover, among other items:

· our future capital needs;

· our expectations about our ability to complete development of our cervical cancer tests;

· our expectations about the FDA and other regulatory approval process that will be required for our cervical cancer tests;

· our expectations about reimbursement of our products by health insurance payors;

· our expectations about the future performance of the cervical cancer tests that we are developing;

· our expectations about acceptance in the market of the cervical cancer tests we are developing;

· our expectations about the ability of our planned cervical cancer tests to compete in the market;

· our marketing and sales plans;

· our expectations about our financial performance;

· our intention to develop additional screening tests using our technology;

We have based these forward-looking statements largely on our current expectations. However, forward-looking statements are subject to a number of risks and uncertainties, certain of which are beyond our control. Actual results could differ materially from those anticipated as a result of the factors described under “Risk Factors” including, among others:

· problems that we may face in successfully completing our planned cervical cancer tests;

· our inability to raise additional capital when needed;

· uncertainty of acceptance of our cervical cancer tests in the market;

· reluctance or unwillingness of laboratories and physicians to accept our tests;

· refusal of insurance companies and other third-party payors to reimburse patients, clinicians and laboratories for our tests;

· problems that we may face in marketing and selling our tests;

· the possibility that we may not be able to compete with established companies;

· delays in obtaining, or our inability to obtain, approval by the FDA for our proposed tests;

· delays in obtaining, or our inability to obtain, approval by certain foreign regulatory authorities for our proposed tests;

· problems in acquiring and protecting intellectual property important to our business through patents, licenses and other agreements;

· our ability to successfully defend claims that our tests may infringe the intellectual property rights of others;

· problems that we may face in obtaining product liability insurance or defending product liability claims;

· problems that we may face in manufacturing and distributing our proposed tests;

· the risks we face in potential international markets; and

· the limited market for our common stock and the adverse affect on liquidity that we may face because our common stock is considered a “penny stock”.

We do not undertake any obligation to publicly update or revise any forward-looking statements contained in this prospectus or incorporated by reference, whether as a result of new information, future events or otherwise. Because of these risks and uncertainties, the forward-looking statements and circumstances discussed in this prospectus might not transpire.

USE OF PROCEEDS

This prospectus relates to shares of our common stock that may be offered and sold from time to time by selling stockholders. The selling stockholders currently hold a total of 19,135,767 shares of our common stock. Certain of the selling stockholders will receive an additional 5,132,728 shares of our common stock upon conversion of our outstanding warrants that they own. We will receive no proceeds from the sale of shares of common stock in this offering. However, if all of the warrants owned by the selling stockholders are exercised in full, we would receive $463,082.35 in proceeds. Any proceeds received upon exercise of the warrants will be used for general corporate purposes consistent with our business strategy.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

On July 30, 2004, we acquired Impact Diagnostics through the merger of our wholly owned subsidiary, Impact Acquisition Corporation, into Impact Diagnostics. As a result of the Merger, each issued and outstanding share of common stock of Impact Diagnostics was converted into the right to receive one share of our common stock, and Impact Diagnostics became a wholly owned subsidiary of our company. We now own, indirectly though Impact Diagnostics, all of the assets of Impact Diagnostics.

For accounting purposes, the acquisition of Impact Diagnostics is treated and presented as a recapitalization of Impact Diagnostics. Therefore, in this prospectus, unless otherwise indicated, all historical financial information presented about our company is historical financial information of Impact Diagnostics only, the historical audited and unaudited interim financial statements are the financial statements of Impact Diagnostics, and no historical financial information or financial statements of Grant Ventures are included.

We are considered a development stage company. In 2002 and 2003, we had no revenues and incurred net losses of $646,201 and $253,881, respectively. For the six months ended June 30, 2003 and 2004, we had no revenues and incurred net losses of $108,417 and $464,247, respectively.

In connection with the Merger, between July 30, 2004 and August 19, 2004, we sold 1,912,125 units in a private placement, at a purchase price of $0.9175 per unit ($0.1835 per share), resulting in gross proceeds to our company of $1,754,375. Each unit was comprised of five (5) shares of our common stock and a warrant to purchase one (1) share of our common stock at an exercise price of $0.18 per share.

We believe that we currently have sufficient capital to satisfy our cash requirements through January 2005. We plan to raise additional capital in the next three months through the sale of equity and/or debt securities to support our development plan in the medical diagnostics industry. However, we currently do not have any committed sources of financing. We may not be able to raise additional financing when we need to on acceptable terms or at all.

During the next 12 months, we plan to complete the development of our cervical cancer screening tests. We intend to continue to validate the effectiveness of the processes that we currently use in the tests we are developing through trials being conducted for us by a reference laboratory. We plan to meet with regulatory agencies in the United States and in other countries to determine the clinical trials and studies we will have to undertake and the data and other information we will be required to submit to them to support our future applications for authority to market and sell our planned cervical

cancer tests in those countries. We also plan to begin studies and clinical trials in the United States and other countries that will be required in connection with our regulatory applications

In connection with the acquisition of Impact Diagnostics, Stan Yakatan was appointed as Chief Executive Officer and President of our company, John Wilson was appointed as Chief Financial Officer of our company and Michael Ahlin and Dr. Mark Rosenfeld were appointed as Vice Presidents of our company. All held these positions with Impact Diagnostics prior to the Merger. In addition to these officers, we currently have three employees and have engaged a number of part-time scientific consultants. During the next 12 months, we anticipate that we will add employees, including scientists and other professionals in the research and development, product development, business development, regulatory, manufacturing, marketing and clinical studies areas.

We plan to invest any excess cash we have in investment grade interest bearing securities. We do not anticipate investing in real estate or interests in real estate, real estate mortgages, or securities of or interests in persons primarily engaged in real estate activities. We do not intend to undertake investments in real estate as a part of our normal operations.

MARKET FOR COMMON STOCK

Our common stock is quoted on the OTC Bulletin Board under the symbol “GRTV.OB.” The following table sets forth, for the calendar periods indicated, the range of the high and low last reported bid prices of our common stock from January 1, 2002 through June 30, 2004, as reported by the OTC Bulletin Board. The quotations represent inter-dealer prices without retail mark-ups, mark-downs or commissions, and may not necessarily represent actual transactions. The quotations may be rounded for presentation.

Period	High	Low

First Quarter 2002	$0.04	$0.04
Second Quarter 2002	$0.04	$0.04
Third Quarter 2002	$0.04	$0.04
Fourth Quarter 2002	$0.04	$0.04

First Quarter 2003	$0.04	$0.04
Second Quarter 2003	$0.04	$0.04
Third Quarter 2003	$0.04	$0.04
Fourth Quarter 2003	$0.04	$0.04

First Quarter 2004	$0.04	$0.04
Second Quarter 2004	$0.04	$0.04

On September 29, 2004, the last reported bid price of our common stock as reported on the OTC Bulletin Board was $0.67 per share. As of September 29, 2004, we had approximately 130 shareholders of record. Certain of the shares of common stock are held in “street” name and may be held by numerous beneficial owners.

DESCRIPTION OF BUSINESS

Overview of Our Business

We are developing protein-based screening tests to screen woman for cervical cancer and pre-cancerous conditions that typically result in cervical cancer. Our tests detect the presence of certain antibodies that appear only when cervical cancer or certain pre-cancerous conditions are present in the body. Our tests are performed by analyzing a small amount of blood taken from the patient. In one version of our test, the blood sample is analyzed in a clinical testing laboratory using standard laboratory equipment and analytic software, which generally can produce test results in about 2 hours. Our rapid test is designed to be administered by a health professional in a doctor’s office, hospital, and clinic or even at home, and provides easy-to-read results in approximately 15 minutes.

Our planned cervical cancer test uses proprietary technology to detect the presence of antibodies. We believe that in the future we may be able to use that technology to develop rapid tests for other diseases and cancers.

Cervical Cancer

Invasive cervical cancer affects over 500,000 women worldwide annually, and approximately 300,000 women die each year from this disease. Cervical cancer is the second highest cause of cancer death among women. In the United States, Western Europe and other countries where there is wide spread screening and a sophisticated testing infrastructure, cervical cancer is less prevalent. In China, India and many other countries, there is a much higher rate of cervical cancer because of the lack of testing and limited or non-standardized testing infrastructure.

Pap Tests have been the most common method of screening for cervical cancer for more than 50 years. Recently, DNA-based HPV tests have been introduced as an adjunct to the Pap Test. Today, approximately 60 million Pap Tests are performed annually in the United States, and an additional 60 million Pap Tests are performed annually in the rest of the world, mainly in Canada, Western Europe and Japan. Outside the United States, approximately 1.7 billion women do not undergo regular cervical cancer testing. In many cases, this is the result of a lack of economic resources. However, social, cultural and/or religious factors may contribute to inhibiting women from undergoing cervical cancer screening. In some countries, the mortality rate of cervical cancer approaches 100%.

There are two types of cervical cancer. Squamous cell carcinoma is the most prevalent type. Adenocarcinoma is a more virulent cancer that is increasing in incidence and often is undetectable by Pap Tests. Virtually all-cervical cancer is caused by humanpapilloma virus or HPV. However, of the more than 100 specific types of HPV, the scientific community believes only 7 to 15 are positively correlated with most cervical cancers.

Traditional Testing for Cervical Cancer

Pap Tests.

The most common means of screening for cervical cancer is the Pap Test, which has been used as the primary screen for over 50 years. The Pap Test is performed by swabbing the cervix to extract cells and smearing them on a microscope slide. A highly trained licensed cytotechnologist working in a laboratory

observes the cells using a microscope and other specialized equipment to determine whether abnormal cells are present. When a cytotechnologist identifies a potential abnormality, a cytopathologist verifies the interpretation. In the second generation Pap Test, known as a “Liquid Pap Test”, a process is used to present the cells in a manner that is intended to allow for a more simplified reading of the cells by the cytotechnologist.

Women with normal Pap Test results do not undergo further treatment but typically return for routine Pap screening annually. Women with abnormal Pap Test results typically undergo multiple follow-up Pap Tests, a colposcopy (a visual examination of the cervix with the aid of a colposcope) and a concurrent biopsy to determine if there are cancerous cells. In many cases, suspect lesions are removed using a cauterizing instrument or scalpel, and in some cases a woman undergoes a hysterectomy, or removal of the cervix. If a patient’s Pap Test cannot specifically be classified as normal or abnormal, the patient is classified as “equivocal”, or ASC-US (Atypical Squamous Cells of Undetermined Significance). This occurs in approximately 5-7% of cases in the United States. Patients with equivocal Pap Test results typically will undergo multiple repeat Pap Tests. Many of these patients will also undergo a colposcopy and a biopsy. However, 80% of women in the ASC-US category do not have cervical disease or develop cervical cancer.

While Pap Tests have been an important screening tool for many years and have helped reduce deaths caused by cervical cancer, they still have some significant shortcomings, including:

· limited predictive value — in the United States, each year over 9 million colposcopies are performed on patients with abnormal Pap Test results, but only 20% of the colposcopies reveal cervical cancer or pre-cancerous conditions.

· false negative results — in the United States, Pap Tests fail to diagnose cervical cancer or pre-cancerous conditions that often lead to cervical cancer in approximately 30% to 60% (depending on whether a Liquid Pap Test or a regular Pap Test is used) of the cases where cervical cancer or pre-cancerous conditions are present.

· false positive results — Pap Tests alone sometimes are unable to distinguish between cervical cancer or pre-cancerous conditions and benign conditions that mimic them.

· inability to detect adenocarcinomas — Pap Tests are unable to detect the presence of the more virulent adenocarcinoma.

· invasive procedure — that Pap Test requires the healthcare professional to extract cells from the cervix. In some non-Western countries, women may be inhibited from undergoing this procedure for social, cultural or religious reasons.

· high costs — highly trained physicians and specialists are required to collect and examine the Pap Test specimen, which contributes to a higher cost structure for the Pap Test. Following a positive test result, colposcopies and biopsies are required, raising the overall potential cost of screening.

Some of these deficiencies may be due primarily to visual limitations, sample distribution and other technical problems and to the subjective nature of cytology.

HPV Tests.

In the past few years, HPV DNA testing has been introduced as another element of the cervical cancer screening process. The HPV Test is a gene-based test that detects the presence or absence of certain cancer-causing HPV. Like the Pap Test, it is performed by swabbing the cervix to extract cells. The specimen is then analyzed using expensive specialized equipment and software programs in a laboratory.

In the United States, women with ASC-US results from an initial Pap Test often undergo an HPV Test to determine if HPV is present. That test can be performed using the same specimen as the Pap Test or a second specimen. HPV testing has also been introduced in conjunction with Pap Tests as an optional part of the screening protocol for women 30 years of age and older, even in the absence of ASC-US results.

While HPV Tests are helpful in detecting the presence of HPV, which is a precursor for virtually all cervical cancer, they too suffer from some significant shortcomings:

· limited predictive value — HPV Tests screen for the presence or absence of HPV, not for the presence of cervical cancer, the stage of the disease or pre-cancerous conditions. Although HPV is a precursor to cervical cancer, the scientific community believes that only 7 to 15 of the 100 types of HPV actually cause the majority of cervical cancers. Only 2% of patients who test positive for HPV will eventually contract cervical cancer

· invasive procedure — Like the Pap Test, the HPV Test requires the physician or other healthcare professional to extract cells from the cervix, which may inhibit some women in many non-Western cultures from undergoing screening.

· high cost and complex — The HPV Test specimen must be analyzed by specialized laboratory software and equipment administered by highly trained technicians, which contributes to a higher cost structure for the HPV Tests. Following a positive test result, colposcopies and biopsies are required, raising the overall potential cost of screening.

Our Planned Cervical Cancer Test

We are developing cervical cancer tests that will detect the presence or absence of specific antibodies that are produced only if cancer-causing HPV is present in the body. Cancer-causing HPV expresses certain unique proteins that trigger the disease. Once the disease is expressed, the body begins to produce certain antibodies to the proteins. These antibodies can be readily distinguished from antibodies that the body produces in reaction to non-cancer-causing HPV. By detecting the presence or absence of antibodies to the cancer-causing HPV, we believe that our tests will be able to more reliably determine whether a patient has cervical cancer or pre-cervical cancer conditions than the existing Pap or HPV Tests.

Our tests are performed by extracting a small blood sample from the patient. It is not necessary to swab the patient’s cervix or perform similar invasive procedures. Both of our tests are performed in a few easy steps:

· The specimen is placed into a container which is coated with special proteins. The antibodies in the specimen adhere to the proteins.

· The container is then rinsed, removing everything but the antibodies that have adhered to the proteins.

· A special solution is added to the container. This solution includes “detector” antibodies that attach themselves to antibodies associated with cancer-causing proteins. The solution will change color if cancer-causing proteins are present.

We are developing two tests. One, known as the ELISA (Enzyme Linked Immunosorbent Assay) Test, is designed to be run in a laboratory. The blood specimen is sent to the laboratory, where a laboratory technician runs the test using standard, readily available laboratory equipment. No unique analytic or diagnostic software is required. While test results typically are available in about 2 hours, we anticipate that the typical turnaround time from the laboratory to the doctor will be approximately 1 day. We believe that a doctor will be able to order this test as one of a battery of tests that is run on a patient’s blood sample after a typical office visit.

Our second generation rapid test is designed to be a point-of-care test that will be able to be administered in the hospital, physician’s office, clinic or even at home. The test kit will contain the required container and reagents. A color change will indicate the presence of cancer-causing proteins. We anticipate results will be available in 10 to 15 minutes.

We have not yet completed the development of our cervical cancer tests. We are continuing to refine the existing proteins and processes currently used in our tests and are testing other proteins and processes, which may be included in our tests in the future.

We believe that, when completed, our tests will be a more accurate and efficient way to diagnose cervical cancer for the following reasons:

· greater accuracy — Our cervical cancer tests will detect the presence or absence of specific antibodies that are present if cancer-causing HPV is present in the body. As a result, we believe our tests will be able to more accurately diagnose the presence or absence of cancer or pre-cancerous conditions than Pap Tests and HPV tests, and will yield fewer false positive or false negative results.

· non-invasive — Our tests use a small blood sample, which may be taken from the finger or arm. We believe that in countries where women are reluctant to allow a healthcare professional to swab their cervix to extract a specimen for the Pap Test or HPV Test they may be more willing to submit to the simple blood test required for our tests.

· reduced costs — We believe that because our tests will be run by lab technicians using standard, readily available lab equipment and analytic software or by a healthcare professional using a point-of-care test, the overall cost structure for our screening tests will be lower than that of the Pap Test or HPV Tests. In addition, by providing more accurate results, we believe that our tests may reduce the number of repeat tests and high-cost colposcopies, biopsies and other medical procedures.

Initial Validation Studies

We have conducted initial studies to validate our planned cervical cancer tests.

In the United States, the Institutional Review Board (IRB) governs collection and use of patient specimens for research and testing purposes. The IRB Committee at Intermountain Health Care, the largest hospital facility in the intermountain western United States, and at St. Mark’s Hospital in Salt Lake City, Utah, approved the evaluation of our technology for screening blood serum from patients, some of whom had negative Pap Tests and some of whom had previously been diagnosed with cervical cancer or intraepithelial lesions, the immediate precursor to cervical cancer. These initial non-blind studies were performed in May 2003 by Ameripath, Inc. on a total of 65 American patient samples from these IRB approved sources. Our tests detected cervical cancer or pre-cancerous conditions 94% of the time such conditions existed, and were able to rule out cervical cancer or pre-cancerous conditions 82% of the time the patient did not have these conditions.

Similar testing was done in April 2003, under a Chinese IRB equivalent, at the China Cancer Institute, China Academy of Medical Sciences on 70 samples, of which over half were from cervical cancer patients. Our tests detected cervical cancer or pre-cancerous conditions 97% of the time such conditions existed and were able to rule out cervical cancer or pre-cancerous conditions 85% of the time the patient did not have these conditions.

The initial studies conduced by Ameripath and in China used a “cut off” value or measurement standard to differentiate benign from cancerous or pre-cancerous conditions that is higher than would typically be used in a commercially available test. We currently are refining our technology in order to enable our tests to achieve similar results using a measurement standard appropriate for a commercial cervical cancer diagnostic test.

We plan to conduct validation studies on a refined version of our cervical cancer test in the next few months. Allogen Laboratories, a wholly owned subsidiary of the Cleveland Clinic Foundation, has agreed to conduct these studies for us.

Allogen Laboratories will also assist us in developing a proposed protocol of clinical trials and other studies that will be used to support the submissions we intend to make to the FDA and other foreign regulatory authorities.

Regulatory Approval

In the United States, our planned cervical cancer tests will be subject to regulation by the FDA under the Federal Food, Drug and Cosmetic Act. Governmental bodies in many other countries also regulate medical devices. These domestic and foreign regulations govern the majority of the commercial activities we plan to perform, including the purposes for which our proposed tests can be used, the development, testing, labeling, storage and use of our proposed tests with other products and the manufacturing, advertising, promotion, sales and distribution of our proposed test for the approved purposes. Compliance with these regulations will be expensive and time-consuming.

Products that are used to diagnose diseases in people are considered medical devices, which are regulated in the United States by the FDA. To obtain FDA authorization for a new medical device, a company may have to submit data relating to safety and efficiency based upon extensive testing. This testing, and the preparation and processing of necessary applications, are expensive and may take several years to complete. Whether a medical device requires FDA authorization and the data that must be submitted to the FDA varies depending on the nature of the medical device. Medical devices are classified into one of three classes (Class I, II, or III), in accordance with the FDA’s determination of controls necessary to ensure the safety and effectiveness of the device or diagnostic. We anticipate that our planned cervical cancer tests will be classified by the FDA either as a class I or class II device.

To market and sell a Class II medical device, a company must first obtain permission of the FDA. This permission is obtained by submitting a 510(k) premarket notification, also known as a 510(k). The 510(k) is a showing that the device is “substantially equivalent” to a Class I or Class II device that is already on the market. The FDA may require clinical studies of a device’s safety and effectiveness be performed.

To market and sell a Class III medical device, a company must first get permission from the FDA for the device by submitting a premarket approval application, commonly known as a PMA application. A company will almost always have to include preclinical and clinical test data in a PMA application, to demonstrate the safety and effectiveness of the device.

When we complete the development of our planned cervical cancer tests, we intend to market them in the United States for clinical screening purposes. We believe that we will be able to market and sell our tests to laboratories that qualify as high complexity laboratories, without FDA approval. Those laboratories will be able to use our tests for validation as an analyte specific reagent.

In addition to government requirements relating to marketing authorization for medical device products, we will also be subject to other FDA requirements. Once we complete our tests and begin to manufacture, distribute and sell them, we will have to be registered as a medical device manufacturer with the FDA. We will be inspected on a routine basis by the FDA for compliance with the FDA’s quality system regulations, which prescribe standards for manufacturing, testing, distribution, storage, design control and service activities. Also, the FDA’s medical device reporting regulation will require us to provide information to the FDA on deaths or serious injuries associated with the use of our proposed tests, as well as product malfunctions that are likely to cause or contribute to death or serious injury if the malfunction were to recur. The FDA also prohibits promoting a device for unauthorized uses and reviews company labeling for accuracy.

· withdrawal of approval;

· denial of requests for future approval;

· fines, injunctions and civil penalties;

· recall or seizure of the product;

· operating restrictions, partial suspension or total shutdown of production; and

· criminal prosecution.

Regardless of FDA approval, we must obtain approval from comparable regulatory authorities in many other countries before we are able to market or sell our proposed tests in those countries. The amount of time necessary for foreign approval of our proposed cervical cancer tests varies between different countries. There is no assurance that acceptance by any one country will determine acceptance by another country. Additionally, implementation of more stringent requirements or the adoption of new requirements or policies could adversely affect our ability to sell our proposed tests in other countries in the world. We may be required to incur significant costs to comply with these laws and regulations.

Competition

We are not aware of other companies that are developing a protein-based screening test that detects antibodies to cervical cancer. However, when completed, we expect that our cervical cancer tests will compete with the Pap Tests, which have been widely accepted by the medical community for many years. Approximately 60 million Pap Tests are performed annually in the United States, and an additional 60 million Pap Tests are performed annually in the rest of the world. Manufacturers of Pap Tests include Cyctc Corporation and several other companies.

Our cervical cancer test also will compete with HPV Tests, which are becoming increasingly accepted in the medical community. Manufacturers of HPV Tests include Digene Corporation, Ventana Medical Systems, Roche Diagnostics, Abbott Laboratories, and Bayer Corporation.

All of the companies who make Pap Tests and HPV Tests have far greater financial, technical, research and development, sales and marketing, administrative and other resources than we do.

For our proposed tests to become accepted in the medical community, we will need to convince those who use established tests that our proposed tests are more reliable for the screening of cervical cancer, either as stand-alone tests or in conjunction with the Pap Test and/or HPV Tests.

In addition, we will need to obtain reimbursement coverage for our proposed cervical cancer tests. In the United States, the American Medical Association assigns specific Current Procedural Terminology, or CPT, codes necessary for reimbursement. Third-party payors and managed care entities

that provide health insurance coverage to approximately 225 million people in the United States currently authorize almost universal reimbursement for the Pap Test, and the Pap Test is nearly fully reimbursed in other markets where we will sell our proposed tests. The HPV Test now has full reimbursement as well for certain uses. We will attempt to obtain reimbursement for our planned cervical cancer tests to the same degree as the Pap Test. There is no assurance, however, that we will be able to obtain third-party reimbursement for our proposed tests.

Sales and Marketing

When we have completed the development of our cervical cancer tests and received any required regulatory approval, we plan to market and sell our ELISA test to laboratories in the United States, Canada, Western Europe, Japan and other countries with established cervical cancer screening programs for use as a screening test. Initially, we do not plan to sell our test in these countries directly to primary healthcare providers.

In developing nations and other markets where cervical cancer screening is not widespread and where there are few laboratories or other testing facilities, we plan to market and sell our rapid test to primary healthcare providers as a stand alone point-of-care test. In some of these countries, we plan to sell our proposed test directly to the governments or to other national healthcare distributors who distribute tests to national healthcare providers.

We do not currently have a marketing or sales force or a distribution arrangement in place. We will need to expend resources to develop our own marketing and sales force or enter into third party distribution arrangements.

Intellectual Property

We rely on patents, licenses from third parties, trade secrets, trademarks, copyright registrations and non-disclosure agreements to establish and protect our proprietary rights in our technologies and products.

We plan to file patent applications for any additional technology that we create in the future.

We anticipate that we may need to license from other third parties other technology to be used in our planned cervical cancer tests. We cannot be certain that we will be able to obtain these licenses on acceptable terms or at all.

Our technology is also dependent upon unpatented trade secrets. However, trade secrets are difficult to protect. In an effort to protect our trade secrets, we have a policy of requiring our employees, consultants and advisors to execute non-disclosure agreements. These agreements provide that confidential information developed or made known to an individual during the course of their relationship with us must be kept confidential, and may not be used, except in specified circumstances. In addition, our employees are parties to agreements that require them to assign to us all inventions and other technology that they create while employed by us.

Research and Development

Our research and development program is focused on completing development of our cervical cancer tests. We continue to refine existing technology and develop further improvements to our tests.

We believe that in the future we may be able to apply our technology to develop rapid tests for other diseases and certain other cancers. We plan to pursue development of these other tests.

For the fiscal years ended December 31, 2002 and 2003 and the six month period ended June 30, 2004, we spent approximately $270,000, $65,000 and $186,000, respectively, on reasearch and development.

Manufacturing

We plan to outsource the manufacturing and assembly of our planned cervical cancer tests to third parties. We do not currently have arrangements in place with any such third parties.

Suppliers

We develop the processes including proteins and other technology that we use in our proposed tests, and license certain other technology from third parties. We believe that the reagents and other supplies we will use to manufacture our test may be readily obtained from multiple suppliers.

Employees

As of September 24, 2004, we had 7 employees and retained three consultants on a part-time basis. Our employees consist of our 4 executive officers, 1 laboratory development manager, 1 controller and 1 secretary.

Principal Executive Offices

Our principal executive offices are located at 5511 Capitol Center Drive, Suite 224, Raleigh, NC 27606.

History of the Company

Our company was incorporated in Idaho in 1983 as Grant Silver, Inc., for the purposes of acquiring and developing mineral resources. We engaged in preliminary mining work on certain mining claims that were eventually abandoned in 1984. Thereafter, we conducted no business until 1995.

In October, 1997, our company acquired BrewServ Corporation, an Ohio Corporation (“BrewServ Ohio”). In anticipation of the acquisition of BrewServ Ohio, in 1997, we changed our name to BrewServ Corporation. BrewServ Ohio and its subsidiaries produced and distributed alcohol-based cider products, operated coffee retail stores, and developed theme restaurants. In 1999, the Brewserv Ohio acquisition was rescinded, and in January 2000, we changed our name to Grant Ventures, Inc.

From 1999 to July 2004, we conducted no business. In 2001, we reincorporated in Nevada through a merger with North Ridge Corporation. On July 30, 2004, we acquired Impact Diagnostics, through a merger of our wholly owned subsidiary into Impact Diagnostics. Impact Diagnostics was incorporated in Utah in 1998.

Available Information

Our electronic filings with the United States Securities and Exchange Commission (including our annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and any amendments to these reports) are available free of charge on the Securities and Exchange Commission’s website at http://www.sec.gov.

DESCRIPTION OF PROPERTY

We lease our principal executive offices in Raleigh, NC, executive offices in Murray, Utah and our clinical laboratory in Sandy, Utah. We believe that our existing facilities will be adequate for our current needs and that additional space will be available as needed. The material terms of our property leases are set forth in the table below.

Location	Use	Square Feet	Rent Payments	Term	Leased From

5511 Capital Center Drive Suite 224 Raleigh, NC 27606	Principal Executive Offices	Approximately 1,438 square feet	$1,600 per month	October 1, 2004 — September 30, 2004	HD Capital Center, LLC
64 East Winchester Suite 205 Murray, Utah 84107	Executive Offices	Approximately 1330 square feet	$1,663 per month	September 1, 2004 — August 31, 2005	Plaza 6400, LLC
10011 Centennial Parkway Suite 300 Sandy, Utah 84070	Clinical Laboratory	Approximately 800 square feet	$600 per month	April 1, 2004 — March 31, 2005	Rocky Mountain Pathology, LLC

LEGAL PROCEEDINGS

We are not currently a party to any litigation.

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information regarding our directors and executive officers. Our Board of Directors is comprised of seven directors. Currently, we have one vacancy on our Board that we expect to fill in the future. There are no family relationships between any of our directors or executive officers. Each of our directors is elected at our annual meeting of our stockholders and holds office until his successor is elected and qualified or until such director’s earlier death, removal or termination.

Name	Age	Position

Stan Yakatan	62	President, Chief Executive Officer and Chairman of the Board of Directors
Michael Ahlin	56	Vice President and Director
Dr. Mark Rosenfeld	55	Vice President and Director
John C. Wilson	55	Executive Vice President and Chief Financial Officer
Jack Levine	54	Director
Eric Wilkinson	46	Director
Kevin Crow	43	Director

Stan Yakatan. Mr. Yakatan has been the Chief Executive Officer and the Chairman of the Board of Directors of the Company since July 2004. From May 2004 to the present, Mr. Yakatan has been the Chief Executive Officer and the Chairman of the Board of Directors of Impact Diagnostics. From September 1984 to the present, Mr. Yakatan has been the Chairman of Katan Associates, a life sciences advisory business. Mr. Yakatan is also a director of Lifepoint, Inc., a manufacturer of drug and alcohol testing systems, and is a strategic advisor to the state government of Victoria, Australia. Between 1968 and 1989, Mr. Yakatan held various senior executive positions with New England Nuclear Corporation (a division of E.I. DuPont), ICN Pharmaceuticals, Inc., New Brunswick Scientific Co., Inc. and Biosearch.

Michael Ahlin. Mr. Ahlin has been a Vice President and a director of the Company since July 2004. From May 2004 to the present, Mr. Ahlin has been the Vice President and a member of the Board of Directors of Impact Diagnostics. From July 1998 to May 2004, Mr. Ahlin was the Chairman of the Board, President and Chief Executive Officer of Impact Diagnostics. Mr. Ahlin has been President of WetCor, Inc., a land development company, since 1983.

Mark Rosenfeld, PhD. Dr. Rosenfeld has been a Vice President and a director of the Company since August 2004. From July 1998 to the present, Dr. Rosenfeld has been the Secretary and Chief Technical Officer of Impact Diagnostics. He was formerly on the research faculty at the Department of Cellular, Viral and Molecular Biology at the University of Utah School of Medicine. From October 1993 to October 2000, Dr. Rosenfeld was the Chief Technical Officer of Ratite Research, a bio-agricultural consulting company.

John C. Wilson. Mr. Wilson has been the Chief Financial Officer of the Company since July 2004. Since January 1, 1997, Mr. Wilson has been the Managing Principal of Wentworth Advisors, LLC, a financial consulting company. From August 1996 to January 2002, Mr. Wilson was a Managing Director and Senior Advisor of Credit Suisse First Boston Corporation.

Jack Levine. Mr. Levine has been a director of the Company since July 2004. Since 1984, Mr. Levine has been the President of Jack Levine, PA, a certified public accounting firm. Since 1999, Mr. Levine has served as a director and the chairman of the audit committee of SFBC International Inc., a clinical research organization. Mr. Levine is also a director, Vice Chairman of the Executive Committee and Chairman of the Audit Committee of Beach Bank, a director and Chairman of the Audit Committee of The Prairie Fund, a mutual fund, and a director of RealCast Corporation, an internet streaming company. Mr. Levine is a certified public accountant licensed by the State of Florida.

Eric Wilkinson. Mr. Wilkinson has been a director of the Company since July 2004. Since June 2003, Mr. Wilkinson has been the Vice President of Life Sciences for XL TechGroup, a biotechnology company. From September 2001 to May 2003, Mr. Wilkinson worked as a consultant for Tyrgen Technologies, a biotechnology-consulting firm. From December 1999 to August 2001, Mr. Wilkinson was the President of Genetic Vectors, Inc., a biotechnology company. Mr. Wilkinson served as a consultant for the Cleveland Clinic Medical Foundation from November 1998 to November 1999.

Kevin Crow. Mr. Crow has been a director of the Company since July 2004. Since April 2004, Mr. Crow has been the Chief Executive Officer of Diversified Corporation Solutions, LLC, a business advisory company. From September 2000 to December 2003, Mr. Crow was the Chief Operating Officer of the Women’s United Soccer Association, a professional athletic league. Mr. Crow was President of

ZipDirect, LLC, a full service printing, mailing and shipping company, from February 1994 to September 2000. Mr. Crow is the brother of Michael Crow, who serves as the Chairman and Chief Executive Officer of Duncan Capital Group LLC, which is the Company’s financial advisor and beneficially owns 5.3% of the outstanding capital stock of the Company, and a manager of B&P Management LLC, which beneficially owns 6.2% of the outstanding capital stock of the Company.

Consultants

We have retained Stephen Bende, PhD, David Bolick, M.D. and Cliff Mintz, PhD as consultants. Each of them provides services to our company on a part-time basis.

Executive Compensation

The following table provides information about the compensation paid us to our executive officers who were serving as executive officers at the end of 2003, 2002 and 2001. With the exception of the compensation paid to Pete Wells and Geoff Williams, all compensation information provided in the table was paid by Impact Diagnostics prior to the Merger.

		Annual Compensation			Long-Term Compensation
					Awards		Payouts
Name and Principal Position	Year	Salary	Bonus	Other Annual Compensation	Restricted Stock Awards	Securities Underlying Options/SARs	LTIP Payouts	All Other Compen-sation
		($)	($)	($)	($)	(#)	($)	($)
Stan Yakatan Chief Executive Officer	2003 2002 2001	—	—	—	—	—	—	—
John C. Wilson Chief Financial Officer	2003 2002 2001	—	—	—	—	—	—	—
Dr. Mark Rosenfeld Vice President	2003 2002 2001	76,763 85,000 72,000	—	—	—	—	—	—
Michael Ahlin Vice President	2003 2002 2001	73,617 75,552 48,768	—	—	—	—	—	—
Pete Wells President and Director	2003 2002	—	—	—	—	—	—	—
	2001

Geoff Williams
Secretary and Director

2003 2002 2001

—

33,839 (1

)

—

_______________

(1) In February 2002, Mr. Williams was granted 1,691,951 shares of our common stock for services to the Company valued at $33,839. At the time the shares were issued, Mr. Williams served as our Secretary and a director.

We did not pay any salaries or other compensation to our officers, directors or employees for the years ended December 31, 2003, 2002 or 2001, except as set forth on the table above. We did not have a bonus, profit sharing, or deferred compensation plan for the benefit of employees, officers or directors for the years ended 2003, 2002 or 2001.

Between May and June 2004, Impact Diagnostics paid Mr. Yakatan $5,000 per month for consulting services to Impact Diagnostics in connection with the Merger. Beginning in July 2004, Mr. Yakatan receives $10,000 per month for acting as Chief Executive Officer of our company and Mr. Wilson receives $6,000 per month for acting as Chief Financial Officer of our company. We expect to enter into employment agreements with Stan Yakatan and John C. Wilson in the future.

Michael Ahlin and Mark Rosenfeld each have an employment agreement with Impact Diagnostics. Pursuant to those employment agreements, Impact Diagnostics pays to each of Mr. Ahlin and Dr. Rosenfeld an annual salary of $144,000 and the Board of Directors of Impact Diagnostics has the discretion to grant an annual bonus to each of them. Mr. Ahlin and Dr. Rosenfeld are each entitled to participate in all employee benefit plans or programs that are available to management employees of Impact Diagnostics and all other benefit plans or programs as may be specified by the Board of Directors of Impact Diagnostics. Each of the employment agreements provide that either we or Mr. Ahlin or Dr. Rosenfeld may terminate the respective agreement at any time.

We have entered into consulting agreements with each of Dr. Stephen Bende, Dr. David Bolick and Dr. Cliff Mintz. We pay each of these consultants $5,000 per month for providing part-time consulting services to our company. The consultants are also entitled to reimbursement of expenses related to these consulting services.

Compensation of Non-Employee Directors

We pay our directors who are not employees of our company a director’s fee of $4,000 per year. Each non-employee director also is paid $300 per hour for attending any meeting of the Board of Director and each Board committee meeting, up to a maximum of $1,200 per meeting. We have granted each non-employee director options to purchase 100,000 shares of our common stock at an exercise price of $0.18, of which, 50,000 will first be exercisable in September 2005 and 50,000 in September 2006.

Non-employee directors will receive additional options to purchase 50,000 shares of our common stock at the start of each calendar year that they serve as directors, beginning in 2005. These options will have an exercise

price equal to the market value at the time they are granted. One third of the options will first become exercisable on the first, second and third anniversary of the date of their grant. Jack Levine, Kevin Crow and Eric Wilkinson are non-employee directors.

In addition to the fees and options which they receive for serving as non-employee directors, the chairman of our Audit Committee and Compensation Committee each receives an annual fee of $2,500 and $1,500, respectively for each year that he or she serves as chair of their respective committees. The chairman of each of these committees will also receive options to purchase an additional 25,000 shares of our common stock for each year that he or she serves as chairman of the committee. The options will be exercisable at the market price at the time they are granted. One third of these options will first become exercisable on the first, second, and third anniversary of the date of the grant. Jack Levine is the chairman of the Audit Committee and Kevin Crow is the chairman of the Compensation Committee.

INDEMNIFICATION OF OFFICERS AND DIRECTORS

Section 78.7502 of the Nevada Revised Statutes allows a corporation to indemnify any officer, director, employee or agent who is a party or is threatened to be made a party to a litigation by reason of the fact that he or she is or was an officer, director, employee or agent of the corporation, or is or was serving at the request of the corporation as an officer, director, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such director or officer if:

· there was no breach by the officer, director, employee or agent of his or her fiduciary duties to the corporation involving intentional misconduct, fraud or knowing violation of law; or

· the officer, director, employee or agent acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

Our Amended and Restated Articles of Incorporation provide for the indemnification of our officers and directors to the maximum extent permitted by Nevada law, and also provide that:

· the indemnification right is a contract right that may be enforced in any manner by our officers and directors,

· the expenses of our officers and directors incurred in any proceeding for which they are to be indemnified are to be paid to them as they are incurred, with such payments to be returned to our company if it is determined that an officer or director is not entitled to be indemnified,

· the indemnification right is not be exclusive of any other rights that our officers and directors have or may acquire and includes any other rights of indemnification under any bylaw, agreement, vote of stockholders or provision of law,

· our Board of Directors may adopt bylaws to provide for the fullest indemnification permitted by Nevada law,

· our Board of Directors may cause our company to purchase and maintain insurance for our officers and directors against any liability asserted against them while acting in their capacity as our officers or directors, and

· these indemnification rights shall continue to apply after any officer or director has ceased being an officer or director and shall apply to their respective heirs, executors and administrators.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of our company pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

These provisions of our Amended and Restated Articles of Incorporation become effective 20 days after the Information Statement is first mailed to our stockholders.

SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

The following table lists stock ownership of our common stock as of September 24, 2004. The information includes beneficial ownership by (i) holders of more than 5% of our common stock, (ii) each of our current directors and executive officers and (iii) all of our directors and executive officers as a group. The information is determined in accordance with Rule 13d-3 promulgated under the Exchange Act based upon information furnished by the persons listed or contained in filings made by them with the Commission. Except as noted below, to our knowledge, each person named in the table has sole voting and investment power with respect to all shares of our common stock beneficially owned by them.

Name and Address of Beneficial Owner	Director/Officer	Amount and Nature of Beneficial Ownership (1)	Percentage of Class (1)

Michael Crow 830 Third Avenue New York, NY 10022	—	5,766,974 (2)	11.5%

Blaine Taylor 634 Hidden Circle North Salt Lake City, UT 84054	—	4,600,718 (3)	9.2%

Mitchell T. Godfrey P.O. Box 10206 Bozeman, MT 59719	—	3,730,607	7.5%

David Fuchs 830 Third Avenue New York, NY 10022	—	3,437,535	6.9%

Rex Lewis 2325-A Renaissance Drive Las Vegas, NV 89119	—	3,256,905	6.7%

B & P Management LLC 830 Third Avenue New York, NY 10022	—	3,096,974 (4)	6.2%

DCOFI Master LDC 803 Third Avenue New York, NY 10022	—	3,007,200	6.0%

Duncan Capital Group LLC 830 Third Avenue New York, NY 10022	—	2,670,000 (5)	5.3%

Stan Yakatan 155 Lyndon — First Court Hermosa Beach, CA 90254	President, Chief Executive Officer and Chairman of the Board of Directors	573,651 (6)	1.1%

Michael Ahlin 4770 Ichabod Holladay, UT 84117	Vice President and Director	6,640,900 (7)	13.3%

Dr. Mark Rosenfeld 1075 Skyler Drive Draper, UT 84020	Vice President and Director	6,077,050 (8)	12.2%

John C. Wilson P.O. Box 1883 Southern Pines, NC 28388	Chief Financial Officer	250,000 (9)	*

Jack Levine 16855 N.E. 2^nd Avenue, Suite 303 N. Miami Beach, FL 33162	Director	588,555 (10)	1.2%

Eric Wilkinson 348 Versailles Drive Melbourne Beach, FL 32951	Director	0 (11)	*

Kevin Crow 5120 Park Brooke Walk Way Alpharetta, GA 30022	Director	0 (12)	*

All directors and officers as a group (7 persons)		14,130,156 (13)	28.3%

______________________

* Less than one percent

(1) Includes in each case shares of our common stock that may be issued upon exercise of options or warrants that are exercisable within 60 days for the subject individual only. Percentages are computed on the basis of 50,000,000 shares of our common stock outstanding as of September 24, 2004.

(2) Includes the 2,992,479 shares of our common stock warrants to purchase 104,495 shares of our common stock held by B & P Management LLC and the warrants to purchase 2,670,000 shares of our common stock held by Duncan Capital Group LLC. Michael Crow is a manager of B & P Management LLC and the Chairman and Chief Executive Officer of Duncan Capital Group LLC.

(3) Includes 1,253,000 shares of our common stock held by Six Way, Inc. Mr. Taylor is the President, a director and principal shareholder of Six Way, Inc.

(4) Includes 2,992,479 shares of our common stock and warrants to purchase 104,495 shares of our common stock exercisable within 60 days.

(5) Represents warrants to purchase 2,670,000 shares of our common stock exercisable within 60 days.

(6) Represents options to purchase 573,651 shares of our common stock exercisable within 60 days. Does not include options to purchase 2,294,603 shares of our common stock held by Mr. Yakatan that are not exercisable within 60 days.

(7) Includes 1,253,000 shares of our common stock held by Princess Investments. Mr. Ahlin has voting power over securities held by Princess Investments. Includes 3,387,900 shares of our common stock that Mr. Ahlin is entitled to receive as a result of the Merger, but that Mr. Ahlin agreed not to receive until the Board of Directors and stockholders have increased the authorized capital of the Company. Our Board of Directors has approved the required increase in the number of shares of our authorized common stock, and the holders of a majority of our outstanding common stock, acting by written consent, have also approved such increase in our authorized shares of common stock. We have filed an Information Statement regarding those changes with the Securities and Exchange Commission. This change will be deemed effective 20 days after mailing of the Information Statement to our stockholders.

(8) Includes 4,077,050 shares of our common stock that Dr. Rosenfeld is entitled to receive as a result of the Merger, but that Dr. Rosenfeld agreed not to receive until the Board of Directors and stockholders have increased the authorized capital of the Company. Our Board of Directors has approved the required increase in the number of shares of our authorized common stock, and the holders of a majority of our outstanding common stock, acting by written consent, have also approved such increase in our authorized shares of common stock. We have filed an Information Statement regarding those changes with the Securities and Exchange Commission. This change will be deemed effective 20 days after mailing of the Information Statement to our stockholders.

(9) Includes 250,000 shares of our common stock held by Wentworth Advisors, LLC. Mr. Wilson is the managing principal and 100% owner of Wentworth Advisors. Does not include options to purchase 750,000 shares held by Mr. Wilson that are not exercisable within 60 days.

(10) Includes warrants to purchase 98,092 shares of our common stock beneficially owned by Mr. Levine that are exercisable within 60 days. Does not include options to purchase 125,000 shares of our common stock that are not exercisable within 60 days.

(11) Does not include options to purchase 100,000 shares of our common stock that are not exercisable within 60 days.

(12) Does not include options to purchase 125,000 shares of our common stock that are not exercisable within 60 days.

(13) Includes options to purchase 573,651 shares of our common stock and warrants to purchase a total of 98,092 shares of our common stock exercisable within 60 days. Does not include options to purchase a total of 3,394,603 shares of our common stock not exercisable within 60 days.

Securities Authorized for Issuance Under Equity Compensation Plans

As of the end of fiscal year 2003, we had no compensation plans under which our equity securities were authorized for issuance. On August 2, 2004, our Board of Directors adopted our 2004 Stock Issuance Plan, subject to stockholder approval. The Plan provides for the issuance of qualified and non-qualified incentive stock options and direct restricted stock grants to officers, employees, consultants and others providing services to our company. The directors of our company will be eligible to be issued options to purchase shares of our common stock, or to receive awards of restricted stock, under the Plan. Up to 25,000,000 shares of our common stock may be issued in connection with awards granted under the Plan.

On September 30, 2004, a total of 17 stockholders owning 25,696,014 shares of our common stock, acting by written consent, approved the Plan. On September 30, 2004, we filed a preliminary information statement with the Securities and Exchange Commission that includes a description of the Plan and its approval by the stockholders. The Plan will be deemed effective 20 days after mailing the Information Statement to our stockholders.

As of September 24, 2004, Stan Yakatan held options to purchase 2,868,254 shares of our common stock, John C. Wilson held options to purchase 750,000 shares of our common stock, Jack Levine held options to purchase 125,000 shares of our common stock, Eric Wilkinson held options to purchase 100,000 shares of our common stock and Kevin Crow held options to purchase 125,000 shares of our common stock. No other options of the Company have been granted as of the date of this Registration Statement.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as set forth below, there have been no material transactions during the past two years between us and any officer, director or any stockholder owning greater than 5% of our outstanding shares, nor any of their immediate family members.

In August 2004, we paid $100,000 and issued warrants to purchase 2,670,000 shares of our common stock to Duncan Capital Group LLC as compensation for acting as our financial advisor in connection with the Merger. In August 2004, we paid $77,000 and issued warrants to purchase 306,199 shares of our common stock to Duncan Capital LLC as compensation for acting as our placement agent in connection with the sale of our units in a private financing. The warrants have an exercise price of $0.18 per share. Duncan Capital Group LLC beneficially owns 5.3% of the outstanding capital stock of the company. Both Duncan Capital LLC and Duncan Capital Group LLC are affiliates of B & P Management LLC, which beneficially owns 6.2% of the outstanding capital stock of our company. Michael Crow, the brother of Kevin Crow, a director of our company, is Chairman and Chief Executive Officer of Duncan Capital Group LLC, which is the Company’s financial advisor and beneficially owns 5.3% of the outstanding capital stock of our company, and a manager of B&P Management LLC, which beneficially owns 6.2% of the outstanding capital stock of our company.

In 2002 and 2003, Impact Diagnostics advanced $22,500 and $13,000, respectively, to Michael Ahlin, a director and Vice President of our company, and $8,533 and $8,533, respectively, to Dr. Mark Rosenfeld, a director and Vice President of our company. At the time of the advances, Mr. Ahlin was Chairman of the Board, President and Chief Executive Officer of Impact Diagnostics, and Dr. Rosenfeld was Secretary and Chief Technical Officer of Impact Diagnostics.

In 2002 and 2003, Impact Diagnostics advanced $22,631 and $6,229, respectively, to Seroctin Research & Technology. Michael Ahlin, a director and Vice President of our company, owns 20%, and Dr. Mark Rosenfeld, a director and Vice President of our company, owns 18.4% of Seroctin Research & Technology.

In 2002 and 2003, Impact Diagnostics advanced $11,922 and $7,820, respectively, to WetCor, Inc. Michael Ahlin, a director and Vice President of our company, is the President of WetCor, Inc.

In 2002 and 2003, Impact Diagnostics received advances of $10,000 and $20,000 from Blaine Taylor, pursuant to a non-interest bearing demand note. Mr. Taylor beneficially owns 9.2% of the outstanding capital stock of our company. As of December 31, 2003, the amount outstanding under the note was approximately $21,500. Effective July 30, 2004, this note was converted to 89,918 shares of common stock of our company.

In 2002, Impact Diagnostics paid management and consulting fees of $115,000 and $55,000, respectively, to WetCor, Inc. Michael Ahlin, a director and Vice President of our company, is the President of WetCor, Inc.

In 2001, Mitchell Godfrey loaned Impact Diagnostics $50,000, pursuant to an unsecured promissory note. Mr. Godfrey beneficially owns 7.5% of the outstanding capital stock of our company. As of December 31, 2003 and 2002, the amount outstanding under the note was $29,279 and $32,083, respectively. Effective July 30, 2004, this note was converted into 159,557 shares of common stock of our company.

From time to time since 1999, Seroctin Research & Technology has leased office facilities from Impact Diagnostics, pursuant to a verbal agreement. Seroctin Research & Technology has made payments to Impact Diagnostics of $2,300 for each month (approximately $55,000 in the aggregate since 1999) it has leased such facilities. Michael Ahlin, a director and Vice President of our company, owns 20% and Dr. Mark Rosenfeld, a director and Vice President of our company, owns 18.4% of Seroctin Research & Technology.

SELLING STOCKHOLDERS

The following table details the name of each selling stockholder, the number of shares owned by that selling stockholder, and the number of shares that may be offered by each selling stockholder for resale under this prospectus. The selling stockholders may sell up to 24,268,495 shares of our common stock from time to time in one or more offerings under this prospectus, of which 19,135,767 are shares of common stock currently held by the selling stockholders and 5,132,728 are shares of common stock issuable upon exercise of warrants held by the selling stockholders. Because each selling stockholder may offer all, some or none of the shares it holds, and because, based upon information provided to us, there are currently no agreements, arrangements, or understandings with respect to the sale of any of the shares, no definitive estimate as to the number of shares that will be held by each selling stockholder after the offering can be provided. The following table has been prepared on the assumption that all shares offered under this prospectus will be sold to parties unaffiliated with the selling stockholders. Except as indicated below, no selling stockholder nor any of their affiliates have held a position or office, or had any other material relationship, with us.

Name of Selling Stockholder	Number of Shares Owned Before Offering	Number of Shares Offered for Sale	Number of Shares Owned After Completion of Offering	Percentage of Common Stock Owned After Completion of Offering

Michael Ahlin (1)	6,640,900	1,000,000	5,640,900	11.8	%
AJW Offshore, Ltd.	241,962	241,962	0	0
AJW Partners	104,632	104,632	0	0
AJW Qualified Partners, LLC	287,738	287,738	0	0
Alan Gelband Co. Defined Contribution Pension Plan & Trust	130,790	130,790	0	0
Armadillo Partners	653,951	653,951	0	0
Thomas J. Axon	788,201	788,201	0	0
B & P Management LLC (3)	3,096,974	3,096,974	0	0
Shekhar K. Basu and Sita Basu	653,951	653,951	0	0
BIP Partners	117,711	117,711	0	0
Daniel C. Bolick	653,951	653,951	0	0
Dr. David R. Bolick (2)	660,490	660,490	0	0
Julia Bolick	32,697	32,697	0	0
Larry and Glenda Bolick Family Trust	130,790	130,790	0	0
Marie Bono	65,395	65,395	0	0

Mike Cassidy	130,790	130,790	0	0
Peter L. Coker and Susan H. Coker	130,790	130,790	0	0
DCOFI Master LDC	3,007,200	3,007,200	0	0
James H. Donell, as receiver of Citadel Capital Management, Inc.	507,167	507,167	0	0
Thomas Doyle	65,395	65,395	0	0
Duncan Capital LLC (4)	306,199	306,199	0	0
Duncan Capital Group LLC (5)	2,670,000	2,670,000	0	0
Blair Eddins	29,428	29,428	0	0
John A. Fahlberg	130,790	130,790	0	0
Bruce A. Falbaum	65,395	65,395	0	0
Anthony Falcone	130,790	130,790	0	0

Richard Gillings	326,976	326,976	0	0
Mitchell Godfrey	3,370,607	159,557	3,211,050	6.4	%
Francesco Gozzo	326,976	326,976	0	0
Harold Gubnitsky	163,488	163,488	0	0
Steven T. Hague	78,820	78,820	0	0
Roberta B. Hardy	65,395	65,395	0	0
Frank L. Hoffecker	300,000	300,000	0	0
HT Ardinger & Sons, Inc.	326,976	326,976	0	0

Ira A. Hunt Jr.	130,790	130,790	0	0
Horace Mann Johnson III	98,093	98,093	0	0
David P. Kalm	78,820	78,820	0	0
Don Larsen	98,093	98,093	0	0
Steven W. Lefkowitz	1,576,402	1,576,402	0	0
Jack Levine and Susan Levine (6)	588,556	588,556	0	0
Timothy McNamee	326,976	326,976	0	0
Andreas Michailidis	130,790	130,790	0	0
Network 1 Financial Securities Inc.	104,904	104,904	0	0
New Millenium Capital Partners II, LLC	19,618	19,618	0	0
Pershing LLC, as custodian of Robert L. Bolick, Roth IRA	130,790	130,790	0	0
Christina Recchia	65,395	65,395	0	0
Peter Reichard	65,395	65,395	0	0
RH Damon & Co. Inc.	501,200	501,200	0	0
Michael Rosenbaum	326,976	326,976	0	0
Dr. Mark Rosenfeld (7)	6,077,050	1,000,000	5,077,050	10.2	%
David Ruggieri	490,463	490,463	0	0
Peter Siraslian	326,976	326,976	0	0
SilverDeer LLC	65,395	65,395	0	0
Blaine Taylor	4,600,718	89,918	4,510,800	9.0	%
Carl B. Turner and Alison M. Turner	65,395	65,395	0	0
John F. Turner and Emily F. Turner	130,790	130,790	0	0
Donna Viemeister	65,395	65,395	0	0
Wentworth Advisors, LLC	250,000	250,000	0	0
TOTAL	42,708,295	24,268,495	18,439,800	36.7	%

(1) Michael Ahlin has served as a director and Vice President of our company since July 2004.

(2) David R. Bolick provides consulting services to our company on a part-time basis. Dr. Bolick receives $5,000 per month for these services. Dr. Bolick is also an employee of Ameripath, Inc. We lease our clinical laboratory space from Rocky Mountain Pathology, LLC, an affiliate of Ameripath, Inc. In addition, Ameripath has conducted initial studies of our technology for our company.

(3) B & P Management LLC is an affiliate of Duncan Capital Group LLC, which acted as financial advisor in connection with the Merger, and is also an affiliate of Duncan Capital LLC, which served as placement agent in connection with the sale of our units in the private financing that we completed in connection with the Merger. Includes warrants to purchase 3,096,974 shares of our common stock held by B & P Management LLC.

(4) Duncan Capital LLC served as placement agent in connection with the sale of our units in the private financing described above. Includes warrants to purchase 306,199 shares of our common stock held by Duncan Capital LLC.

(5) Duncan Capital Group LLC served as financial advisor to our company in connection with the Merger. Includes warrants to purchase 2,670,000 shares of our common stock held by Duncan Capital Group LLC.

(6) Jack Levine has served as a director of our company and chairman of the Audit Committee of our company since August 2004. Does not include options to purchase 125,000 shares of our common stock that are not exercisable within 60 days.

(7) Mark Rosenfeld has served as a director and Vice President of our company since August 2004.

(8) John C. Wilson, our Executive Vice President and Chief Financial Officer, is Managing Principal and 100% owner of Wentworth Advisors.

PLAN OF DISTRIBUTION

The common stock offered by this prospectus is being offered by the selling stockholders. The common stock may be sold or distributed from time to time by the selling stockholders directly to one or more purchasers or through brokers, dealers or underwriters who may act solely as agents at market prices prevailing at the time of sale, at prices related to the prevailing market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of the common stock offered by this prospectus may be effected in one or more of the following methods:

• ordinary brokers’ transactions,

• through brokers, dealers, or underwriters who may act solely as agents,

• “at the market” into an existing market for the common stock,

• in other ways not involving market makers or established trading markets, including direct sales to purchasers or sales effected through agents,

• in privately negotiated transactions, and

• any combination of the foregoing.

In order to comply with the securities laws of certain states, if applicable, the shares may be sold only through registered or licensed brokers or dealers. In addition, in certain states, the shares may not be sold unless they have been registered or qualified for sale in the state or an exemption from the registration or qualification requirement is available and complied with.

The selling stockholders may pledge their shares to their brokers under the margin provisions of customer agreements. If a selling stockholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares. Broker-dealers engaged by a selling stockholder may arrange for other broker-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated.

The selling stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act of 1933, as amended.

We will pay all of the expenses incident to the registration, offering, and sale of the shares to the public other than commissions or discounts of underwriters, broker-dealers, or agents. We have also agreed to indemnify the selling stockholders and related persons against specified liabilities, including liabilities under the Securities Act.

While they are engaged in a distribution of the shares included in this prospectus the selling stockholders are required to comply with Regulation M promulgated under the Securities Exchange Act of 1934, as amended. With certain exceptions, Regulation M precludes the selling stockholders, any

affiliated purchasers, and any broker-dealer or other person who participates in the distribution, from bidding for or purchasing, or attempting to induce any person to bid for or purchase any security which is the subject of the distribution until the entire distribution is complete. Regulation M also prohibits any bids or purchases made in order to stabilize the price of a security in connection with the distribution of that security. All of the foregoing may affect the marketability of the shares offered by this prospectus.

The selling stockholders may also sell shares under Rule 144 promulgated under the Securities Act of 1933, as amended, rather than selling under this prospectus. This offering will terminate on the date that all shares offered by this prospectus have been sold by the selling stockholders or are eligible for sale under Rule 144(k). In general, under Rule 144 as currently in effect, a person (or persons whose shares are required to be aggregated) who has owned shares for at least one year would be entitled to sell within any three-month period a number of shares that does not exceed the greater of (i) 1% of the number of shares of our common stock then outstanding (which, after our increase in authorized capital is effective, will equal approximately 535,908 shares of common stock) or (ii) the average weekly trading volume of our shares of common stock during the four calendar weeks preceding the filing of a Form 144 with respect to such sale. Under Rule 144(k), a person who is not deemed to have been our affiliate at any time during the three months preceding a sale, and who has owned the shares proposed to be sold for at least two years, is entitled to sell his shares without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144.

DESCRIPTION OF SECURITIES

Our authorized capital stock currently consists of 50,000,000 shares of common stock. Our Board of Directors and a majority of our stockholders, acting by written consent, have agreed to amend and restate our Articles of Incorporation. Our Amended and Restated Articles of Incorporation will, among other things, increase the number of shares of common stock that we may issue from 50,000,000 to 150,000,000 and authorize our Board to issue up to 20,000,000 shares of preferred stock. Each share of common stock is entitled to one vote on all matters voted upon by our stockholders. Holders of our common stock have no preemptive or other rights to subscribe for additional shares or other securities. There are no cumulative voting rights.

Holders of our common stock are entitled to dividends in such amounts as may be declared by our board of directors from time to time from funds legally available therefore. We have not declared or paid cash dividends or made distributions in the past on our common stock, and we do not anticipate that we will pay cash dividends or make distributions in the foreseeable future. We currently intend to retain and invest future earnings to finance operations.

Upon effectiveness of our Amended and Restated Articles of Incorporation, our Board of Directors will have the authorization, without further stockholder approval, to issue up to 20,000,000 shares of preferred stock from time to time in one or more series and to fix the number of shares and the relative dividend rights, conversion rights, voting rights and other rights and qualifications of any such series. The Board has not fixed any series of preferred stock and no shares of preferred stock are issued and outstanding.

LEGAL MATTERS

Certain matters relating to the offering of securities covered by this prospectus will be passed upon for us by Brown Raysman Millstein Felder & Steiner, LLP, 900 Third Avenue, New York, New York.

EXPERTS

The audited financial statements of our company for the fiscal years ended December 31, 2003 and 2002 have been audited by Tanner + Co ("Tanner"), independent public accountants. The report of Tanner, which appears elsewhere herein, includes an explanatory paragraph as to the ability of our company to continue as a going concern and a paragraph indicating the 2002 financial statements were restated. The financial statements of our company are included in reliance upon such report and upon the authority of such firm as an expert in auditing and accounting.

Prior to the Merger, HJ & Associates, LLC were the independent accountants of our company. In connection with the Merger, our company dismissed HJ & Associates as our independent accountant, with the approval of our Board of Directors. The audit reports of HJ & Associates on the financial statements for our company’s fiscal years ended December 31, 2003 and December 31, 2002 did not contain any adverse opinion or disclaimer of opinion, nor were such reports modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2003 and December 31, 2002, and the subsequent interim period prior to the dismissal of HJ & Associates, there were no disagreements with HJ & Associates on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to HJ & Associates’ satisfaction, would have caused HJ & Associates to make reference to the subject matter of the disagreement in connection with its report.

FURTHER INFORMATION

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and file reports, proxy statements and other information with the Securities and Exchange Commission. These reports, proxy statements and other information may be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Securities and Exchange Commission’s regional offices. You can obtain copies of these materials from the Public Reference Section of the Securities an Exchange Commission upon payment of fees prescribed by the Securities and Exchange Commission. You may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission’s Web site contains reports, proxy and information statements and other information regarding registrants that file electronically with the Securities and Exchange Commission. The address of that site is http://www.sec.gov.

CONSOLIDATED FINANCIAL STATEMENTS

Index to Financial Statements

Page 41		Audited Financial Statements of Impact Diagnostics, Inc. — December 31, 2003 and 2002 and the years then ended
Page 55		Unaudited Financial Statements of Impact Diagnostics, Inc. — June 30, 2004 and the six months ended June 30, 2004 and 2003
Page 58		Proforma Financial Statements of Grant Ventures, Inc. and Impact Diagnostics, Inc. — June 30, 2004 and the six months then ended and the Statement of Operations for the year ended December 31, 2003

INDEPENDENT AUDITORS' REPORT

To the Stockholders' and
Board of Directors of Impact Diagnostics, Inc.

We have audited the accompanying balance sheet of Impact Diagnostics, Inc. (A Development Stage Company) as of December 31, 2003 and 2002 and the related statements of operations, stockholders' deficit, and cash flows for the periods then ended and for the period from July 9, 1998 (date of inception) to December 31, 2003. These financial statements are the responsibility of the Company's management. 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes 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 Impact Diagnostics, Inc. (A Development Stage Company) as of December 31, 2003 and 2002 and the results of operations and its cash flows for the periods then ended and for the period from July 9, 1998 (date of inception) to December 31, 2003, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has a working capital deficit and a stockholders' deficit. The Company has not generated revenue and has incurred losses since inception. These conditions raise substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

As explained in Note 11, the 2002 financial statements have been restated.

/s/ TANNER + CO.

Salt Lake City, Utah
April 15, 2004, except for Note 12, which is dated September 28, 2004

IMPACT DIAGNOSTICS, INC.

(A Development Stage Company)

Balance Sheet

	December 31,

		2003			2002
					(Restated)
Assets

Current assets - Cash		$	11,299		$	34,685

Employee receivables		33,343			21,733
Related party receivables		14,049			35,553
Property and equipment, net of accumulated depreciation of $8,186 and $4,521, respectively		6,713			10,378
Deposits		700			—

Total assets		$	66,104		$	102,349

Liabilities and Stockholders’ Deficit

Accounts payable		$	33,531		$	54,847
Accrued interest payable		142,086			83,024
Accrued payroll liabilities		51,194			—
Related party notes payable - current portion		37,934			18,350
Notes payable		587,753			587,753

Total current liabilities		852,498			743,974

Related party notes payable		12,845			23,733

Total liabilities		865,343			767,707

Commitments and contingencies		—			—

Stockholders’ deficit:
Common stock, $.001 par value, 100,000,000 shares authorized; 34,572,060 and 33,641,260 shares issued and outstanding, respectively		34,572			33,641
Additional paid in capital		637,178			518,109
Deficit accumulated during development stage		(1,470,989		)	(1,217,108		)

Total stockholders’ deficit:		(799,239		)	(665,358		)

		$	66,104		$	102,349

See accompanying notes to financial statements.

IMPACT DIAGNOSTICS, INC.

(A Development Stage Company)

Statement of Operations

							Cumulative Amounts
	Years Ended December 31,						(Since Date of Inception)
	2003			2002			July 9, 1998
				(Restated)			(Restated)

Revenues	$	—		$	—		$	—

General and administrative expenses	189,928			718,941			1,320,426

Other (income) expense:
Gain on extinguishment of debt	—			(98,507		)	(98,507		)
Interest expense	63,953			25,767			249,070

Net loss before income taxes	(253,881		)	(646,201		)	(1,470,989		)

Income tax benefit	—			—			—

Net loss	$	(253,881	)	$	(646,201	)	$	(1,470,989	)

Net loss per common share - basic and diluted	$	(0.01	)	$	(0.02	)

Weighted average shares - basic and diluted	33,842,000			30,144,000

See accompanying notes to financial statements.

IMPACT DIAGNOSTICS, INC.

(A Development Stage Company)

Statement of Stockholders’ Deficit

Period from July 9, 1998 (date of inception) to December 31, 2003

	Common Stock			Stock Subscription Receivable						Accum- ulated Deficit
	Shares	Amount					APIC						Total

Balance, July 9, 1998 (date of inception)	9,272,200	$	9,272	$	—		$	(9,272	)	$	—		$	—

Issued stock for subscription receivable	18,795,000	18,795		(100,000		)	81,205			—			—

Balance, December 31, 1998	28,067,200	28,067		(100,000		)	71,933			—			—

Issued stock for cash	1,253,000	1,253		—			3,747			—			5,000

Net loss	—	—		—			—			(5,053		)	(5,053		)

Balance, December 31, 1999	29,320,200	29,320		(100,000		)	75,680			(5,053		)	(53		)

Payment of subscriptions receivable	—	—		100,000			—			—			100,000

Net loss	—	—		—			—			(43,641		)	(43,641		)

Balance, December 31, 2000	29,320,200	29,320		—			75,680			(48,694		)	56,306

Issued stock for cash	250,600	251		—			749			—			1,000

Net loss	—	—		—			—			(522,213		)	(522,213		)

Balance, December 31, 2001	29,570,800	29,571		—			76,429			(570,907		)	(464,907		)

Beneficial conversion feature on issuance of debt	—	—		—			98,507			—			98,507

Gain on extinguishment of debt (restated)	—	—		—			(98,507		)	—			(98,507		)

Issued stock for cash (restated)	689,150	689		—			91,811			—			92,500

Issued stock for services (restated)	1,591,310	1,591		—			101,659			—			103,250

Issued stock in satisfaction of debt (restated)	1,790,000	1,790		—			248,210			—			250,000

Net loss (restated)	—	—		—			—			(646,201		)	(646,201		)

Balance, December 31, 2002 (restated)	33,641,260	33,641		—			518,109			(1,217,108		)	(665,358		)

Stock issued for cash	930,800	931		—			119,069			—			120,000

Net loss	—	—		—			—			(253,881		)	(253,881		)

Balance, December 31, 2003	34,572,060	$	34,572	$	—		$	637,178		$	(1,470,989	)	$	(799,239	)

See accompanying notes to financial statements.

IMPACT DIAGNOSTICS, INC.

(A Development Stage Company)

Statement of Cash Flows

	Years Ended December 31,						Cumulative Amounts Since
	2003			2002			Inception
				(Restated)			(Restated)
Cash flows from operating activities:
Net loss	$	(253,881	)	$	(646,201	)	$	(1,470,989	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	3,665			3,706			8,186
Common stock issued for services	—			103,250			104,250
Beneficial conversion feature	—			98,507			98,507
Gain on extinguishment of debt	—			(98,507		)	(98,507		)
Decrease (increase) in:
Prepaid expenses	—			5,828			—
Deposits	(700		)	—			(700		)
Increase (decrease) in:
Accounts payable	(21,316		)	50,817			33,531
Accrued payroll liabilities	51,194			—			51,194
Accrued interest payable	59,062			58,840			142,086

Net cash used in operating activities	(161,976		)	(423,760		)	(1,132,442		)

Cash flows from investing activities:
Purchase of property and equipment	—			(6,229		)	(14,899		)
(Increase) decrease in other receivables	21,504			13,947			(14,049		)
Increase in employee receivable	(11,610		)	(19,133		)	(33,343		)

Net cash used in investing activities	9,894			(11,415		)	(62,291		)

Cash flows from financing activities:
Issuance of common stock	120,000			92,500			217,500
Proceeds from note payable	20,000			260,000			857,753
Proceeds from related party notes payable	—			10,000			10,000
Payments on related party notes payable	(11,304		)	(11,765		)	(29,221		)
Proceeds from related party note receivable	—			—			50,000
Collections on stock subscriptions receivable	—			—			100,000

Net cash provided by financing activities	128,696			350,735			1,206,032

Net (decrease) increase in cash and cash equivalents	(23,386		)	(84,440		)	11,299

Cash and cash equivalents at beginning of period	34,685			119,125			—

Cash and cash equivalents at end of period	$	11,299		$	34,685		$	11,299

See accompanying notes to financial statements.

IMPACT DIAGNOSTICS, INC.

(A Development Stage Company)

Notes to Financial Statements

December 31, 2003 and 2002

1. Organization and Summary of Significant Accounting Policies

Organization

Impact Diagnostics, Inc. (the Company) was organized under the laws of the State of Utah on July 9, 1998. The Company’s purpose is to research, develop, market and sell diagnostic kits for detecting disease with emphasis on the detection of low-grade cervical disease.

Development Stage Company

Effective July 9, 1998, the Company is considered a development stage Company as defined in SFAS No. 7. The Company’s development stage activities consist of the development of medical diagnostic kits. Sources of financing for these development stage activities have been primarily debt and equity financing. The Company has, at the present time, not paid any dividends and any dividends that may be paid in the future will depend upon the financial requirements of the Company and other relevant factors.

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

The Company maintains its cash in bank deposit accounts, which at times may exceed federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk on cash and cash equivalents.

Property and Equipment

Property and equipment are carried at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed under an accelerated method based on the estimated useful lives of the assets or term of the lease. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed and any resulting gain or loss is recognized in operations for the periods.

Research and Development

Research and development costs are expensed as incurred.

Income Taxes

Income taxes are recorded using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Earnings Per Share

The computation of basic earning per common share is based on the weighted average number of shares outstanding during each period.

The computation of diluted earnings per common share is based on the weighted average number of shares outstanding during the period plus the common stock equivalents which would arise from the exercise of stock options and warrants outstanding using the treasury stock method and the average market price per share during the period. There were no options outstanding at December 31, 2003. Options to purchase 10,000 shares of common stock at the price of $.50 per share were outstanding at December 31, 2002, but were not included in the diluted loss per share calculation because the effect would have been antidilutive.

Use of Estimates in the Preparation of Financial Statements

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 period. Actual results could differ from those estimates.

2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company is a development stage company and is not currently generating revenues from operations and has incurred significant losses and cash outflows from operations. Additionally, at December 31, 2003 the Company has a working capital deficit and a stockholders’ deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

The Company’s ability to continue as a going concern is subject to the attainment of revenues which generate positive cash flow and/or the necessary financing from outside sources such as related parties or equity markets. There can be no assurance the Company will be successful in such efforts.

Management continues to gather research data to file with the Food and Drug Administration for the approval of its diagnostic kits. Until such approval is obtained and the company can generate revenue from the sale of its products, management will continue to obtain financing through debt and equity issuances.

3. Related Party Transactions

The Company has entered into the following related party transactions:

• During the years ended December 31, 2003 and 2002, the Company paid management fees to related entities of approximately $0 and $115,000, respectively. The Company also paid approximately $0 and $55,000 to a company with common ownership for consulting fees during the years ended December 31, 2003 and 2002, respectively.

• As of December 31, 2003 and 2002, the Company had receivables from employees of $33,343 and $21,733, respectively.

• The Company has receivables from entities with common shareholders for $14,049 and $35,533 as of December 31, 2003 and 2002, respectively.

• As of December 31, 2003 and 2002 the Company had an unsecured note payable to a shareholder for $29,279 and $32, 083, respectively. The note earns interest at 5% and is due in September 2004.

• As of December 31, 2003 the Company had a non-interest bearing demand note payable to a shareholder for approximately $21,500.

4. Note Payable

In June 2001, the Company entered into a note agreement with a venture capital firm that provided the Company with the right, but not an obligation, to borrow up to $578,000. Any advances on the note would bear interest at 10% with all total advances and accrued interest due on or before November 30, 2002. As of December 31, 2003 and 2002, the note balance was $587,753, and accrued interest payable on the note was $141,501 and $82,726, respectively.

The note payable was in default as of December 31, 2002. The venture capital firm that issued the loan has since declared bankruptcy, and the Company is negotiating the final satisfaction of the note payable with the bankruptcy trustee.

5. Common Stock

On May 20, 2002, the Company’s board of directors approved an increase in the number of authorized shares of common stock from 200,000 to 10,000,000, enabling the Company to complete a 10-for-1 common stock split effective May 31, 2002. The par value of the common stock was also changed from no par value to a par value of $.001.

Additionally, on November 27, 2002, the Company’s board of directors approved an increase in the number of authorized shares of common stock from 10,000,000 to 100,000,000. The Company then completed a 7-for-1 common stock split effective November 27, 2002.

All references to common stock, common shares authorized, issued and outstanding, weighted average number of shares (basic and diluted), and per share amounts in the Financial Statements and Notes to Financial Statements prior to the record date of the stock splits and change in par value have been restated to reflect such transactions on a retroactive basis.

6. Gain on Extinguishment of Debt

During the year ended December 31, 2002, the Company refinanced certain debt, for which a beneficial conversion feature had been recorded as interest expense, with additional debt financing. As a result of this refinancing, the Company has recorded a gain on the extinguishment of debt of $98,507.

7. Income Taxes

The provision for income taxes differs from the amount computed at federal statutory rates as follows:

	Years Ended December 31,
	2003			2002

Income tax benefit at statutory rate	$	(86,000	)	$	(219,000	)
State taxes	(13,000		)	(32,000		)
Other	3,000			11,000
Change in valuation allowance	96,000			240,000

	$	—		$	—

Deferred tax assets (liabilities) are comprised of the following:

	Years Ended December 31,
	2003			2002

Net operating loss carryforward	$	548,000		$	452,000

Valuation allowance	$	(548,000	)	$	(452,000	)

	$	—		$	—

As of December 31, 2003, the Company had net operating losses of approximately $1,464,000, which begin to expire in 2019. Since changes in the Company's ownership have occurred, there would be an annual limitation of the amount of net operating loss carryforwards which could be utilized. The ultimate realization of these carryforwards is due, in part, on the tax law in effect at the time and future events which cannot be determined.

A valuation allowance has been established that offsets the net deferred tax asset because there is significant uncertainty surrounding its ultimate realization. The uncertainty is caused by the Company’s recurring losses and the annual limits referred to above.

8. Supplemental Cash Flow Information

During the year ended December 31, 2003 and 2002, the Company paid cash for the following:

	2003		2002

Interest	$	344	$	1,347

Income taxes	$	—	$	—

During the year ended December 31, 2002 the Company issued 600,000 shares of stock as payment of debt of $300,000.

9. Commitments

The Company has entered into a consulting agreement with a company for assistance with the application and approval process for their product with the Food and Drug Administration (FDA). The term of the contract extends until FDA approval is obtained, but may be terminated by either party with 30 days written notice. During the years ended December 31, 2003 and 2002, the Company made no payment under this contract.

10. Recent Accounting Pronouncements

In November 2002, the EITF reached a consensus on Issue No. 00-21, Revenue Arrangements with Multiple Deliverables. EITF Issue No. 00-21 provides guidance on how to account for certain arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF Issue No. 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF Issue No. 00-21 did not have a material impact on operating results or financial condition of the Company.

In April 2003, FASB issued SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities. SFAS 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS 133, Accounting for Derivatives and Hedging Activities. SFAS 149 is generally effective for derivative instruments, including derivative instruments embedded in certain contracts, entered into or modified after June 30, 2003. The adoption of SFAS 149 did not have a material impact on the operating results or financial condition of the Company.

In May 2003, the FASB issued SFAS 150, Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS 150 clarifies the accounting for certain financial instruments with characteristics of both liabilities and equity and requires that those instruments be classified as liabilities in statements of financial position. Previously, many of those financial instruments were classified as equity. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003. On November 7, 2003, FASB Staff Position 150-3 was issued, which indefinitely deferred the effective date of SFAS 150 for certain mandatory redeemable non-controlling interests. As the Company does not have any of these financial instruments, the adoption of SFAS 150 did not have any impact on the Company’s consolidated financial statements.

In December 2003, the FASB issued Interpretation No. 46R (“FIN 46R”) (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51 (“ARB 51”), which addresses how a business enterprise should evaluate whether it has a controlling interest in an entity through means other than voting rights and accordingly should consolidate the entity. FIN 46R replaces FASB Interpretation No. 46 (FIN 46), which was issued in January 2003. Before concluding that it is appropriate to apply ARB 51 voting interest consolidation model to an entity, an enterprise must first determine that the entity is not a variable interest entity (VIE). The provisions of FIN 46R must be applied for any existing VIE’s by 2005. For VIE’s created after December 31, 2003, the provisions of FIN 46R must be applied immediately. The Company is evaluating the applicability, if any, of this Interpretation.

11. Restatement of Financial Statements

The Company identified certain stock issuances and debt and equity transactions, which it had not recorded in its December 31, 2002 financial statements. This resulted in the Company’s financial statements being restated as of December 31, 2002 as follows:

	As Reported			As Restated

General and administrative expenses	$	644,958		$	744,708

Gain on extinguishment of debt	$	—		$	98,507

Net loss	$	(644,958	)	$	(646,201	)

Common Stock	$	9,190		$	9,397

Additional paid-in capital	$	544,317		$	542,353

Deficit accumulated during development stage	$	(1,215,865	)	$	(1,217,108	)

12. Subsequent Events		On July 30, 2004, the Company became a wholly owned subsidiary of Grant Ventures, Inc. by merging with Impact Acquisition Corporation, a Utah corporation and wholly owned subsidiary of Grant Ventures, Inc. For accounting purposes the merger was treated as a recapitalization of the Company.

		Effective July 30, 2004, the Company reached an agreement with the holders of its related party notes payable to convert the notes to shares of the Company's common stock at a price of $.1835 per share. As a result of the conversion agreement, $1,604 of accrued interest was forgiven and $45,779 of principal was converted into 249,475 shares.

		On April 14, 2004, the Company obtained convertible bridge financing in the amount of $200,000. The holder of the note exercised the conversion rights and converted the principal balance of the note plus accrued interest of $4,219 into 2,720,000 shares of common stock. As the conversion rate was less than the market value of the Company's common stock on the commitment date, a beneficial conversion feature existed. As a result, the Company recognized interest expense of $200,000.

		Effective July 30, 2004, the Company and the holder of its note payable in the amount of $587,753 entered into a debt conversion agreement. Pursuant to the terms of the agreement, the holder agreed to forgive accrued interest of $170,889 and $237,753 of the principal balance of the note, leaving a remaining principal balance of $350,000. The remaining principal balance bears interest at six percent per annum, payable quarterly. The note is due July 30, 2007 and is convertible at the option of the note holder into shares of the Company's common stock at the price of $3.00 per share. The holder was also issued 89,500 warrants with an exercise price of $.01 per share. The warrants were valued at $.03779 per share and were recognized as a reduction of the gain on extinguishment of debt.

		On July 5, 2004, the Company effected a forward stock split of 3.58 shares to 1. As a result of the split, the outstanding common stock of Impact Diagnostics increased from 9,793,497 to 35,060,720 shares. The effects of the forward split have been reflected in the statement of stockholders' deficit as if it had occurred at the beginning of the periods presented.

IMPACT DIAGNOSTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

Balance Sheet

(Unaudited)

	June 30, 2004
Assets

Current assets - Cash	$	13,093

Accounts Receivable - Trade	4,000
Employee receivables	1,119
Related party receivables	2,110
Property and equipment, net of accumulated depreciation of $10,040	7,711
Deposits	700

Total assets	$	28,733



Liabilities and Stockholders’ Deficit

Accounts payable	$	83,385
Accounts payable - stockholder	—
Accrued interest payable	179,755
Accrued wages payable	34,800
Accrued payroll liabilities	5,678
Related party notes payable	45,779
Notes Payable	910,253		(1)

Total current liabilities	1,259,650

Related party notes payable	—

Total liabilities	1,259,650

Commitments and contingencies	—

Stockholders’ deficit:
Common stock, 35,060,720 shares issued and outstanding	35,061		(2)
Additional paid in capital	669,259

Deficit accumulated during development stage	(1,935,237		)

Total stockholders’ deficit:	(1,230,917		)

	$	28,733

IMPACT DIAGNOSTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

Statement of Operations

(Unaudited)

	For the Six Months Ended June 30, 2004			For the Six Months Ended June 30, 2003

Revenues	$	—		$	—

General and administrative expenses	425,482			76,466

Other (income) expense:
Interest expense	38,765			31,951

Net income (loss) before income taxes	464,247			(108,417		)

Income tax benefit	—			—

Net income (loss)	$	464,247		$	(108,417	)

Net income (loss) per common share - basic and diluted(2)	$	(0.01	)	$	(0.00)

Weighted average shares - basic and diluted(2)	34,701,000			33,641,000

IMPACT DIAGNOSTICS, INC.

(A DEVELOPMENT STAGE COMPANY)

Statement of Cash Flows

(Unaudited)

	For the Six Months Ended June 30, 2004			For the Six Months Ended June 30, 2003
Cash flows from operating activities:
Net income (loss)	$	(464,247	)	$	(108,417	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization	1,853			1,853
Common stock issued for services	12,570			—
Decrease (increase) in:
Accounts receivable	(4,000		)	—
Deposits	—			(700		)
Increase (decrease) in:
Accounts payable	49,955			(36,464		)
Accrued payroll liabilities	(10,817		)	18,110
Accrued interest payable	37,669			29,388

Net cash provided by (used in) operating activities	(377,017		)	(96,230		)

Cash flows from investing activities:
Purchase of property and equipment	(2,852		)	—
(Increase) decrease in other receivables	11,939			(5,512		)
(Increase) decrease in employee receivable	32,224			(2,185		)

Net cash provided by (used in) investing activities	41,311			(7,697		)

Cash flows from financing activities:
Issuance of common stock	20,000			—
Proceeds from note payable	322,500			90,000
Proceeds from related party notes payable	—			—
Payments on related party notes payable	(5,000		)	(10,963		)
Collections on stock subscriptions receivable	—			—

Net cash provided by (used in) financing activities	337,500			79,037

Net increase (decrease) in cash and cash equivalents	1,794			(24,890		)

Cash and cash equivalents at beginning of period	11,299			34,685

Cash and cash equivalents at end of period	$	13,093		$	9,795

NOTES TO UNAUDITED FINANCIAL STATEMENTS OF IMPACT DIAGNOSTICS, INC.

(1) Includes a note payable in the amount of $200,000 that was secured by certain assets of Impact Diagnostics. Subsequent to June 30, 2004, an additional $50,000 was loaned to Impact Diagnostics that was also secured by certain assets of Impact Diagnostics. In connection with the Merger, these notes payable were converted into equity of the Company, and the security interest in the assets of Impact Diagnostics was extinguished.

(2) On July 5, 2004, Impact Diagnostics effected a forward stock split of 3.58 shares to 1. As a result of the split, the outstanding common stock of Impact Diagnostics increased from 9,793,497 to 35,060,720 shares. The share numbers included in these financial statements of Impact Diagnostics have been adjusted to reflect the stock split.

(3) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The interim financial information of Impact Diagnostics, Inc. (the "Company") as of June 30, 2004 and for the six months ended June 30, 2004 and June 30, 2003 included herein is unaudited. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements. Accordingly, they omit or condense footnotes and certain other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments that are necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the six month period ended June 30, 2004 is not necessarily indicative of the results that can be expected for the entire year ending December 31, 2004. The unaudited financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2003.

Net Loss Per Common Share

Basic net loss per common share ("Basic EPS") is computed by dividing net loss available to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per common share ("Diluted EPS") is computed by dividing net loss by the sum of the weighted average number of shares of common stock outstanding and the weighted average dilutive common share equivalents then outstanding. The computation of Diluted EPS does not assume exercise of securities that would have an anti-dilutive effect. Common share equivalents consist of shares issuable upon the exercise of common stock options and warrants. 750,000 shares of common stock issuable upon exercise of options and warrants were not included in the calculation of diluted net loss per share because their effect was anti-dilutive.

GRANT VENTURES, INC.

(A DEVELOPMENT STAGE COMPANY)

Pro Forma Balance Sheet

(Unaudited)

	Grant June 30, 2004			Impact June 30, 2004			Adjustments June 30, 2004			Proforma June 30, 2004
Assets

Current assets - Cash	$	—		$	13,093		$	1,494,937	(b)	$	1,508,030
Accounts Receivable - Trade	—			4,000			—			4,000
Employee receivables	—			1,119			—			1,119
Related party receivables	—			2,110			—			2,110
Property and equipment, net of accumulated depreciation of $10,040, respectively	—			7,711			—			7,711
Deposits	—			700			—			700

Total assets	$	—		$	28,733		$	1,494,937		$	1,523,670


Liabilities and Stockholders’ Equity (Deficit)

Accounts payable	$	20,034		$	83,385		$	—		$	103,419
Accounts payable - stockholder	39,778			—			—			39,778
Accrued interest payable	—			179,755			(1,604		)(c)	3,043
							(4,219		)(d)
							(170,889		)(e)
Accrued wages payable	—			34,800			—			34,800
Accrued payroll liabilities	—			5,678			—			5,678
Related party notes payable	—			45,779			(45,779		)(c)	—
Notes Payable	—			910,253			(200,000		)(d)	472,500
							(237,753		)(e)

Total current liabilities	59,812			1,259,650			(660,244		)	659,218

Total liabilities	59,812			1,259,650			(660,244		)	659,218

Commitments and contingencies	—			—			—			—

Stockholders’ equity (deficit):
Common stock, 53,590,821 shares issued and outstanding(g)	6,000			35,061			9,561		(b)	53,591
							249		(c)
							2,720		(d)
Additional paid in capital	178,689			669,259			1,485,376		(b)	2,539,234
							(244,501		)(a)
							45,530		(c)
							201,499		(d)
							200,000		(d)
							3,382		(e)
Deficit accumulated during development stage	(244,501		)	(1,935,237		)	244,501		(a)	(1,728,373		)
							1,604		(c)
							(200,000		)(d)
							408,642		(e)
							(3,382		)(e)

Total stockholders’ equity (deficit):	(59,812		)	(1,230,917		)	2,155,181			864,452

	$	—		$	28,733		$	1,494,937		$	1,523,670

GRANT VENTURES, INC.

(A DEVELOPMENT STAGE COMPANY)

Pro Forma Statement of Operations

(Unaudited)

	Grant For the Six Months Ended June 30, 2004			Impact For the Six Months Ended June 30, 2004			Adjustments For the Six Months Ended June 30, 2004			Proforma For the Six Months Ended June 30, 2004

Revenues	$	—		$	—		$	—		$	—

General and administrative expenses	19,403			425,482			(19,403		)(a)	425,482


Other (income) expense:
Gain on extinguishment of debt	—			—			(1,604		)(c)	(406,864		)
							(408,642		)(e)
							3,382		(e)
Interest expense	1,752			38,765			(1,752		)(a)	238,765
							200,000		(d)


Net income (loss) before income taxes	(21,155		)	(464,247		)	228,019			(257,383		)

Income tax benefit (expense)	—			—			—			—

Net income (loss)	$	(21,155	)	$	(464,247	)	$	228,019		$	(257,383	)


Net income (loss) per common share - basic and diluted(f)										$	(0.01	)

Weighted average shares - basic and diluted(f)										40,701,000

GRANT VENTURES, INC.

(A DEVELOPMENT STAGE COMPANY)

Pro Forma Statement of Operations

(Unaudited)

	Grant Year Ended December 31, 2003			Impact Year Ended December 31, 2003			Adjustments Year Ended December 31, 2003			Proforma Year Ended December 31, 2003

Revenues	$	—		$	—		$	—		$	—

General and administrative expenses	8,643			189,928			(8,643		)	189,928

Other (income) expense:
Interest expense	2,965			63,953			(2,965		)	63,953

Net income (loss) before income taxes	(11,608		)	(253,881		)	11,608			(253,881		)

Income tax benefit	—			—			—			—

Net income (loss)	$	(11,608	)	$	(253,881	)	$	11,608		$	(253,881	)

Net income (loss) per common share - basic and diluted(f)										$	(0.01	)

Weighted average shares - basic and diluted(f)										39,842,000

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

(a) The unaudited pro forma balance sheet at June 30, 2004 gives effect to the Merger (on July 30, 2004) of Impact Acquisition Corporation, a wholly owned subsidiary of the Company, into Impact Diagnostics, Inc. (a development stage company). The unaudited pro forma consolidated balance sheet as of June 30, 2004 estimates the pro forma effect of the Merger as if it had been consummated on June 30, 2004. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2003 and the six months ended June 30, 2004 estimate the pro forma effect of the Merger as if it had been consummated at the beginning of the respective periods.

(b) The unaudited pro forma balance sheet at June 30, 2004 gives effect to the issuance by the Company in a private placement of 1,912,125 units (9,560,625 shares), at a purchase price of $0.9175 per unit ($0.1835 per share). Each unit is comprised of five (5) shares of the Company’s common stock and a warrant to purchase one (1) share of the Company’s common stock at an exercise price of $0.18 per share. The net proceeds to the Company were $1,494,937 after payment of legal and financial consultant fees. After the Merger, the Company will have outstanding options and warrants to purchase 8,700,982 shares of Common Stock.

Gross proceeds from issuance of common stock	$	1,754,375
Less: Costs of issuance i.e. legal, financial, travel	259,438
Net proceeds in cash to Company	$	1,494,937

(c) Impact Diagnostics, Inc. has reached an agreement with affiliates who held notes payable to convert their notes to shares at a price of $.1835 per share. The conversion agreement has an effective date of July 30, 2004 and includes a waiver of the related accrued interest on these notes payable. As result of the conversion agreement, $1,604 of interest was forgiven and $45,779 of principal was converted into 249,475 shares.

(d) Impact Diagnostics, Inc. has a bridge loan with conversion rights in the amount of $200,000. The lender has exercised the conversion of its note and accrued interest of $4,219 into 2,720,000 shares in connection with the Merger. As the conversion rate was less than the market price on the loan commitment date, a beneficial conversion feature existed. Calculation of the beneficial conversion feature resulted in an amount in excess of the debt, and as a result the Company is recognizing interest expense in the amount of $200,000 as the beneficial conversion feature cannot exceed the value of the debt.

(e) In connection with the Merger, Impact Diagnostics entered into a debt conversion agreement with Citadel Capital Management to convert Citadel’s convertible note to stock at a conversion price of $.8379 per share. In connection with this agreement, Citadel Capital Management agreed to forgive the accrued interest of $170,889 and $237,753 of the original principal, leaving a remaining balance of $350,000. Citadel Capital Management was also given 89,500 warrants to purchase additional shares at a price of $.01 per share. These warrants have an option value of $.03779 per share and have been recognized as a reduction of the gain on extinguishment of debt.

(f) In connection with the Merger, on July 5, 2004, Impact Diagnostics, Inc. effected a forward stock split of 3.58 shares to 1. As a result of the split, the outstanding common stock of Impact Diagnostics increased from 9,793,497 to 35,060,720 shares. Pursuant to the Merger Agreement, each share of Impact Diagnostics common stock was exchanged for one share of Grant Ventures common stock. All numbers in the pro forma financial statements have been adjusted to reflect the stock split.

(g) Prior to the Merger, the Company had 50,000,000 authorized shares of common stock, par value $0.001 per share, and Impact Diagnostics had 100,000,000 authorized shares of common stock, par value $0.001 per share. The Company plans to amend its articles of incorporation to increase its authorized shares of common stock to 100,000,000. These share numbers included in the pro forma financial statements assume that the Board of Directors and the stockholders of the Company have approved this increase in the authorized capital of the Company.

PART II — INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24. INDEMNIFICATION OF OFFICERS AND DIRECTORS

Under the Nevada Revised Statutes and our Amended and Restated Articles of Incorporation, our directors and officers will have no individual liability to us or our stockholders or creditors for any damages resulting from the officer's or director’s act or failure to act in his or her capacity as an officer or director unless it is proven that (i) the officer's or director’s act or failure to act constituted a breach of his or her fiduciary duties as an officer or director; and (ii) the officer's or director’s breach of those duties involved intentional misconduct, fraud or a knowing violation of law. The effect of this statute and our Amended and Restated Articles of Incorporation is to eliminate the individual liability of our officers and directors to the corporation or its stockholders or creditors, unless any act or failure to act of an officer or director meets both situations listed in (i) and (ii) above.

Our Amended and Restated Articles of Incorporation provide for the indemnification of our officers and directors to the maximum extent permitted by Nevada law. The Nevada Revised Statutes also provide that a corporation may indemnify any officer or director who is a party or is threatened to be made a party to a litigation by reason of the fact that he or she is or was an officer or director of the corporation, or is or was serving at the request of the corporation as an officer or director of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such officer or director if (i) there was no breach by the officer or director of his or her fiduciary duties to the corporation involving intentional misconduct, fraud or knowing violation of law; or (ii) the officer or director acted in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

These provisions of our Amended and Restated Articles of Incorporation become effective 20 days after the Information Statement is first mailed to our stockholders.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the fees and expenses the Company expects to incur in connection with the issuance and distribution of the securities being registered. With the exception of the SEC registration fee, all amounts are estimates.

Securities and Exchange Commission Registration Fee	$	2,152
Printing Fees and Expenses	$	20,000
Legal Fees and Expenses	$	35,000
Accounting Fees and Expenses	$	10,000
Miscellaneous	$	10,000

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

On July 30, 2004, in connection with the Merger, we issued 30,565,246 shares of our common stock and options and warrants to purchase 6,972,754 shares of our common stock to the holders of common stock, convertible notes and options to purchase common stock of Impact Diagnostics immediately prior to the Merger. Upon effectiveness of the increase in our authorized common stock, we will issue 7,464,950 shares of our common stock to certain stockholders of Impact Diagnostics who were entitled to receive shares of our common stock in the Merger. The shares, options and warrants issued in connection with the Merger were issued in reliance upon the exemption from registration under Rule 4(2) of the Securities Act.

Between July 30 and August 19, 2004, we sold a total of 1,912,125 units, at a purchase price of $0.9175 per unit ($0.1835 per share), resulting in gross proceeds to the Company of $1,754,375. Each unit is comprised of five (5) shares of our common stock and a warrant to purchase one (1) share of our common stock at an exercise price of $0.18 per share. The units were sold to individuals and institutional investors, all of whom were “accredited investors”, as defined by Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”). The securities sold in the financing were sold in reliance upon the exemption from registration under Rule 506 of Regulation D promulgated under the Securities Act. Each of the investors represented to us that the investor was an accredited investor and represented to us the investor’s intention to acquire our securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof.

In August 2004, we issued 2,670,000 warrants to Duncan Capital Group LLC as compensation for acting as our financial advisor in connection with the Merger. In August 2004, we issued 306,199 warrants to Duncan Capital LLC as compensation for acting as our placement agent in connection with the sale of our units in a private financing. The warrants have an exercise price of $0.18 per share. The warrants issued to Duncan Capital Group LLC and Duncan Capital LLC were issued in reliance upon the exemption from registration under Rule 4(2) of Securities Act.

ITEM 27. EXHIBITS

Exhibit No.		Description

2.1		Agreement and Plan of Merger, dated as of July 6, 2004, by and among Grant Ventures, Inc., Impact Acquisition Corporation and Impact Diagnostics, Inc.

3.1		Articles of Incorporation of North Ridge Corporation, filed with the Secretary of State of Nevada on January 31, 2000.

3.2		Certificate of Amendment to Articles of Incorporation of North Ridge Corporation, changing its name to Grant Ventures, Inc. and changing its authorized capital to 50,000,000 shares, par value $0.001 per share, filed with the Secretary of State of Nevada on May 30, 2001.

3.3		Form of Amended and Restated Articles of Incorporation of Grant Ventures, Inc.

3.4		Articles of Merger for the merger of Grant Ventures, Inc. (Idaho) and Grant Ventures, Inc. (Nevada), filed with the Secretary of State of Nevada on July 9, 2001.

3.5		Bylaws of Grant Ventures, Inc.*

4.1		Securities Purchase Agreement between Grant Ventures, Inc. and the purchasers party thereto.

4.2		Registration Rights Agreement between Grant Ventures, Inc. and the purchasers party thereto.

4.3		Form of Common Stock Purchase Warrant.

5.1		Opinion*

10.1		6% Convertible Promissory Note in the amount of $350,000, dated as ofJuly 23, 2004, between Impact Diagnostics, Inc. and James H. Donell, as receiver of Citadel Capital Management, Inc.

10.2		Warrant, dated July 23, 2004, of James H. Donell, as receiver of Citadel Capital Management, Inc., to purchase 89,500 shares of common stock of Impact Diagnostics, Inc.

10.3		Letter Agreement, dated July 1, 2004, between Impact Diagnostics, Inc. and Duncan Capital LLC

10.4		Letter Agreement, dated July 1, 2004, between Impact Diagnostics, Inc. and Michael Ahlin.

10.5		Letter Agreement, dated July 1, 2004, between Impact Diagnostics, Inc. and Dr. Mark Rosenfeld.

10.6		2004 Stock Incentive Plan of Grant Ventures, Inc.

10.7		Incentive Stock Option Agreement, dated as of July 6, 2004, between Impact Diagnostics, Inc. and Stan Yakatan.

10.8		Incentive Stock Option Agreement, dated as of July 6, 2004, between Impact Diagnostics, Inc. and John C. Wilson.

10.9		Employment Agreement between Michael L. Ahlin and Impact Diagnostics, Inc., dated January 1, 2004, as amended by the Amendment of Employment Agreement, dated July 1, 2004.

10.10		Employment Agreement between Mark J. Rosenfeld and Impact Diagnostics, Inc., dated January 1, 2004, as amended by the Amendment of Employment Agreement, dated July 1, 2004.

10.11		Exclusive License Agreement between Impact Diagnostics Incorporation and Dr. Yao Xiong Hu, M.D., dated July 20, 2004.*

16.1		Letter dated August 30, 2004 from HJ & Associates, LLC to the Securities and Exchange Commission.

21.1		Subsidiaries of Grant Ventures, Inc.

23.1		Consent of Tanner + Co.

23.2		Consent of Brown Raysman Millstein Felder & Steiner LLP.

* To be filed by amendment.

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 SB-2 and authorized this registration statement to be signed on its behalf by the undersigned, in the city of Los Angeles, state of California on September 30, 2004.

		GRANT VENTURES, INC.


		By:	/s/ Stan Yakatan
			Stan Yakatan
			President and Chief Executive Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Stan Yakatan and John C. Wilson, and each or either of them, his true and lawful attorneys-in-fact, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities to sign any and all amendments (including post-effective amendments) to this registration statement and to sign a registration statement pursuant to Section 462(b) of the Securities Act of 1933, and to file the same with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

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 dates stated:

Signature	Title	Date

/s/ Stan Yakatan Stan Yakatan	President, Chief Executive Officer and Chairman of the Board of Directors	September 30, 2004

/s/ John C. Wilson John C. Wilson	Chief Financial Officer and Chief Accounting Officer	September 30, 2004

/s/ Michael Ahlin Michael Ahlin	Director	September 30, 2004

/s/ Dr. Mark Rosenfeld Dr. Mark Rosenfeld	Director	September 30, 2004

/s/ Jack Levine Jack Levine	Director	September 30, 2004

/s/ Kevin Crow Kevin Crow	Director	September 30, 2004

/s/ Eric Wilkinson Eric Wilkinson	Director	September 30, 2004

EX-2.1 2 a2143868zex-2_1.htm EXHIBIT 2.1

Exhibit 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

among

Grant Ventures, Inc.,

Impact Acquisition Corporation,

and

Impact Diagnostics, Inc.

Dated as of July 6, 2004

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER dated as of July 6, 2004 (this “Agreement”) by and among Grant Ventures, Inc., a Nevada Corporation (“Parent”), Impact Acquisition Corporation, a Utah corporation (“Merger Sub”) and Impact Diagnostics, Inc., a Utah corporation (“Company”).

W I T N E S S E T H:

WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the Company have deemed it advisable and in the best interests of Parent, Merger Sub and the Company, as the case may be, and their respective stockholders that Merger Sub merge with and into the Company with the Company being the Surviving Corporation (as defined herein) in accordance with the terms and conditions of this Agreement (the “Merger”), and have approved this Agreement and the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are acknowledged, the parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.1 Definitions . The following terms, as used herein, have the following meanings:

“14f-1 Statement” has the meaning set forth in Section 6.9 hereof.

“Affiliate” has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act.

“Agreement” or “this Agreement” shall mean, and the words “herein”, “hereof” and “hereunder” and words of similar import shall refer to, this agreement, and all Exhibits and Schedules hereto, as the same from time to time may be amended.

“Articles of Merger” has the meaning set forth in Section 2.2 hereof.

“BrewServ” has the meaning set forth in Section 4.2(c) hereof.

“Business Day” means any day of the year other than (i) any Saturday or Sunday or (ii) any other day on which commercial banks located in Salt Lake City, Utah are closed or authorized to be closed for business.

“Certificates” has the meaning set forth in Section 3.2(b) hereof.

“Closing” means the consummation of the Transactions, as provided in Section 2.5 hereof.

“Closing Date” has the meaning set forth in Section 2.5 hereof.

“Code” means the United States Internal Revenue Code of 1986, as amended.

“Company Balance Sheet Date” has the meaning set forth in Section 5.6 hereof.

“Company Confidential Information” means all confidential information concerning the Company or its Affiliates that (i) is not and has not become ascertainable or obtainable from public or published information, (ii) is not received from a third party or is received from a third party pursuant to the authorization of the Company, (iii) was not in Parent or Merger Sub’s possession prior to disclosure thereof to Parent or Merger Sub in connection with the transactions contemplated herein, and (iv) was not independently developed by Parent or Merger Sub.

“Company Financial Statements” means the audited financial statements of the Company as of and for the year ended December 31, 2003 (including all schedules and notes thereto), consisting of the balance sheet, statement of operations, statement of cash flows and statement of stockholders’ equity (deficit) for such periods.

“Company Material Adverse Change” means a change (or circumstance involving a prospective change) that has or can reasonably be expected to have a Company Material Adverse Effect.

“Company Material Adverse Effect” means any change, development, effect, event, condition or occurrence that would reasonably be expected to be materially adverse to the business, assets (including tangible assets), liabilities (contingent or otherwise), financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, or to prevent or materially impede or delay the consummation of the Merger or the other Transactions.

“Company Stock” means the shares of common stock, par value $0.001 per share, of the Company.

“Contract” means any lease, license, loan or credit agreement, indenture, note, bond, agreement, guarantee, permit, concession, franchise or other contract, commitment, instrument, arrangement, understanding, obligation or undertaking, whether oral or written.

“Effective Date” has the meaning set forth in Section 2.2 hereof.

“Effective Time” has the meaning set forth in Section 2.2 hereof.

“Environmental Laws” means all federal, state and local laws, rules and regulations and other requirements which in any way are related to protection of health, safety or the environment (including, without limitation, ambient air, surface water, ground water, land surface or subsurface strata), including, without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of hazardous substances, or otherwise

relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of hazardous substances.

“Escrow Agent” has the meaning set forth in Section 6.7 hereof.

“GAAP” means U.S. generally accepted accounting principles in effect from time to time.

“Governmental Authority” means the government of the United States or any foreign country or any state, local or other political subdivision thereof and any entity, agency, body or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, administrative agency, tribunal or commission.

“IRS” means the Internal Revenue Service.

“Law” means any law, statute, regulation, ordinance, rule, order, decree, judgment, consent decree, settlement agreement or governmental requirement enacted, promulgated, entered into, agreed or imposed by any Governmental Authority.

“Lien” means any mortgage, lien (except for any lien for Taxes not yet due and payable), charge, restriction, pledge, security interest, option, lease or sublease, claim, right of any third party, easement, encroachment or encumbrance.

“Litigation” has the meaning set forth in Section 4.9 hereof.

“Merger” has the meaning set forth in the Recitals.

“Merger Consideration” has the meaning set forth in Section 3.1(c) hereof.

“NASD” means the National Association of Securities Dealers, Inc.

“Nondisclosure Agreement” has the meaning set forth in Section 6.4 hereof.

“Parent Common Stock” means the 50,000,000 shares of common stock, par value $0.001 per share, of Parent.

“Parent Confidential Information” means all confidential information concerning Parent or its Affiliates that (i) is not and has not become ascertainable or obtainable from public or published information, (ii) is not received from a third party or is received from a third party pursuant to the authorization of Parent, (iii) was not in the possession of the Company prior to disclosure thereof to the Company in connection with the transactions contemplated herein, and (iv) was not independently developed by the Company.

“Parent Expenses” has the meaning set forth in Section 6.7 hereof.

“Parent Financial Statements” means (i) the audited financial statements of Parent as of and for the fiscal year ended December 31, 2003 (including all schedules and notes thereto), consisting of the balance sheet, statement of operations and statement of cash flows as of and for

the year ended December 31, 2003 and the statement of stockholders’ equity (deficit) for the period from July 1, 1983 through December 31, 2003; and (ii) the unaudited financial statements of Parent as of and for the three month period ended March 31, 2004 (including all schedules and notes thereto), consisting of the balance sheet, statement of operations and statement of cash flows as of and for the three month period ended March 31, 2004 and the statement of stockholders’ equity (deficit) for the period from July 1, 1983 through March 31, 2004.

“Parent Material Adverse Change” means a change (or circumstance involving a prospective change) that has or can reasonably be expected to have a Parent Material Adverse Effect.

“Parent Material Adverse Effect” means any change, development, effect, event, condition or occurrence that would reasonably be expected to be materially adverse to the business, assets (including tangible assets), liabilities (contingent or otherwise), financial condition or results of operations of Parent and its Subsidiaries, taken as a whole, or to prevent or materially impede or delay the consummation of the Merger or the other Transactions.

“Parent SEC Reports” has the meaning set forth in Section 4.5(a) hereof.

“Person” means any individual, corporation, proprietorship, firm, partnership, limited partnership, limited liability company, limited liability partnership, trust, association or other entity, including a government or government department, agency or instrumentality.

“Placement Agent” has the meaning set forth in Section 6.7 hereof.

“Sarbanes-Oxley Act” has the meaning set forth in Section 4.5(b) hereof.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Subsidiary” means any Person 50.1% or more of the voting power of which is controlled by another Person.

“Surviving Corporation” has the meaning set forth in Section 2.2 hereof.

“Taxes” means all taxes, charges, fees, duties, levies or other assessments, including income, gross receipts, net proceeds, ad valorem, turnover, real and personal property (tangible and intangible), sales, use, franchise, excise, value added, stamp, leasing, lease, user, transfer, fuel, excess profits, occupational, interest equalization, severance, employee’s income and employment tax withholding, other withholding, unemployment taxes, interest, penalties and/or additions to tax attributable thereto, which are imposed by any Governmental Authority.

“Tax Return” means any report, return or other information required to be supplied to a Governmental Authority in connection with any Taxes.

“Transactions” means the Merger and each of the other transactions contemplated by this Agreement.

“Transaction Document” means this Agreement and any other agreement or instrument executed and delivered in connection with this Agreement or the Transactions.

“URBCA” means the Utah Revised Business Corporation Act.

SECTION 1.2 Interpretation . Unless the context otherwise requires, the terms defined in Section 1.1 shall have the meanings herein specified for all purposes of this Agreement, applicable to both the singular and plural forms of any of the terms defined herein. All accounting terms defined in this Article I, and those accounting terms used in this Agreement not defined in Section 1.1, except as otherwise expressly provided herein, shall have the meanings customarily given thereto in accordance with GAAP. Except as otherwise expressly provided herein, all terms used in conjunction with a description of securities shall have the meanings given to those terms under the 1934 Act. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”. The use of the neuter gender herein shall be deemed to include the masculine and feminine genders wherever necessary or appropriate, the use of the masculine gender shall be deemed to include the neuter and feminine genders and the use of the feminine gender shall be deemed to include the neuter and masculine genders wherever necessary or appropriate.

ARTICLE II

THE MERGER

SECTION 2.1 The Merger . Upon the terms and subject to the conditions hereof, Merger Sub shall be merged with and into the Company at the Effective Time (as defined below). Following the Merger, the Company, with all its purposes, objects, rights, privileges, powers and franchises, shall continue, and Merger Sub shall cease to exist.

SECTION 2.2 Effective Time. Articles of merger providing for the merger of Merger Sub with and into the Company (the “Articles of Merger”) shall be duly prepared, executed and filed by the Company, as the surviving corporation (sometimes also referred to as the “Surviving Corporation”), in accordance with the relevant provisions of the URBCA, and the parties hereto shall take all other actions required by law to make the Merger effective. The Merger shall be effective at the time (the “Effective Time”) and on the date (the “Effective Date”) that the properly executed Articles of Merger are duly filed with the Secretary of State of Utah in accordance with the URBCA; provided, however, that by mutual consent of the parties, such Articles of Merger may provide for a later date of effectiveness of the Merger not more than thirty (30) days after such filing.

SECTION 2.3 Effects of the Merger. The Merger shall have the effects set forth in the URBCA. As of the Effective Time, the Surviving Corporation shall become a wholly owned subsidiary of Parent. The Articles of Incorporation and bylaws of the Company shall be the Articles of Incorporation and bylaws of the Surviving Corporation unless and until amended in accordance with their terms and as provided by law.

SECTION 2.4 Directors and Officers. From and after the Effective Time, the directors of the Company immediately prior to the Effective Time will be the directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time will be the officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified, or until their earlier death, removal or resignation.

SECTION 2.5 Closing. The closing of the Transactions (the “Closing”) shall take place at the offices of Brown Raysman Millstein Felder & Steiner LLP, 900 Third Avenue, New York, New York, at 10:00 a.m. (EST), as soon as practicable after the receipt by the Company of confirmation from the Utah Secretary of State that the Articles of Merger have been approved as filed, or at such other time and place upon which the parties hereto may agree (the time and date of the Closing being hereinafter called the “Closing Date”). All transactions consummated at the Closing shall be deemed to have taken place simultaneously and shall be deemed to be effective as of the Closing Date.

ARTICLE III

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES

SECTION 3.1 Effect on Capital Stock. As of the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or any holder of any of the following securities:

(a) Capital Stock of Merger Sub. Each issued and outstanding share of capital stock of Merger Sub shall be converted into and become one fully paid and non-assessable share of common stock, par value $0.001, of the Surviving Corporation.

(b) Cancellation of Company Owned Stock. Each share of Company Stock that is held in the treasury of the Company shall automatically be canceled and retired and shall cease to exist, and no consideration shall be delivered in exchange therefor.

(c) Conversion of Company Stock. Each share of Company Stock (other than shares of Company Stock to be canceled in accordance with Section 3.1(b)) shall be converted into the right to receive one (1) share of Parent Common Stock (the “Merger Consideration”). As of the Effective Time, all shares of Company Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such shares of Company Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration.

(d) Conversion of Company Options. Each option to purchase one share of Company Stock shall be converted into the right to receive an option to purchase one (1) share of Parent Common Stock. As of the Effective Time, all options to purchase shares of Company Stock shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of any such options to purchase shares of Company Stock shall cease to have any rights with respect thereto, except the right to receive options to purchase shares of Parent Common Stock, as described in the preceding sentence.

(e) As a result of the Merger, the holders of capital stock of the Company and the holders of options to purchase capital stock of the Company immediately prior to the Effective Time will own in the aggregate 89% of the outstanding common stock of Parent and 91% of the common stock of Parent assuming the conversion of all outstanding convertible notes and the exercise of all outstanding options and warrants of Parent immediately following the Effective Time.

SECTION 3.2 Exchange of Certificates.

(a) Exchange Shares. Immediately following the Effective Time and from time to time thereafter, Parent shall make available, or cause the Surviving Corporation to make available, shares of Parent Common Stock in an amount and at the times necessary for the payment of the Merger Consideration upon surrender of certificates representing shares of Company Stock as part of the Merger pursuant to Section 3.1 (other than Company Stock to be canceled in accordance with Section 3.1(b)). The shares of Parent Common Stock issuable with respect to shares of Company Stock in the Merger shall be deemed to have been issued at the Effective Time.

(b) Exchange Procedure. As soon as reasonably practicable after the Effective Time, Parent shall, or cause the Surviving Corporation or its agent to, mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented shares of Company Stock (other than Company Stock to be canceled in accordance with Section 3.1(b)) (the “Certificates”): (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to Parent, or its agent, and shall be in a form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration. Upon surrender of a Certificate for cancellation to the Surviving Corporation or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by Parent, the holder of such Certificate shall be entitled to receive in exchange therefor the number of shares of Parent Common Stock into which the shares of Company Stock theretofore represented by such Certificate shall have been converted pursuant to Section 3.1, and the Certificate so surrendered shall forthwith be canceled. In the event of a transfer of ownership of shares of Company Stock that is not registered in the transfer records of the Company, payment may be made to a Person other than the Person in whose name the Certificate so surrendered is registered, if such Certificate shall be properly endorsed, and otherwise be in proper form for transfer and the Person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a Person other than the registered holder of such Certificate or establish to the satisfaction of the Surviving Corporation that such

tax has been paid or is not applicable. Until surrendered as contemplated by this Section 3.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the number of shares of Parent Common Stock into which the shares of Company Stock theretofore represented by such Certificate shall have been converted pursuant to Section 3.1. No interest will be paid or will accrue on any cash payable upon the surrender of any Certificate. In the event any Certificate shall have been lost, stolen or destroyed, Parent may, in its discretion and as a condition precedent to the payment of the Merger Consideration in respect of the shares represented by such Certificate, require the owner of such lost, stolen or destroyed Certificate to deliver either (i) a bond in such sum as Parent may reasonably direct or (ii) a reasonable indemnity against any claim that may be made against Parent or the Surviving Corporation or their agents.

(c) Distributions with Respect to Unexchanged Shares. No dividends or other distributions declared or made after the Effective Time with respect to Parent Common Stock shall be paid to the holder of any unsurrendered Certificate until the holder of record of such Certificate shall surrender such Certificate. Subject to the effect of applicable Laws, following surrender of any such Certificate, there shall be issued and paid to the record holder of the Certificate, at the time of such surrender, the amount of any such dividends or other distributions declared or made after the Effective Time with respect to Parent Common Stock, without interest.

(d) No Further Ownership Rights in Company Stock. All shares of Parent Common Stock exchanged upon the surrender of Certificates in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Stock theretofore represented by such Certificates. At the Effective Time, the stock transfer books of the Company shall be closed, and there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the shares of Company Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates are presented to the Surviving Corporation or Parent for any reason, they shall be canceled and exchanged as provided in this Article III.

(e) No Fractional Securities. No certificates or scrip representing fractional shares of Parent Common Stock shall be issued in connection with the Merger, and such fractional interest shall not entitle the owner thereof to vote or to any rights of a stockholder. In lieu of any such fractional shares, each holder of Company Stock who would otherwise have been entitled to a fraction of a share of Parent Common Stock upon surrender of stock certificates for exchange pursuant to this Article III shall be paid cash upon such surrender in an amount equal to the product of such fraction multiplied by the Merger Consideration.

(f) No Liability. Neither Parent nor the Surviving Corporation shall be liable to any holder of shares of Company Stock for any Merger Consideration or cash properly and legally delivered to a public official pursuant to any abandoned property, escheat or similar law.

SECTION 3.3 Withholding Rights. Each of the Surviving Corporation and Parent (and their agents, if applicable) shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Stock such amounts as it is required to deduct and withhold with respect to the making of such payment

under the Code, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by the Surviving Corporation or Parent, as the case may be, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Stock in respect of which such deduction and withholding were made by the Surviving Corporation or Parent, as the case may be.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Each of Parent and Merger Sub hereby, jointly and severally, represents and warrants to the Company, as of the date of this Agreement and on the Effective Date (except as otherwise provided herein), as follows:

SECTION 4.1 Organization and Qualification. Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each of Parent and Merger Sub is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in jurisdictions where the failure to be so duly qualified or licensed and in good standing would not in the aggregate be reasonably likely to result in a Parent Material Adverse Effect. Parent has heretofore delivered to the Company accurate and complete copies of the Articles of Incorporation and bylaws, as currently in effect, of each of Parent and Merger Sub.

SECTION 4.2 Capitalization.

(a) The authorized capital stock of Parent consists of fifty million (50,000,000) shares of common stock, par value $0.001 per share, of which, as of the date of this Agreement, six million (6,000,000) shares are issued and outstanding, and all of which are validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, call option, preemptive right, right of first refusal, subscription or any similar right.

(b) The authorized capital stock of Merger Sub consists of one hundred (100) shares of common stock, par value $0.01 per share, of which one hundred (100) shares are issued and outstanding, and all of which are owned by Parent.

(c) Except as disclosed on Schedule 4.2(c) and except for Parent’s ownership of Merger Sub, neither Parent nor Merger Sub owns, directly or indirectly, any capital stock or other equity or other securities of any Person or has any other direct or indirect equity, voting or other ownership interest in any business or Person. The only Subsidiary owned by Parent since July 1, 1983 was BrewServ Corporation, an Ohio Corporation (“BrewServ”), and its subsidiaries Mimo Development, Inc., Buckley Brewing Company and The Cider People, Inc., which Parent acquired on October 30, 1997. On July 27, 1999, pursuant to an order of the Third Judicial Court in and for Salt Lake County, State of Utah, the acquisition of BrewServ by Parent was rescinded. There are not now, and at the Effective Time there will not be, any voting trusts or other

agreements or understandings to which either Parent or Merger Sub, or to their knowledge any other Person, is a party or is bound with respect to the voting of the capital stock of Parent or Merger Sub. Except as set forth in this Section 4.2, there are no Contracts of any kind to which either Parent or Merger Sub is a party or by which either Parent or Merger Sub is bound (i) obligating either Parent or Merger Sub to issue, grant, deliver or sell, or cause to be issued, granted, delivered or sold, additional shares of capital stock of, or other securities or equity or voting interests in, Parent or Merger Sub, (ii) obligating Parent or Merger Sub to enter into any such Contracts, or (iii) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of Parent Common Stock. There are no outstanding contractual or other obligations of either Parent or Merger Sub to repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity or voting interests in, either Parent or Merger Sub.

SECTION 4.3 Authority Relative to the Agreement. Each of Parent and Merger Sub has all requisite power and authority to execute and deliver this Agreement and each other Transaction Document to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each other Transaction Document and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite corporate action on the part of Parent and Merger Sub, and no other corporate proceedings on the part of either Parent or Merger Sub are necessary to approve this Agreement or any other Transaction Document or to authorize and consummate the transactions contemplated hereby and thereby. Without limiting the foregoing, no approval of the stockholders of Parent is required to consummate the Merger or the Transactions. This Agreement and each other Transaction Document has been duly and validly executed and delivered by each of Parent and Merger Sub and constitutes the valid and binding obligation of each of Parent and Merger Sub, enforceable against the each of Parent and Merger Sub in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy and other similar laws affecting the rights of creditors generally and (b) rules of law or equity governing specific performance, injunctive relief and other equitable remedies.

SECTION 4.4 Consents and Approvals; No Violations. Except as otherwise provided in Schedule 4.4 and for the filing and recordation of the Articles of Merger, as required by the URBCA, no filing with, and no permit, authorization, consent or approval of, any Governmental Authority or any other Person is necessary for the consummation by Parent and Merger Sub of the Transactions. Except as set forth in Schedule 4.4, neither the execution and delivery of this Agreement or any other Transaction Document by Parent or Merger Sub nor the consummation by Parent or Merger Sub of the Transactions nor compliance by Parent or Merger Sub with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Articles of Incorporation or bylaws of Parent or Merger Sub, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any Contract to which Parent or Merger Sub is a party or by which it or any of its properties or assets may be bound, or (iii) violate any order, writ, injunction, decree, statute, treaty, rule or regulation applicable to Parent or Merger Sub or any of their respective properties or assets.

SECTION 4.5 SEC Reports.

(a) Parent has filed with the SEC, and has heretofore made available to Parent true and complete copies of, all reports, schedules, forms, statements and other documents required to be filed with the SEC (collectively, the “Parent SEC Reports”).

(b) As of its respective date, each Parent SEC Report complied in all material respects with the requirements of the Securities Act and the Securities Exchange Act, as the case may be, and, to the extent not included in the Securities Act or the Securities Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the rules and regulations of the SEC promulgated thereunder applicable to such Parent SEC Report, and did not when filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

(c) The financial statements of Parent included in the Parent SEC Reports when filed complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, were prepared in accordance with GAAP (except, in the case of unaudited statements, as permitted by Form 10-QSB of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented the financial position of Parent as of the dates thereof and the results of its operations, cash flows and stockholders’ equity (deficit) for the periods shown (subject, in the case of unaudited statements, to the absence of certain notes to the financial statements and to normal year-end audit adjustments).

(d) Each of the principal executive officer of Parent and the principal financial officer of Parent (or each former principal executive officer of Parent and each former principal financial officer of Parent, as applicable) has made all certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act and the rules an regulations of the SEC promulgated thereunder with respect to the Parent SEC Reports. For purposes of the preceding sentence, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.

SECTION 4.6 No Undisclosed Liabilities.

(a) Except as and to the extent set forth in the Parent Financial Statements and on Schedule 4.6, neither Parent nor Merger Sub has, as of the date hereof, or will have at Closing, any liabilities, debts or obligations of any nature, whether accrued, absolute, contingent or otherwise, whether due or to become due.

(b) No claims were made against Parent by any creditor of BrewServ, Mimo Development, Inc., Buckley Brewing Company or The Cider People, Inc., or by any other Person in the United States Bankruptcy Court for the Southern District of Ohio, under the United States Bankruptcy Code, or otherwise with respect to any liabilities, obligations, debts or any other matters related to BrewServ, Mimo Development, Inc., Buckley Brewing Company, The Cider People, Inc., or otherwise.

SECTION 4.7 Absence of Certain Changes. Except as set forth on Schedule 4.7, since December 31, 2003, Parent has not taken any of the prohibited actions set forth in Section 6.1, suffered any Parent Material Adverse Change or entered into any transaction, or conducted any business or operations. Parent has not operated any business since July 27, 1999 and, except as set forth on Schedule 4.7, Parent has never operated any business.

SECTION 4.8 No Default. Except as set forth on Schedule 4.8, neither Parent nor Merger Sub is in default or violation (and no event has occurred which with notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its Articles of Incorporation or its bylaws or (ii) any order, writ, injunction, decree, statute, rule or regulation applicable to Parent or Merger Sub.

SECTION 4.9 Litigation. Except as set forth on Schedule 4.9, there is no claim, action, suit, charge, proceeding, investigation or review (collectively, “Litigation”) pending or, to the knowledge of Parent or Merger Sub, threatened involving or affecting Parent or Merger Sub or any of their assets or properties, at law or in equity, or which may prevent or delay the consummation of the Transactions.

SECTION 4.10 Compliance with Applicable Law. Except as disclosed on Schedule 4.10 attached hereto, Parent and Merger Sub are in compliance with all applicable Laws, including, but not limited to, the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder.

SECTION 4.11 Assets. Except as set forth on Schedule 4.11, neither Parent nor Merger Sub has any assets. Each of Parent and Merger Sub, as the case may be, has good and marketable title to those assets listed on Schedule 4.11, free and clear of all Liens.

SECTION 4.12 Taxes. Parent and all its Subsidiaries have duly filed all federal, state, local and foreign tax returns required to be filed by Parent or any of such Subsidiaries, and Parent has duly paid or caused to be paid or made adequate provision in its financial statements for the payment of all Taxes required to be paid in respect of the periods covered by such returns and has made adequate provision for payment of all Taxes anticipated to be payable in respect of all taxable periods since the periods covered by such returns and ending with the Effective Date. None of the income tax returns required to be filed by Parent with any Governmental Authority has ever been examined by the government agencies responsible for auditing such returns. There are no Liens filed or issues or claims asserted for Taxes by any taxing authority on the assets of Parent or any of its Subsidiaries. Except as set forth in Schedule 4.12 attached hereto, there are no outstanding agreements or waivers extending the statutory period of limitation applicable to any income tax return of Parent.

SECTION 4.13 Environmental Matters.

(a) Parent and all of its Subsidiaries are and have at all times been in compliance with all applicable Environmental Laws, and neither Parent nor Merger Sub has received any (i) communication that alleges that either Parent or Merger Sub is in violation of, or has liability under, any Environmental Law, (ii) written request for information pursuant to any Environmental Law, or (iii) notice regarding any requirement that is proposed for adoption or

implementation under any Environmental Law and that would be applicable to the operations of either Parent or Merger Sub.

(b) Neither Parent nor any of its Subsidiaries nor any of the current and former properties, operations or activities of Parent or any of its Subsidiaries is subject to any existing, pending or, to the knowledge of Parent, threatened action, suit, investigation, inquiry or proceeding by any Governmental Authority or other Person under any Environmental Law.

(c) All authorizations, if any, required to be obtained or filed by Parent or any of its Subsidiaries under any Environmental Law in connection with the business of Parent have been obtained or filed and are valid and currently in full force and effect and will remain valid and in full force and effect after the consummation of the Merger and Parent is in compliance with the terms and conditions of such authorizations.

(d) There has been no release of any hazardous substance, pollutant or contaminant into the environment by Parent or any of its Subsidiaries in connection with the current or former properties or operations of Parent.

(e) To the knowledge of Parent, there has been no exposure of any person or property to any hazardous substance, pollutant or contaminant in connection with the current or former properties, operations and activities of Parent or any of its Subsidiaries.

SECTION 4.14 Contracts. Schedule 4.14 lists all Contracts to which either Parent or Merger Sub is a party or by which any of their properties or assets are bound, including a description of the material terms of all oral Contracts. Neither Parent nor Merger Sub is in violation of or default (with or without notice or lapse of time or both) under, or has waived or failed to enforce any rights or benefits under, any Contract to which it is a party or by which it or any of its properties or assets is bound, and, to the knowledge of Parent and Merger Sub, no other party to any such Contract is in violation or default (with or without notice or lapse of time or both) under, and there has occurred no event giving to others any rights of termination, amendment or cancellation of, with or without notice or lapse of time or both, any such Contract.

SECTION 4.15 Minute Books. Parent has made available to the Company true and complete copies of the minute books of its Board of Directors and each committee of its Board of Directors. Such minute books contain in all material respects summaries of all meetings of the Board of Directors of Parent, committees of the Board of Directors of Parent and stockholders of Parent or actions by written consent since July 1, 1983, and such summaries are true and complete in all material respects and reflect all transactions referred to in such minutes accurately in all material respects.

SECTION 4.16 Interim Operations of Merger Sub. Merger Sub was formed solely for the purpose of engaging in the Transactions, and has engaged in no business activities except as contemplated hereby.

SECTION 4.17 Securities, Listing. The outstanding shares of Parent were issued in accordance with the provisions of the Securities Act or exemptions therefrom, and any relevant state securities laws or pursuant to valid exemptions therefrom. Parent is in compliance with all applicable maintenance criteria and other requirements necessary to permit continued

listing of the Parent Common Stock on the NASD Over-the-Counter Bulletin Board system, and Parent has not received evidence to the contrary from the NASD.

SECTION 4.18 Brokers. Except as set forth on Schedule 4.18, no broker, finder, investment banker or other Person is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent.

SECTION 4.19 Accuracy of Statements. Neither this Agreement nor any Transaction Document nor any written statement, list, certificate or other information furnished by or on behalf of Parent or Merger Sub to the Company in connection with this Agreement, the Transaction Documents or any of the Transactions, taken as a whole, contains any untrue statement of a material fact regarding Parent or Parent’s business, or omits to state a material fact necessary to make the statements regarding Parent or Parent’s business contained herein or therein, in light of the circumstances in which they are made, not misleading.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub, as of the date of this Agreement and on the Effective Date (except as otherwise provided herein), as follows:

SECTION 5.1 Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Utah and has all requisite power and authority to own, lease and operate its properties and to carry on is business as now being conducted. The Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in jurisdictions where the failure to be so duly qualified or licensed and in good standing would not in the aggregate be reasonably likely to result in a Company Material Adverse Effect. The Company has heretofore delivered to Parent accurate and complete copies of the Articles of Incorporation and bylaws, as currently in effect, of the Company.

SECTION 5.2 Capitalization.

(a) The authorized capital stock of the Company consists of one hundred million (100,000,000) shares of common stock, par value $0.001 per share, of which, as of the date of this Agreement, nine million six hundred seven thousand (9,607,000) shares are issued and outstanding, and all of which are validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, call option, preemptive right, right of first refusal, subscription or any similar right, and (ii) options, warrants, and other contractual rights to acquire ten million seven hundred eighty-four thousand eight hundred sixty (10,784,860) Company Shares, a detailed list of which is set forth on Schedule 5.2(a), listing the owner, exercise price, conversion terms (cash or cashless), expiration and other materially relevant data.

(b) Except as disclosed on Schedule 5.2(b), the Company does not own, directly or indirectly, any capital stock or other equity or other securities of any Person or have any other direct or indirect equity, voting or other ownership interest in any business or Person. There are not now, and at the Effective Time there will not be, any voting trusts or other agreements or understandings to which the Company, or to its knowledge any other Person, is a party or is bound with respect to the voting of the capital stock of the Company. Except as set forth in this Section 5.2, there are no Contracts of any kind to which the Company is a party or by which the Company is bound (i) obligating the Company to issue, grant, deliver or sell, or cause to be issued, granted, delivered or sold, additional shares of capital stock of, or other equity or voting interests in, the Company (ii) obligating the Company to enter into any such Contracts, or (iii) that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights occurring to holders of Company Shares. Except as set forth on Schedule 5.2(c), there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity or voting interests in, the Company.

SECTION 5.3 Authority Relative to the Agreement. The Company has all requisite power and authority to execute and deliver this Agreement and each other Transaction Document to which it is a party and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each other Transaction Document and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite corporate action on the part of the Company, and no other corporate proceedings on the part of the Company are necessary to approve this Agreement or any other Transaction Document or to authorize and consummate the transactions contemplated hereby and thereby. This Agreement and each other Transaction Document has been duly and validly executed and delivered by the Company and constitutes the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy and other similar laws affecting the rights of creditors generally and (b) rules of law or equity governing specific performance, injunctive relief and other equitable remedies.

SECTION 5.4 Consents and Approvals; No Violations. Except as otherwise provided in Schedule 5.4 and for the filing and recordation of the Articles of Merger, as required by the URBCA, no filing with, and no permit, authorization, consent or approval of, any Governmental Authority or any other Person is necessary for the consummation by the Company of the Transactions. Except as set forth in Schedule 5.4, neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the Transactions nor compliance by the Company with any of the provisions hereof or thereof will (i) conflict with or result in any breach of any provision of the Articles of Incorporation or bylaws of the Company, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, Contract, agreement or other instrument or obligation to which the Company is a party or by which it or any of its properties or assets may be bound, or (iii) violate any order, writ, injunction, decree, statute, treaty, rule or regulation applicable to the Company or any of its properties or assets.

SECTION 5.5 Company Financial Statements. The Company has delivered to Parent copies of the Company Financial Statements. The Company Financial Statements present fairly the financial position of the Company as of the dates thereof and results of operations and cash flows for the Company for the periods presented therein. The Company Financial Statements have been prepared in conformity with GAAP, consistently applied during the periods presented therein.

SECTION 5.6 No Undisclosed Liabilities. Except as and to the extent set forth in the Company Financial Statements or on Schedule 5.6, the Company, as of the date of the last balance sheet (the “Company Balance Sheet Date”) contained in the Company Financial Statements, did not have any material liabilities required to be included on a balance sheet not reflected on such balance sheet. Except as and to the extent set forth in the Company Financial Statements, since the Company Balance Sheet Date, through and including the Effective Date, the Company has not incurred any liabilities material to the business, operations or financial condition of the Company taken as a whole, except liabilities incurred in the ordinary and usual course of business and consistent with past practice and any liabilities incurred in connection with this Agreement.

SECTION 5.7 Absence of Certain Changes. Except as set forth on Schedule 5.7, since December 31, 2003, the Company has not taken any of the Company prohibited actions set forth in Section 6.2 or suffered any Company Material Adverse Change.

SECTION 5.8 No Default. Except as set forth on Schedule 5.8, the Company is not in default or violation (and no event has occurred which with notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its Articles of Incorporation or its bylaws or (ii) any order, writ, injunction, decree, statute, rule or regulation applicable to the Company.

SECTION 5.9 Litigation. Except as set forth on Schedule 5.9, there is no Litigation pending or, to the knowledge of the Company, threatened involving the Company, at law or in equity, or which may prevent or delay the consummation of the Transactions.

SECTION 5.10 Compliance with Applicable Law. Except as disclosed on Schedule 5.10 attached hereto, the Company is in compliance with all applicable Laws, except for any noncompliance that could not reasonably be expected to result in a Company Material Adverse Effect.

SECTION 5.11 Taxes. The Company has duly filed all federal, state, local and foreign tax returns required to be filed by it, and the Company has duly paid, caused to be paid or made adequate provision in the Company Financial Statements for the payment of all Taxes required to be paid in respect of the periods covered by such returns and has made adequate provision for payment of all Taxes anticipated to be payable in respect of all taxable periods since the periods covered by such returns and ending with the Effective Date. None of the income tax returns required to be filed by the Company with any Governmental Authority has ever been examined by the government agencies responsible for auditing such returns. There are no Liens filed or issues or claims asserted for Taxes by any taxing authority on the assets of the Company. Except as set forth in Schedule 5.11 attached hereto, there are no outstanding

agreements or waivers extending the statutory period of limitation applicable to any income tax return of the Company.

SECTION 5.12 Environmental Matters.

(a) The Company is and has at all times been in compliance with all applicable Environmental Laws, and the Company has not received any (i) communication that alleges that the Company is in violation of, or has liability under, any Environmental Law, (ii) written request for information pursuant to any Environmental Law, or (iii) notice regarding any requirement that is proposed for adoption or implementation under any Environmental Law and that would be applicable to the operations of the Company.

(b) Neither the Company nor any of its Subsidiaries nor any of the current and former properties, operations or activities of the Company or any of its Subsidiaries is subject to any existing, pending or, to the knowledge of the Company, threatened action, suit, investigation, inquiry or proceeding by any Governmental Authority or other Person under any Environmental Law.

(c) All authorizations, if any, required to be obtained or filed by the Company or any of its Subsidiaries under any Environmental Law in connection with the business of the Company have been obtained or filed and are valid and currently in full force and effect and will remain valid and in full force and effect after the consummation of the Merger and the Company is in compliance with the terms and conditions of such authorizations.

(d) There has been no release of any hazardous substance, pollutant or contaminant into the environment by the Company or any of its Subsidiaries in connection with the current or former properties or operations of the Company.

(e) To the knowledge of the Company, there has been no exposure of any person or property to any hazardous substance, pollutant or contaminant in connection with the current or former properties, operations and activities of the Company or any of its Subsidiaries.

SECTION 5.13 Brokers. Except as set forth on Schedule 5.13, No broker, finder, investment banker or other Person is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company.

SECTION 5.14 Accuracy of Statements. Neither this Agreement nor any written statement, list, certificate or other information furnished by or on behalf of the Company to Parent in connection with this Agreement or any of the Transactions, taken as a whole, contains any untrue statement of a material fact regarding the Company or the Company’s business, or omits to state a material fact necessary to make the statements regarding the Company or the Company’s business contained herein or therein, in light of the circumstances in which they are made, not misleading.

ARTICLE VI

COVENANTS AND AGREEMENTS

SECTION 6.1 Covenants of Parent and Merger Sub. Parent and Merger Sub, jointly and severally, each covenant and agree that, prior to the Effective Time, unless otherwise expressly contemplated by this Agreement or consented to in writing by the Company, it:

(a) Shall conduct no business other than to comply with all the terms of this Agreement and the Transaction Documents and to take such other actions as are necessary and advisable to allow the parties to consummate the Merger and the Transactions.

(b) Shall not enter into any Contracts, or cancel, terminate, modify, assign or amend in any respect any existing Contracts.

(c) Shall not, nor shall it propose to, (i) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock, (ii) split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (iii) repurchase, redeem or otherwise acquire any of its securities.

(d) Shall not authorize for issuance, issue, sell, deliver or agree to commit or issue, sell or deliver (whether through this issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any other securities (including indebtedness having the right to vote) or equity equivalents (including, without limitation, stock appreciation rights), except as required pursuant to the agreements and instruments outstanding on the date hereof and disclosed in Section 4.2, or amend in any material respect any of the terms of any such securities or agreement outstanding on the date hereof.

(e) Shall not amend or propose to amend its Articles of Incorporation or bylaws except as provided for in Section 6.9 hereof.

(f) Shall not acquire, sell, lease, encumber, transfer or dispose of any assets, except as contemplated by this Agreement.

(g) Shall not incur any liabilities other than liabilities incurred in connection with this Agreement and the Transactions.

(h) Shall not change any of the accounting principles or practices used by it (except as required by GAAP).

(i) Shall not agree to take any of the foregoing actions or knowingly take or agree to take any action that would or is reasonably likely to result in any of its representations and warranties set forth in this Agreement being untrue or in any of the conditions to the Merger set forth in Article VII not being satisfied.

(j) Shall give the Company prompt notice of: (i) any notice of, or other communication relating to, a default or event which, with notice or the lapse of time or both,

would become a default, if received by such party subsequent to the date of this Agreement and prior to the Effective Time, under this Agreement, any other Transaction Document or any other Contract to which such party is a party or is subject; (ii) any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Transactions, which consent, if required, would breach the representations contained in Articles IV or V; (iii) any notice or other communication received by either Parent or Merger Sub from a Governmental Authority relating to this Agreement, the Transaction Documents, the Transactions or any Litigation related to the Transactions, and (iii) any Parent Material Adverse Change.

(k) During the period from the date of this Agreement and continuing until the Effective Time, Parent agrees that it will not, without the prior written consent of the Company, except as contemplated by this Agreement or required by Law, increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any plan and arrangement as in effect as of the date hereof or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.

(l) Each will fully comply with all SEC rules and regulations, including all rules and regulations promulgated under the Securities Act and the Securities Exchange Act and will file in a timely manner all reports, schedules, forms, statements and other documents required to be filed with the SEC.

SECTION 6.2 Covenants of the Company. The Company covenants and agrees that, prior to the Effective Time, unless otherwise expressly contemplated by this Agreement or consented to in writing by Parent, it:

(a) Shall carry on its business in the usual, regular and ordinary course, consistent with past practice, and use its best efforts, consistent with past practice, to preserve intact its present business organization, maintain its corporate existence and good standing in its state of incorporation, keep available the services of its present officers and employees and preserve its relationships with customers, suppliers and others having business dealings with it.

(b) Shall not, nor shall it propose to, (i) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of any of its capital stock, (ii) issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock or (iii) repurchase, redeem or otherwise acquire any of its securities.

(c) Shall not agree to take any of the foregoing actions or knowingly take or agree to take any action that would or is reasonably likely to result in any of its representations and warranties set forth in this Agreement being untrue or in any of the conditions to the Merger set forth in Article VII not being satisfied.

(d) Shall give Parent prompt notice of: (i) any notice of, or other communication relating to, a default or event which, with notice or the lapse of time or both, would become a default, if received by the Company subsequent to the date of this Agreement and prior to the Effective Time, under this Agreement, any other Transaction Document or any other Contract to

which the Company is a party or is subject; (ii) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the Transactions, which consent, if required, would breach the representations contained in Article V; (iii) any notice or other communication received by the Company from a Governmental Authority relating to this Agreement, the Transaction Documents, the Transactions or any Litigation related to the Transactions, and (iii) any Company Material Adverse Change.

(e) During the period from the date of this Agreement and continuing until the Closing, the Company agrees that it will not, without the prior written consent of Parent, except as contemplated by this Agreement or required by law, increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any plan and arrangement as in effect as of the date hereof or enter into any contract, agreement, commitment or arrangement to do any of the foregoing.

SECTION 6.3 No Solicitation. Except as set forth on Schedule 6.3, neither the Company, on the one hand, nor Parent or Merger Sub, on the other hand, nor any of their respective Affiliates, officers, directors, employees, representatives or agents shall, directly or indirectly, solicit, initiate or encourage (including by way of furnishing information) any Person, entity or group concerning any merger, sale of substantially all of the assets outside the ordinary course of business, sale of shares of capital stock or similar transaction involving the Company, on the one hand, or Parent or Merger Sub, on the other hand (other than the transactions contemplated by this Agreement). Each party shall promptly advise the other party of any such inquiries or proposals it receives from third parties.

SECTION 6.4 Access to Information. Upon reasonable notice the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall each afford to the officers, employees, accountants, counsel and other representatives of the other, access, during normal business hours during the period prior to the Effective Time, to its pertinent properties, books, contracts, commitments and records and, during such period, each of the Company, on the one hand, and Parent and Merger Sub, on the other hand, shall furnish promptly to the other all information concerning its business, properties and personnel as such other party may reasonably request. Any such information furnished to the Company, on the one hand, or Parent and Merger Sub, on the other hand, shall be subject to the provisions of the Nondisclosure Agreement between the Company and Parent, dated June 22, 2004 (the “Nondisclosure Agreement”), which remains in full force and effect.

SECTION 6.5 Commercially Reasonable Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereto agrees to use its commercially reasonable efforts to have the Closing occur by July 19, 2004, or as soon as practicable thereafter, and to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable Laws and regulations to consummate and make effective the Transactions including, without limitation, the preparation and filing of all other forms, registrations and notices required to be filed to consummate the transactions contemplated hereby and the taking of such actions as are necessary to obtain any requisite approvals, consents, orders, exemptions, waivers by any public or private third party. Each party shall promptly consult with the other with respect to, provide any necessary information with respect

to and provide the other (or its counsel) copies of, all filings made by such party with any Governmental Authority in connection with this Agreement and the transactions contemplated hereby.

SECTION 6.6 Notice Regarding Change in Circumstances. The Company shall give Parent written notice promptly upon the occurrence of or the Company becoming aware of the impending or threatened occurrence of any event which would cause or constitute a breach or would have caused a breach of any of the representations, warranties, duties and/or obligations of the Company as contained in this Agreement. Parent and Merger Sub shall give the Company written notice promptly upon the occurrence of or either Parent or Merger Sub, as the case may be, becoming aware of the impending or threatened occurrence of any event which would cause or constitute a breach or would have caused a breach of any of the representations or warranties of Parent or Merger Sub as contained in this Agreement.

SECTION 6.7 Expenses. The Company shall pay all costs and expenses that it incurs in connection with this Agreement, the Transaction Documents and the Transactions. Parent shall pay all costs and expenses that Parent and Merger Sub incur in connection with this Agreement, the Transaction Documents and the Transactions (the “Parent Expenses”), provided that, if the Transactions are completed, any expenses of Parent and Merger Sub, collectively, in excess of $20,000 shall be paid by Edward Cowle, H. Deworth Williams and Geoff Williams. Pursuant to an escrow agreement, dated as of the date hereof, by and among Parent, Duncan Capital LLC (the “Placement Agent”) and Continental Stock Transfer & Trust Company (the “Escrow Agent”), Parent and the Placement Agent will direct the Escrow Agent to, at Closing, issue a check or wire funds in the amount of $20,000 into the Leonard E. Neilson Trust Account III, to be used for payment of the Parent Expenses.

SECTION 6.8 Public Announcements. Parent and Merger Sub, on the one hand, and the Company, on the other hand, shall, to the extent reasonably practical, consult with each other before issuing, and provide each other a reasonably opportunity to review and comment upon, any press release or other public statements with respect to this Agreement, the Merger and the other Transactions and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system. The parties agree that the initial press release to be issued with respect to the Transactions shall be in the form heretofore agreed to by the parties.

SECTION 6.9 Board of Directors of Parent. Pursuant to Articles III and VIII of the bylaws of Parent, Parent will, prior to Closing, amend its bylaws to increase the size of the Board of Directors of Parent to seven (7) directors and will appoint the directors nominated by the Company to fill the vacancies created by such increase in the size of the Board (the “Appointment”). Parent will prepare and file with the SEC the statement required by Rule 14f-1 promulgated under the Securities Exchange Act (the “14f-1 Statement”), in form and substance reasonably satisfactory to the Company. The Appointment will become effective at the later of (i) 10 days following the filing of the 14f-1 Statement with the SEC (as required by Rule 14f-1) and (ii) the Closing.

ARTICLE VII

CONDITIONS

SECTION 7.1 Conditions to each Party’s Obligation to Effect the Merger . The respective obligation of each party to effect the Merger shall be subject to the satisfaction at or prior to the Closing of the following conditions:

(a) This Agreement shall have been approved and adopted by the affirmative vote of the stockholders of the Company.

(b) All authorizations, consents, orders or approvals of, or declarations or filings with, any Governmental Authority, the absence of which would prohibit the consummation of the Merger and the other Transactions, shall have been filed, occurred or been obtained.

(c) There shall not be in effect any statute, rule, regulation, executive order, decree, stop order or injunction enacted, entered, promulgated or enforced by any Governmental Authority, which prohibits or has the effect of preventing the consummation of the Merger.

(d) There shall not be any Litigation that makes consummation of the Merger illegal or otherwise prohibits or prevents the consummation of the Merger.

(e) Parent shall have completed a private placement of its securities that results in gross proceeds to Parent of not less than 1.0 million dollars.

SECTION 7.2 Conditions to the Obligations of Parent and Merger Sub to Effect the Merger . The obligations of Parent and Merger Sub to effect the Merger are further subject to the satisfaction at or prior to the Closing of the following conditions, unless waived by Parent and Merger Sub in writing:

(a) The representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement, and in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date.

(b) The Company shall have performed all obligations required to be performed by the Company under this Agreement at or prior to the Closing.

(c) From the date of this Agreement through and including the Effective Date, except as set forth on Schedule 5.7, the Company shall not have suffered any Company Material Adverse Change.

(d) The President of the Company shall deliver to Parent at Closing a certificate stating that the conditions specified in clauses (a), (b) and (c) of this Section 7.2 have been fulfilled.

(e) The Company shall furnish Parent with copies of (i) resolutions duly adopted by the Board of Directors of the Company approving the execution and delivery of this Agreement

and all other necessary or proper corporate action to enable the Company to comply with the terms of this Agreement, (ii) the resolution duly adopted by the stockholders of the Company approving and adopting this Agreement and the Merger, such resolutions to be certified by the Secretary or Assistant Secretary of the Company.

SECTION 7.3 Conditions to the Obligation of the Company to Effect the Merger . The obligation of the Company to effect the Merger is further subject to the satisfaction at or prior to the Closing of the following conditions, unless waived by the Company:

(a) The representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement, and in all material respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date.

(b) Parent and Merger Sub shall have performed all obligations required to be performed by each of Parent and Merger Sub under this Agreement at or prior to the Closing.

(c) From the date of this Agreement through and including the Effective Date, except as set forth on Schedule 4.7, neither Parent nor Merger Sub shall have suffered any Parent Material Adverse Change.

(d) The President of Parent shall deliver to the Company at Closing a certificate stating that the conditions specified in clauses (a), (b) and (c) of this Section 7.3 have been fulfilled.

(e) Parent shall furnish the Company with copies of (i) resolutions duly adopted by the Board of Directors of Parent approving the execution and delivery of this Agreement and all other necessary or proper corporate action to enable Parent to comply with the terms of this Agreement, (ii) resolutions duly adopted by the Board of Directors of Merger Sub approving the execution and delivery of this Agreement and all other necessary or proper corporate action to enable Merger Sub to comply with the terms of this Agreement, and (iii) the resolution duly adopted by the stockholders of Merger Sub approving and adopting this Agreement and the Merger. All such resolutions are to be certified by the Secretary or Assistant Secretary of Parent or Merger Sub, as the case may be.

(f) Parent shall have complied with the requirements of Section 6.9 of this Agreement and the directors and officers of Parent serving as directors and officers of Parent as of the date of this Agreement shall have resigned.

SECTION 7.4 Frustration of Closing Conditions. None of the Company, Parent, or Merger Sub may rely on the failure of any condition set forth in Section 7.1, 7.2 or 7.3, as the case may be, to be satisfied if such failure was caused by such party’s failure to use commercially reasonable efforts to consummate the Merger and the other Transactions, as required by and subject to Section 6.5.

ARTICLE VIII

TERMINATION

SECTION 8.1 Termination. This Agreement may be terminated and the Transactions may be abandoned at any time prior to the Closing:

(a) By mutual written consent of the Company, on the one hand, and Parent, on the other.

(b) By Parent, upon a breach of any representation, warranty, covenant, obligation or agreement on the part of the Company set forth in this agreement or if any representation or warranty of the Company shall have become untrue, in either case such that the condition set forth in Section 7.2(a) would not be satisfied and such breach or untruth is not curable by the Company, or if curable, is not cured within thirty (30) days after notice thereof has been received by the Company.

(c) By the Company, upon a breach of any representation, warranty, covenant, obligation or agreement on the part of either Parent or Merger Sub set forth in this agreement or if any representation or warranty of either Parent or Merger Sub shall have become untrue, in either case such that the condition set forth in Section 7.3(a) would not be satisfied and such breach or untruth is not curable by Parent or Merger Sub, as the case may be, or if curable, is not cured within thirty (30) days after notice thereof has been received by Parent or Merger Sub, as the case may be.

(d) By Parent or the Company, if there shall be any Law or Litigation that makes consummation of the Merger illegal or otherwise prohibited, or if there shall be any final and nonappealable order of a competent Governmental Authority that prevents or restrains the consummation of the Merger.

(e) By Parent or the Company, if the Merger shall not have been consummated on or before July 31, 2004; provided, however, that the right to terminate this Agreement pursuant to this Section 8.1(e) shall not be available to any party whose failure or whose Affiliates’ failure to perform any covenant, obligation or agreement hereunder has been the principal cause of, or resulted in, the failure of the Merger to occur on or before such date.

SECTION 8.2 Effect of Termination.

(a) In the event of the termination of this Agreement pursuant to Section 8.1 hereof, this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its Affiliates, directors, officers or stockholders, except as provided below in Section 8.2(b). Notwithstanding the preceding sentence, each of (i) Section 6.8 and (ii) the Nondisclosure Agreement shall remain in full force and effect in the event of the termination of this Agreement pursuant to Section 8.1 hereof.

(b) In the event of the termination of this Agreement pursuant to Section 8.1 hereof, Parent, Merger Sub and the Company each agree on behalf of themselves and their respective agents and representatives, to promptly return to Parent and Merger Sub, on the one hand, all

Parent Confidential Information and to the Company, on the other hand, all Company Confidential Information, and to refrain from keeping any copies thereof, or to destroy any such Confidential Information if so requested by the originating party. The Nondisclosure Agreement shall remain in full force and effect after termination of this Agreement.

SECTION 8.3 Amendment. This Agreement may be amended by the parties hereto, at any time prior to the Effective Time, by an instrument in writing signed on behalf of each of the parties hereto.

SECTION 8.4 Extension; Waiver. At any time prior to the Effective Date, the parties hereto may by mutual written agreement, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party.

ARTICLE IX

MISCELLANEOUS

SECTION 9.1 Notices. All notices and other communications hereunder shall be in writing (and shall be deemed given upon receipt) if delivered personally, telecopied (which is confirmed), mailed by registered or certified mail (return receipt requested), or delivered by a national overnight delivery service to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):

(i) if to Parent or Merger Sub, to:

Geoff Williams

Grant Ventures, Inc.

56 West 400 South

Suite #220

Salt Lake City, UT 84101

Facsimile: (801) 595-0967

with a copy to:

Leonard E. Neilson

Leonard E. Neilson, P.C.

8160 South Highland Drive

Suite 209

Sandy, UT 84093

Facsimile : (801) 733-0808

(ii) if to the Company, to:

Stan Yakatan

Impact Diagnostics, Inc.

5792 South 900 East

Suite B

Salt Lake City, UT 84121

Facsimile: (801) 261-5276

with a copy to:

Steven S. Pretsfelder, Esq.

Brown Raysman Millstein Felder & Steiner LLP

900 Third Avenue

New York, NY 10022

Facsimile: (212) 895-2900

SECTION 9.2 Descriptive Headings. The descriptive headings herein are inserted for convenience only and are not intended to be part of or to affect the meaning or interpretation of this Agreement.

SECTION 9.3 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.

SECTION 9.4 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the Transactions are fulfilled to the extent possible.

SECTION 9.5 Entire Agreement; Assignment. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof (other than the Nondisclosure Agreement; any provisions of such agreement that are inconsistent with the Transactions being waived hereby).

SECTION 9.6 Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of New York without regard to any applicable principles of conflicts of law.

SECTION 9.7 Parties in Interest. This Agreement shall be binding upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or

implied, is intended to or shall confer upon any other Person or Persons any rights, benefits or remedies of any nature whatsoever under or by reason of this Agreement.

SECTION 9.8 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of the Agreement, this being in addition to any other remedy to which they are entitled at law or in equity.

[Remainder of Page Intentionally Left Blank]

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date set forth above.

	“PARENT”

	GRANT VENTURES, INC.


	By:
		Name:
		Title:


	“MERGER SUB”

	IMPACT ACQUISITION CORPORATION


	By:
		Name:
		Title:


	“COMPANY”

	IMPACT DIAGNOSTICS, INC.


	By:
		Name:
		Title:

	AS TO SECTION 6.7 OF THIS AGREEMENT:

	EDWARD COWLE




	AS TO SECTION 6.7 OF THIS AGREEMENT:

	H. DEWORTH WILLIAMS




	AS TO SECTION 6.7 OF THIS AGREEMENT:

	GEOFF WILLIAMS

Schedule 4.2(c)

Parent and Merger Sub Ownership Interest in other Persons

None

Schedule 4.4

Consents and Approvals, Violations

None

Schedule 4.6

Undisclosed Liabilities

None

Schedule 4.7

Certain Changes

None

Schedule 4.8

Defaults

None

Schedule 4.9

Litigation

None

Schedule 4.10

Noncompliance with Applicable Law

None

Schedule 4.11

Assets

None

Schedule 4.12

Agreements or Waivers Extending the Statute of Limitations for Income Tax Returns

None

Schedule 4.14

Contracts

1. Appointment of Stock Transfer Agent and Agreement, dated May 25, 2001, by and between Grant Ventures, Inc. and Interstate Transfer Company.

Schedule 4.18

Brokers

None

Schedule 5.2(a)

Contractual Rights to Acquire Company Shares

Convertible Notes

Holder	$ Invested		Price (post split)		Shares, as converted	Due Date
Craig Littler	$	14,000	$	0.092	151,879	3/1/2005
J. Michael Kellum	$	10,000	$	0.092	108,485	3/1/2005
Calvin Vaughn	$	10,000	$	0.092	108,485	3/1/2005
Harold Kaufman	$	8,000	$	0.092	86,788	3/1/2005
Robert O’Brien	$	5,000	$	0.092	54,242	3/1/2005
Gregory Ruff	$	10,000	$	0.092	108,485	3/1/2005
Mike Bascetta	$	10,000	$	0.092	108,485	3/1/2005
Doris Ruff	$	5,000	$	0.092	54,242	3/1/2005
Robert Baron	$	10,000	$	0.092	108,485	3/1/2005
Tom Linton	$	10,000	$	0.092	108,485	3/1/2005
James Hori	$	10,000	$	0.092	108,485	3/1/2005
Murray Sternfeld	$	10,500	$	0.092	113,909	3/1/2005
Mendel Klein	$	5,000	$	0.092	54,242	3/1/2005
Congregation Zichron Malka	$	5,000	$	0.092	54,242	3/1/2005

Citadel Holdings	$	350,000	$	0.838	417,667	6/1/2007

Warrants/Options

Holder	Shares	Strike Price
Stan Yakatan	2,868,254	$	0.18
John Wilson	750,000	$	0.18
Duncan Capital LLC	545,000	$	0.18
New Investor Warrants	2,180,000	$	0.18
Duncan Capital LLC (to be distributed)	2,670,000	$	0.01
Citadel Holdings	25,000	$	0.01

Schedule 5.2(b)

Company Ownership Interest in other Persons

None

Schedule 5.2(c)

Company Contractual Obligations to Repurchase, etc. Company Stock

None

Schedule 5.4

Consents and Approvals; Violations

None

Schedule 5.6

Undisclosed Liabilities

None

Schedule 5.7

Certain Changes

None

Schedule 5.8

Defaults

None

Schedule 5.9

Litigation

None

Schedule 5.10

Noncompliance with Applicable Law

None

Schedule 5.11

Agreements or Waivers Extending the Statute of Limitations for Income Tax Returns

None

Schedule 5.13

Brokers

Duncan Capital LLC

Schedule 6.3

Solicitations

EX-3.1 3 a2143868zex-3_1.htm EXHIBIT 3.1

Exhibit 3.1

			Filing fee
	*Articles of Incorporation*		Receipt [ILLEGIBLE]
	(PURSUANT TO NRS 78)
	STATE OF NEVADA
	*Secretary of State*

(For filing office use)

IMPORTANT: Read instructions on reverse side before completing this form.

TYPE OR PRINT (BLACK INK ONLY)

NAME OF CORPORATION:

NORTH RIDGE CORPORATION

RESIDENT AGENT: (designated resident agent and his STREET ADDRESS in Nevada where process may be served)

Name of Resident Agent:

CSC SERVICES OF NEVADA, INC.

Street Address:

502 EAST JOHN STREET, SUITE E CARSON CITY NV 89706

Street No.

Street Name

City

Zip

SHARES: (number of shares the corporation is authorized to issue)

Number of shares with par value: 30,000,000 Par value: 0.0001 Number of shares without par value: 0

GOVERNING BOARD: shall be styled as (check one): ý Directors o Trustees

The FIRST BOARD OF DIRECTORS shall consist of 3 members and the names and addresses are as follows (attach additional pages if necessary)

ED COWLE

6 East 45th Street 10th Floor NY NY 10017

Name

Address

City/State/Zip

GEOFF WILLIAMS

56 West 400 South Suite 220 S.L.C. UT 84101

Name

Address

City/State/Zip

PURPOSE (optional-see reverse side): The purpose of the corporation shall be:

ORGANIZED UNDER THE GENERAL CORPORATION LAW OF THE STATE OF NEVADA

OTHER MATTERS: This form includes the minimal statutory requirements to incorporate under NRS 78. You may attach additional information pursuant to NRS 78.037 or any other information you deem appropriate. If any of the additional information is contradictory to this form it cannot be filed and will be returned to you for correction. Number of pages attached 1.

SIGNATURES OF INCORPORATORS: The names and addresses of each of the incorporators signing the articles: (Signatures must be [ILLEGIBLE]) (Attach additional pages if there are more than two incorporators)

TONYA WHEELER

Name (print)

Name (Print)

56 WEST 400 SOUTH SUITE 220 S.L.C. UT 84101

Address

City/State/Zip

Address

City/State/Zip

Signature

State of

Utah

County of

Salt Lake City

State of

County of

This instrument was acknowledged before me on

December 13

1999, by

, 19

, by

TONYA WHEELER

Name of Person

as incorporator

NORTH RIDGE CORP

(name of party on behalf of whom instrument was executed)

/s/ [ILLEGIBLE]

Notary Public Signature

[SEAL]

(affix notary stamp or seal)

CERTIFICATE OF ACCEPTANCE OF APPOINTMENT OF RESIDENT AGENT

hereby accept appointment as Resident Agent for the above named corporation.

Signature of Resident Agent

Date

EX-3.2 4 a2143868zex-3_2.htm EXHIBIT 3.2

Exhibit 3.2

DEAN HELLER Secretary of State 101 North Carson Street, Suite 3 Carson City, Nevada 89701-4786 (775) 684 5708	Certificate of Amendment (PURSUANT TO NRS 78.380)	Office Use Only: FILED # C2516-00 MAY 30, 2001 IN THE OFFICE OF
		[ILLEGIBLE]
Important: Read attached instructions before completing		DEAN HELLER SECRETARY OF STATE

Certificate of Amendment to Articles of Incorporation

For Nevada Profit Corporations

(Pursuant to NRS 78.380 - Before Issuance of Stock)

- Remit in Duplicate -

North Ridge Corporation

1.	Name of corporation:


2.	The articles have been amended as follows (provide article numbers, if available):
Article #1 The new name of the corporation shall be Grant Ventures Inc.
Article #3 The Number of shares with par value shall be 50,000,000 with a par value of $0.001

3.	The undersigned declare that they constitute at least two-thirds of the incorporators. (check)
	o, or of the board of directors (check)	ý

4.	The date upon which the original articles of incorporation were filed with the Secretary of
State: 01/31/00

5.	The undersigned affirmatively declare that to the date of this certificate, no stock of the corporation has been issued.

6.	Signatures:

/s/ Geoff Williams			/s/ Ed Cowle
Signature			Signature

IMPORTANT: Failure to include any of the above information and remit the proper fees may cause this filing to be rejected.

GOVERNING BOARD:

Dave Miller 1408 Westwood Court Sandpoint, ID 83864

EX-3.3 5 a2143868zex-3_3.htm EXHIBIT 3.3

Exhibit 3.3

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

GRANT VENTURES INC.,

A Nevada corporation

I, STAN YAKATAN, being the duly elected and acting President and Chief Executive Officer of Grant Ventures, Inc., do make and file these Amended and Restated Articles of Incorporation, hereby declaring and certifying that the facts herein stated are true:

ARTICLE I

NAME

The name of the corporation is Grant Life Sciences, Inc. (the “Corporation”).

ARTICLE II

RESIDENT AGENT AND REGISTERED OFFICE

The name and address of the Corporation’s resident agent for service of process is Kummer Kaempfer Bonner & Renshaw, 3800 Howard Hughes Parkway, Seventh Floor, Las Vegas, Nevada 89109.

ARTICLE III

PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the NRS.

ARTICLE IV

CAPITAL STOCK

4.01 Authorized Capital Stock. The total number of shares of stock this Corporation is authorized to issue shall be one hundred seventy million (170,000,000) shares. This stock shall be divided into two classes to be designated as “Common Stock” and “Preferred Stock.”

4.02 Common Stock. The total number of authorized shares of Common Stock shall be one hundred fifty million (150,000,000) shares with par value of $.001 per share. Each share of Common stock when issued, shall have one (1) vote on all matters presented to the stockholders.

4.03 Preferred Stock. The total number of authorized shares of Preferred Stock shall be twenty million (20,000,000) shares with par value of $.001 per share. The board of directors shall have the authority to authorize the issuance of the Preferred stock from time to time in one or more classes or series, and to state in the resolution or resolutions from time to time adopted providing for the issuance thereof the following:

(a) Whether or not the class or series shall have voting rights, full or limited, the

nature and qualifications, limitations and restrictions on those rights, or whether the class or series will be without voting rights;

(b) The number of shares to constitute the class or series and the designation thereof;

(c) The preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations, or restrictions thereof, if any, with respect to any class or series;

(d) Whether or not the shares of any class or series shall be redeemable and if redeemable, the redemption price or prices, and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption;

(e) Whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and if such retirement or sinking funds be established, the amount and the terms and provisions thereof;

(f) The dividend rate, whether dividends are payable in cash, stock of the Corporation, or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividend shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends shall accumulate;

(g) The preferences, if any, and the amounts thereof which the holders of any class or series thereof are entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of assets of, the Corporation;

(h) Whether or not the shares of any class or series are convertible into, or exchangeable for, the shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and

(i) Such other rights and provisions with respect to any class or series as may to the board of directors seem advisable.

The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any respect. The Board of Directors may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any existing class or series of the Preferred Stock and the shares so subtracted shall become authorized, unissued and undesignated shares of the Preferred Stock.

ARTICLE V

DIRECTORS

The business and affairs of the Corporation shall be managed by or under the direction of the board of directors, which shall consist of no fewer than five (5) director(s). Provided that the Corporation has at least five (5) directors, the number of directors may at any time or times be increased or decreased

as provided in the bylaws.

ARTICLE VI

DIRECTORS’ AND OFFICERS’ LIABILITY

The individual liability of the directors and officers of the Corporation is hereby eliminated to the fullest extent permitted by the NRS, as the same may be amended and supplemented. Any repeal or modification of this Article by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation for acts or omissions prior to such repeal or modification.

ARTICLE VII

INDEMNITY

Every person who was or is a party to, or is threatened to be made a party to, or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he, or a person of whom he is the legal representative, is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the laws of the State of Nevada from time to time against all expenses, liability and loss (including attorneys’ fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. Such right of indemnification shall be a contract right which may be enforced in any manner desired by such person. The expenses of officers and directors incurred in defending a civil or criminal action, suit or proceeding must be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Corporation. Such right of indemnification shall not be exclusive of any other right which such directors, officers or representatives may have or hereafter acquire, and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of stockholders, provision of law, or otherwise, as well as their rights under this Article.

Without limiting the application of the foregoing, the board of directors may adopt bylaws from time to time with respect to indemnification, to provide at all times the fullest indemnification permitted by the laws of the State of Nevada, and may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprises against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person.

The indemnification provided in this Article shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the heirs, executors and administrators of such person.

In witness whereof, I have hereunto set my hand this day of , .


	(Insert Name)

EX-3.4 6 a2143868zex-3_4.htm EXHIBIT 3.4

Exhibit 3.4

MERGER

State of Utah
DEPARTMENT OF COMMERCE
Division of Corporations & Commercial Code

This form must be type
written or computer
generated. For your
convenience, this form has
been designed to be filled out and printed

File Number :

Non-Refundable Processing Fee:

ý Domestic

$27.00

o Foreign

$37.00

State of Utah

Department of Commerce

RECEIVED

Division of Corporations and Commercial Code

I hereby certified that the foregoing has been filed

JUL 30 2004

And approved on this 30 day of July 2004

In this office of this Division and hereby issued

Utah Div. Of Corp. & Comm. Code

the Certificate thereof.

Examiner

/s/ [ILLEGIBLE]

Date

08.11.04

Articles of Merger / Share Exchange

				Impact Acquisition Corporation 5680222
				the non-surviving corporation

				Into
		/s/ Kathy Berg		Impact Diagnostics, Inc. 1415403 the surviving corporation
		Kathy Berg Division Director		Impact Diagnostics, Inc. 1415403 the surviving corporation

ARTICLE I - Surviving Corporation

Section 1

The name of the corporation surviving the merger is Impact Diagnostics, Inc. and such name o has ý has not been changed as a result of the merger.

Section 2

The surviving corporation is a domestic corporation existing pursuant to the provisions of the Utah Revised Business Corporation Act incorporated on July 8, 1998

The surviving corporation is a foreign corporation incorporated under the laws of the State of

and o qualified o not qualified to do business in Utah.

Note: If application for Certificate of Authority to Transact Business is filed concurrently herewith state “Upon approval of Application for Certificate of Authority.”

The effective date of the merger described herein shall be the date upon which these Articles are filed with the Utah Division of Corporations and Commercial Code, or July 30, 2004.

ARTICLE II - Non-surviving Corporation(s)

The name, state of incorporation, and date incorporation or qualification (if applicable) respectively, of each Utah domestic corporation and Utah qualified foreign corporation, other than the survivor, which is party to the merger are as follows:

Name of Corporation: Impact Acquisition Corporation

State of Domicile: Utah

Date of Incorporation / Qualification in Utah: June 30, 2004

Name of Corporation:

State of Domicile:

Date of Incorporation / Qualification in Utah:

Name of Corporation:

State of Domicile:

Date of Incorporation / Qualification in Utah:

Name of Corporation:

State of Domicile:

Date of Incorporation / Qualification in Utah:

Name of Corporation:

State of Domicile:

Date of Incorporation / Qualification in Utah:

ARTICLE III - Plan of Merger or Share Exchange

The Plan of Merger or Share Exchange, containing such information as required by Utah Code 16-10a-1101, is set forth in “Exhibit A”, attached hereto and made a part hereof.

ARTICLE IV - Manner of Adoption & Vote of Surviving Corporation (must complete Section 1 or 2)

Section 1

o Shareholder vote not required.

The merger/ share exchange was adopted by the incorporators or board of directors without shareholder action and shareholder action was not required.

	Date:		07/30/2004
	Receipt Number:		1212433
	Amount Paid:		$103.00

Section 2

ý Vote of shareholders (complete either A or B)

The designation (i.e., common, preferred or any classification where different classes of stock exist), number of outstanding shares, number of votes entitled to be cast by each voting group entitled to vote separately on the merger / share exchange and the number of votes of each voting group represented at the meeting is set forth below:

A. written consent executed on July 5, 2004.

B. Vote of shareholders during a meeting called by the Board of Directors.

	TOTAL	A	B	C
Designation of each voting group (i.e. preferred and common)
Number of outstanding shares	9,607,000
Number of votes entitled to be cast	9,607,000
Number of votes represented at meeting	6,405,000
Shares voted in favor	6,405,000
Shares voted against	0

ARTICLE V - Manner of Adoption & Vote of Non-surviving Corporation (must complete Section 1 or 2)

Section 1

o Shareholder vote not required.

The merger/ share exchange was adopted by the incorporators or board of directors without shareholder action and shareholder action was not required.

Section 2

ý Vote of shareholders (complete either A or B)

The designation (i.e., common, preferred or any classification where different classes of stock exist), number of outstanding shares, number of votes entitled to be cast by each voting group entitled to vote separately on the merger / share exchange and the number of votes of each voting group represented at the meeting is set forth below:

A. Unanimous written consent executed on July 5, 2004 and signed by all shareholders entitled to vote.

B. Vote of shareholders during a meeting called by the Board of Directors.

	TOTAL	A	B	C
Designation of each voting group (i.e. preferred and common)
Number of outstanding shares
Number of votes entitled to be cast
Number of votes represented at meeting
Shares voted in favor
Shares voted against

In Witness Whereof, the undersigned being the President and Chief Executive Officer of the surviving corporation executes these Articles of Merger / Share Exchange and verifies, subject to penalties of perjury that the statements contained herein are true, this 30 day of July, 2004

/s/ Stan Yakatan		Stan Yakatan
Signature		Printed Name

	Mail In: PO Box 146705
		Salt Lake City, UT 84114-6705
	Walk In: 160 East 300 South, Main Floor
	Information Center: (801) 530-4849
	Toll Free: (877) 526-3994 (within Utah)
	Fax: (801) 530-6438
	Web Site: http://www.commerce.utah.gov

Under GRAMA (63-2-201), all registration information maintained by the Division is classified as public record. For confidentiality purposes, the business entity physical address may be provided rather than the residential or private address of any individual affiliated with the entity.

Revised 09/02

EX-4.1 7 a2143868zex-4_1.htm EXHIBIT 4.1

Exhibit 4.1

SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “Agreement”) is dated as of , 2004, by and among Grant Ventures, Inc. (the “Company”), and the purchasers listed on Schedule 1 hereto (each a “Purchaser” and collectively, the “Purchasers”).

WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined below), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and not jointly, desire to purchase from the Company the (i) number of shares of Common Stock, and (ii) Warrants set forth opposite each Purchaser’s name on Schedule 1 (collectively, the “Offering”) in an aggregate offering amount of up to $2.0 million.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and each Purchaser agrees as follows:

ARTICLE I.

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

“Agent Shares” shall have the meaning ascribed to such term in Section 2.6.

“Agent Warrant Agreement” shall mean the Placement Agent’s Warrant Agreement dated as of the Closing Date.

“Agent Warrants” shall have the meaning ascribed to such term in Section 2.6.

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144.

“Business Day” means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

“Closing” means the closing of the purchase and sale of the Common Stock and the Warrants pursuant to Section 2.1 on , 2004, or such other date as agreed to by the parties.

“Closing Date” means the date of the Closing.

“Closing Price” means on any particular date (a) the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at

4:15 p.m. (New York time) as the last reported closing bid price for regular session trading on such day), or (b) if there is no such price on such date, then the closing bid price on the Trading Market on the date nearest preceding such date (as reported by Bloomberg L.P. at 4:15 p.m. (New York time) as the closing bid price for regular session trading on such day), or (c) if the Common Stock is not then listed or quoted on the Trading Market and if prices for the Common Stock are then reported in the “pink sheets” published by the National Quotation Bureau Incorporated (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported, or (d) if the shares of Common Stock are not then publicly traded the fair market value of a share of Common Stock as determined by an appraiser selected in good faith by the Purchasers of a majority in interest of the Shares then outstanding.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the Company’s common stock, par value $0.001 per share, and any securities into which such Common Stock may hereafter be reclassified.

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

“Company Counsel” means Brown Raysman Millstein Felder & Steiner LLP, or any other counsel reasonably acceptable to the Company and the Placement Agent.

“Disclosure Schedules” means the Disclosure Schedules attached hereto.

“Effective Date” means the date that the Registration Statement is first declared effective by the Commission.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Indemnified Party” shall have the meaning ascribed to such term in Section 5.16(b).

“Indemnifying Party” shall have the meaning ascribed to such term in Section 5.16(b).

“Investor Securities” means the Shares, the Warrants and the Warrant Shares.

“Liens” means a lien, charge, security interest, encumbrance, right of first refusal or other restriction.

“Material Adverse Effect” shall have the meaning ascribed to such term in Section 3.1(b).

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

“Merger” shall have the meaning ascribed to such term in Section 2.2(a)(ix).

“Per Share Purchase Price” means $0.1835, subject to adjustment for reverse or forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement and before the Closing.

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“Placement Agent” means Duncan Capital LLC.

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares and the Warrant Shares and by the Placement Agent of the Agent Shares.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of this Agreement, among the Company and each Purchaser, in the form of EXHIBIT A.

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

“Securities Act” means the Securities Act of 1933, as amended.

“Shares” means the shares of Common Stock purchased by the Purchasers pursuant to this Agreement.

“Subscription Amount” means as to each Purchaser, the amount set forth below such Purchaser’s signature block on the Signature Page of this Agreement in United States Dollars and in immediately available funds.

“Subsidiary” shall have the meaning ascribed to such term in Section 3.1(a).

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not quoted on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting price); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), and (ii) hereof, then Trading Day shall mean a Business Day.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the OTC Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.

“Transaction Documents” means this Agreement, the Registration Rights Agreement, the Warrants, the Placement Agent Warrant Agreement, the Agent Warrant(s) and any and all

other agreements executed by the Company in connection with the transactions contemplated hereunder.

“Transaction Securities” means the Shares, the Warrants, the Warrant Shares, the Agent Warrants and the Agent Shares.

“Warrants” means the common stock purchase warrants in the form of EXHIBIT B issuable to each Purchaser at Closing; such Warrants are exercisable to purchase up to the number of shares of Common Stock equal to 20% of the aggregate number of Shares to be issued to such Purchaser at the Closing, which shall be exercisable immediately after the Closing Date and have an exercise price equal to $0.1835 and be exercisable for a period of five years from the Closing Date.

“Warrant Shares” means the shares of Common Stock issuable upon exercise of the Warrants.

ARTICLE II.

PURCHASE AND SALE

2.1 Closing. On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Company shall sell and issue to each Purchaser and each Purchaser shall purchase from the Company such number of Shares as shall equal such Purchaser’s Subscription Amount divided by the Per Share Purchase Price. The Warrants shall be issued without additional consideration. The aggregate number of Shares and the aggregate number of Warrants each Purchaser shall receive is set forth opposite each Purchaser’s name on Schedule 1. Upon satisfaction of the conditions set forth in Section 2.2, the Closing shall occur at such location as the parties shall mutually agree.

2.2 Closing Conditions.

(a) At the Closing, as a condition to the Purchasers’ obligations hereunder, each Purchaser shall receive from or on behalf of the Company:

(i) a restricted stock certificate for such number of Shares set forth next to such Purchaser’s name on Schedule 1 hereto purchased by each Purchaser;

(ii) a Warrant, registered in the name of such Purchaser, as duly executed by the Company, entitling such Purchaser to purchase such number of Warrant Shares as are set forth next to such Purchaser’s name on Schedule 1 hereto;

(iii) the Registration Rights Agreement duly executed by the Company;

(iv) this Agreement duly executed by the Company;

(v) a legal opinion from Company Counsel in form and substance reasonably satisfactory to the Purchasers and Placement Agent;

(vi) a certificate of the Chief Executive Officer and Chief Financial Officer of the Company stating, among other things, that (A) all the conditions set forth in this Section 2.2(a) have been satisfied in all material respects, (B) except as set forth in any Schedule to this Agreement, since January 31, 2004, there has been no event, condition or circumstance that has had or is reasonably expected to have a Material Adverse Effect, and (C) the Company has complied in all material respects with all its covenants and agreements set forth in the Transaction Documents;

(vii) a certificate of the Secretary of the Company containing, among other items: (A) true and complete copies, as of the Closing Date, of the Articles of Incorporation and any amendments thereto and the By-Laws, and any amendments thereto, of the Company, and (B) true and complete copies of the resolutions of the Board of Directors of the Company approving the Transaction Documents, Placement Agent compensation, the Offering and all documents and matters relating thereto;

(viii) a Good Standing Certificate of the Company dated as of a date no later than 5 days prior to the Closing Date; and

(ix) the merger by and between Impact Diagnostics, Inc. (“IDI”) and a wholly owned subsidiary of the Company, pursuant to which IDI is the surviving entity (the “Merger”), shall have been consummated.

(b) At the Closing, each Purchaser shall deliver or cause to be delivered to the Company the following:

(i) this Agreement duly executed by such Purchaser;

(ii) such Purchaser’s payment for the Shares and Warrants being purchased from the escrow account by wire transfer of immediately available funds; and

(iii) the Registration Rights Agreement duly executed by such Purchaser.

(c) At the Closing, as a condition to each party’s obligations hereunder, all representations and warranties of the other parties herein shall remain true and correct in all material respects as of the Closing Date.

(d) As of the Closing Date, as a condition to the Purchasers’ obligations hereunder, there shall have been no Material Adverse Effect with respect to the Company since the date hereof.

(e) As a condition to the Purchasers’ obligations hereunder, from the date hereof to the Closing Date, (i) trading in the Common Stock shall not have been suspended; (ii) trading in securities shall not have been suspended or limited generally or on any Trading Market; and (iii) no banking moratorium shall have been declared either by the United States or New York State authorities.

2.3 Escrow Provisions. Pending the sale of the Shares and the Warrants, all funds paid hereunder shall be deposited by the Company in a non-interest bearing escrow account with Continental Stock Transfer & Trust Company (the “Escrow Agent”) pursuant to an escrow agreement by and among the Escrow Agent, the Company and the Placement Agent (the “Escrow Agreement”). If a Closing has not occurred on or prior to July , 2004, or such later date mutually agreed by Company and Placement Agent (the “Termination Date”), then this Agreement shall be void and all funds paid hereunder by each Purchaser shall be promptly returned to each Purchaser without interest and/or deduction, subject to Section 2.5. If a Closing occurs on or prior to the Termination Date, then all net purchase price proceeds shall promptly be paid over to the Company.

2.4 Certificates. Each Purchaser hereby authorizes and directs the Company, upon the Closing, to deliver certificates representing the Shares and Warrants to be issued to such Purchaser pursuant to this Agreement to such Purchaser’s address indicated in this Agreement.

2.5 Return of Funds. The Company reserves the right not to accept the offer of the Purchaser to purchase the Shares and Warrants. Each Purchaser hereby authorizes and directs the Company to return any funds without interest and/or deductions for unaccepted purchases to the same account from which the funds were drawn.

2.6 Expenses; Fees. Simultaneously with payment for and delivery of the Shares and Warrants, at the Closing, the Company shall: (i) pay to the Placement Agent a cash fee equal to ten (10%) percent of the aggregate purchase price of the Shares and Warrants sold (the “Cash Fee”); (ii) reimburse the Placement Agent for its actual out-of-pocket expenses incurred in connection with the Offering, including, without limitation, the reasonable fees and expenses of its legal counsel, not to exceed legal fees of $20,000; (iii) pay all expenses in connection with the qualification of the Securities under the blue sky laws of the states which the Placement Agent shall designate, including filing fees and disbursements in connection with such blue sky matters; (iv) pay certain fees to the Escrow Agent for acting as escrow agent; and (v) issue to the Placement Agent five (5) year warrants (the “Agent Warrants”) to purchase 545,000 shares of Common Stock (the “Agent Shares”) at a per share exercise price equal to the Per Share Purchase Price which shall otherwise be substantially in the same form as the Warrants. The Placement Agent is performing additional advisory services in connection with the Merger and shall also receive compensation in connection with the performance of such advisory services.

2.7 Placement Agent. The Investor Securities are being offered on a “best-effort” basis by the Placement Agent. The Placement Agreement reserves the right, but is under no obligation, to sell to its affiliates Shares and Warrants on the terms provided herein.

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. Except as set forth under the corresponding section of the Disclosure Schedules delivered concurrently herewith, the Company hereby makes the following representations and warranties as of the date hereof and as of the Closing Date to each Purchaser:

(a) Subsidiaries. Other than as disclosed on Schedule 3.1(a), the Company has no direct or indirect operating subsidiaries (a “Subsidiary” and collectively, the “Subsidiaries”). Except as set forth on Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

(b) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite corporate power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business or financial condition of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”).

(c) Authorization; Enforcement; Validity. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary corporate action on the part of the Company and no further corporate action is required by the Company in connection therewith. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally and general principles of equity.

(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby, do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, certificates of designation (or similar document related to preferred stock), bylaws and/or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise), or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound, or (iii) result in a violation of any

law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound, except in the case of clause (ii) or (iii), for any conflict, default or violation that is not reasonably expected to have a Material Adverse Effect.

(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than the filing with the Commission of a Form D and the Registration Statement, the application(s) and approvals to the Nasdaq SmallCap Market for the listing of the Shares, Warrant Shares and the Agent Shares for trading thereon in the time and manner required thereby, applicable Blue Sky filings, and the filing of a current report on form 8-K under the Exchange Act.

(f) Issuance of the Securities. All of the Transaction Securities have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens (other than Liens placed thereon by Purchasers or Placement Agent). The Company has reserved from its duly authorized capital stock such number of shares of Common Stock so as to permit the issuance of the Shares, the Warrant Shares and the Agent Shares.

(g) Capitalization. Immediately prior to the Closing, the issued and outstanding shares of the Company’s capital stock (Common Stock and preferred stock), all warrants, options and other securities convertible and/or exchangeable into capital stock shall be as disclosed on Schedule 3.1(g) hereto. Except as set forth on Schedule 3.1(g), All of the Company’s outstanding securities have been and are, or upon issuance will be duly authorized, validly issued, fully paid and non-assessable. Except as disclosed in Schedule 3.1(g), (i) no shares of the Company’s capital stock are subject to any preemptive rights, right of participation, right of first refusal or any other similar rights; (ii) there are no outstanding securities of the Company or any of its Subsidiaries which contain any redemption or similar provisions at the option of the holder thereof, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem or register a security of the Company or any of its Subsidiaries; (iii) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Transaction Securities as described in the Transaction Documents; and (iv) the Company does not have any stock appreciation rights or “phantom stock” agreements or any similar agreement. All prior sales of securities of the Company were either registered under the Securities Act and applicable state securities laws or exempt from such registration, and no security holder has any rescission and/or similar rights with respect thereto.

(h) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or Section 15(d) of the Exchange Act, for the two (2) years preceding the date hereof (or such shorter period as the Company was required by law to file such material) (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the “SEC Reports” and, together with the Disclosure Schedules to this Agreement, the “Disclosure

Materials”). As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports complied in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements were prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal year-end audit adjustments.

(i) Material Changes. Since the date of the latest financial statements included within the SEC Reports, (i) there has been no event, occurrence or development that has had or is reasonably expected to result in a Material Adverse Effect, (ii) the Company has not incurred any material liabilities (contingent or otherwise) or discharged or satisfied an lien or encumbrance other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its holders of Common Stock or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (v) the Company has not issued any stock, bonds or other securities or any rights, options or warrants with respect thereto, except in connection with the Merger and as set forth on Schedule 3.1(i), (vi) the Company has not sold, assigned or transferred any other tangible assets or canceled any debts or claims, except in the ordinary course of business consistent with past practice, (vii) the Company has not sold, assigned or transferred ay patent rights, trademarks, trade names, copyrights, trade secrets or other intangibles assets or intellectual property rights, or disclosed any proprietary confidential information to any person, other than to IDI and its officers, directors and agents in contemplation of the Merger, (viii) the Company has not suffered any substantial losses or waived any rights of material value, whether or not in the ordinary course of business, or suffered the loss of any material amount of prospective business, (ix) the Company has not made any changes in employee compensation, (x) the Company has not entered into any other transaction other than in the ordinary course of business consistent with past practice, or (xi) the Company has not entered into an agreement, written or otherwise, to take any of the foregoing actions. The Company does not have pending before the Commission any request for confidential treatment of information.

(j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency and/or regulatory authority (federal, state, county, local or foreign), including, but not limited to, the Federal Trade Commission, the Food and Drug Agency, the Consumer Product Safety Commission, the United States Department of Agriculture

and any State Attorney General (collectively, an “Action”) which is reasonably expected to (i) adversely affect or challenge the legality, validity or enforceability of any of the Transaction Documents and/or the Transaction Securities or (ii) result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor, to the knowledge of the Company, any current director or officer thereof, is the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. To the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission, administrative agency and/or regulatory authority involving the Company or any current directors or officers of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement that has been filed and not withdrawn by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which is reasonably expected to result in a Material Adverse Effect.

(l) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business, except in the case of clauses (i), (ii) and (iii) as is not reasonably expected to result in a Material Adverse Effect.

(m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as currently conducted, except where the failure to possess such permits would not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any written notice of proceedings relating to the revocation or modification of any Material Permit.

(n) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries, taken as a whole. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in material compliance.

(o) Intellectual Property Rights. The Company and its Subsidiaries own, or possess adequate rights or licenses to use all trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental authorizations, trade secrets and rights necessary to conduct their respective businesses as now conducted. None of the Company’s trademarks, trade names, service marks, service mark registrations, service names, patents, patent rights, copyrights, inventions, licenses, approvals, government authorizations, trade secrets or other intellectual

property rights have expired or terminated, or are expected to expire or terminate within two years from the date of this Agreement, except where such expiration or termination is not either individually or in the aggregate reasonably expected to have a Material Adverse Effect or where the Company has the opportunity to renew or otherwise maintain any of the foregoing. The Company and its Subsidiaries do not have any knowledge of any infringement by the Company or its Subsidiaries of trademarks, trade name rights, patents, patent rights, copyrights, inventions, licenses, service names, service marks, service mark registrations, trade secrets or other similar rights of others, or of any such development of similar or identical trade secrets or technical information by others and no claim, action or proceeding has been made or brought against, or to the Company’s knowledge, has been threatened against, the Company or its Subsidiaries regarding trademarks, trade name rights, patents, patent rights, inventions, copyrights, licenses, service names, service marks, service mark registrations, trade secrets or other infringement, except where such infringement, claim, action or proceeding is not reasonably expected to have either individually or in the aggregate a Material Adverse Effect. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their material intellectual properties.

(p) Transactions With Affiliates and Employees. Except as set forth on Schedule 3.1(p), none of the officers, directors and/or employees of the Company and the Subsidiaries is a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $60,000 other than (a) for payment of salary or consulting fees for services rendered, (b) reimbursement for expenses incurred on behalf of the Company and (c) for other employee benefits, including stock option agreements under any stock option plan of the Company.

(q) Internal Accounting Controls. The Company and each of its Subsidiaries maintains 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 GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

(r) Certain Fees. Except for payments payable to the Placement Agent by the Company, the Company has not entered into agreement to pay any brokerage or finder’s fees or commissions to any person including, but not limited to, any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchasers shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement, except to the extent a Purchaser made an agreement to make any such payment.

(s) Private Placement. Assuming the accuracy of the Purchasers representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Investor Securities by the Company to the Purchasers as contemplated hereby. The issuance and sale of the Transaction Securities hereunder does not contravene the rules and regulations of the Nasdaq SmallCap Market.

(t) Investment Company. The Company is not, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(u) No General Solicitation. Neither the Company, its Subsidiaries, any of their Affiliates nor any person acting on their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of the Transaction Securities.

(v) No Integrated Offering. Neither the Company, its Subsidiaries, any of their Affiliates nor any person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Transaction Securities under the Securities Act or cause the Offering to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable stockholder approval provisions, including without limitation, under the rules and regulations of any exchange or automated quotation system on which any of the securities of the Company are listed or designated. None of the Company, its Subsidiaries, their controlled Affiliates and any person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of any of the Transaction Securities under the Securities Act or cause the Offering to be integrated with other offerings.

(w) Tax Status. The Company and each of its Subsidiaries has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, except when the failure to do so would not be reasonably expected to have a Material Adverse Effect, and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations or to the Company’s knowledge otherwise due and payable, except those being contested in good faith and has set aside on its books reserves in accordance with GAAP reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes by the Company or any of its Subsidiaries in any material amount claimed to be due by the taxing authority of any jurisdiction.

(x) Registration Rights. Except with respect to Purchasers and the Placement Agent and except as provided on Schedule 3.1(x) hereto, no person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

(y) Right of First Refusal. Except with regard to Duncan Capital LLC, no person, firm or other business entity is a party to any agreement, contract or understanding, written or oral entitling such party to a right of first refusal to act as agent with respect to offerings of securities by the Company; provided, however, for the avoidance of doubt, it is agreed and understood that Duncan Capital LLC has no rights of first refusal to purchase securities in respect to this Offering.

(z) Disclosure. The Company confirms that, neither the Company nor any of its officers or directors has provided any of the Purchasers or their agents or counsel with any information that constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchasers will rely on the foregoing representations in effecting transactions in securities of the Company. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby in this Agreement and in the Disclosure Schedules to this Agreement, furnished by or on behalf of the Company, are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(aa) Insurance. Each of the Company and its Subsidiaries maintain insurance of the types and in the amounts deemed adequate for its business, including, but not limited to, product liability insurance, insurance covering real and personal property owned or leased by the Company and its subsidiaries against theft, damage, destruction, acts of vandalism and all other risks customarily insured against by companies of similar size and engaged in business similar to that of the Company, all of which insurance is in full force and effect.

(bb) Environmental. The Company and each of its Subsidiaries is, to its knowledge, in compliance with all applicable published rules and regulations (and applicable standards and requirements) of the United States Environmental Protection Agency (the “EPA”) and of any similar State agency, expect where the failure to be in such compliance would not reasonably be expected to have a Material Adverse Effect. There is no suit, claim, action or proceeding now pending before any court, governmental agency or board, or other forum, nor, to the knowledge of the Company, is any of the same threatened by any Person for (i) noncompliance by the Company with any environmental law, rule, regulation or requirement, or (ii) relating to the release or threatened release into the environment by the Company of any pollutant, toxic or hazardous material, oil, or waste generated by the Company. The Company has not released any Hazardous Materials (as hereinafter defined) at any site owned or leased by the Company or shipped any Hazardous Materials for treatment, storage or disposal at any other site of facility. For purposes of this Section 3.1(bb), “Hazardous Materials” shall mean and include any solid, hazardous or toxic waste, substance or material as defined in the United States Resource Conservation and Recovery Act; the Clean Air Act; the Clean Water Act; the Toxic Substances Control Act; the Comprehensive Environmental Response, Compensation and Liability Act; applicable state laws for the protection of the environment, and the regulations promulgated under any of the foregoing.

(cc) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company, (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (b) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (c) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

(dd) Sarbanes-Oxley Act. The Company is in substantial compliance with the applicable provisions of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), including the rules and regulations promulgated thereunder that are currently effective. The Company intends to materially comply with other applicable provisions of Sarbanes-Oxley, including the rules and regulations promulgated thereunder, upon the effectiveness of such provisions.

3.2 Representations and Warranties of the Purchasers; Affirmative Covenants. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants as of the date hereof and as of the Closing Date to the Company, acknowledging that the Company is relying upon the accuracy and completeness of the representations and warranties set forth herein to, among other things, ensure that registration under Section 5 of the Securities Act is not required in connection with the sale of the Securities pursuant hereto, as follows:

(a) Organization; Authority. Such Purchaser, if not a natural person, is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations thereunder, and the execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of such Purchaser. Each Transaction Document to which it is a party has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms.

(b) Investment Intent. Such Purchaser understands that the Investor Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Investor Securities as principal for its own account and not with a view to or for distributing or reselling such Investor Securities or any part thereof or interest therein, has no present intention of distributing any of such Investor Securities and has no arrangement or understanding with any other Person regarding the distribution of such Investor Securities. Such Purchaser is acquiring the Investor Securities hereunder in the ordinary course of its business. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Investor Securities.

(c) Purchaser Status. At the time such Purchaser was offered the Shares and Warrants, it was, and at the date hereof it is and on the Closing Date it will be an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Purchaser has completed the Accredited Investor Questionnaire, attached hereto as EXHIBIT C, attesting to the same, which questionnaire is incorporated herein by reference. Such Purchaser is not, and is not required to be, registered as a broker-dealer under Section 15 of the Exchange Act. In making an investment decision as to whether to purchase the Shares and Warrants offered hereby, each Purchaser has relied solely upon the SEC Reports and the representation and warranties of the Company contained herein. Each Purchaser has had the opportunity to ask questions of, and receive answers from, representatives of the Company concerning the Company and the officers and all such questions have been asked and answered by the Company to the satisfaction of the Purchaser.

(d) Experience of Such Purchaser. Each Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial

matters so as to be capable of evaluating the merits and risks of the prospective investment in the Investor Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk of an investment in the Investor Securities and, at the present time, is, and at the Closing will be, able to afford a complete loss of such investment.

(e) General Solicitation. Such Purchaser is not purchasing the Shares and Warrants as a result of any advertisement, article, notice or other communication regarding the Investor Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

(f) Compliance with the Securities Laws. Such Purchaser hereby confirms its understanding that it may not cover short sales made prior to the Effective Date with shares of Common Stock registered for resale in the Registration Statement.

(g) No Conflicts. The execution, delivery and performance of the Transaction Documents by such Purchaser and the consummation by such Purchaser of the transactions contemplated thereby, do not and will not conflict with or violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency, or court to which such Purchaser is subject or any provision of its organizational documents or other similar governing instruments or any provision of such Purchaser’s certificate or articles of incorporation, certificates of designation (or similar document related to preferred stock), bylaws and/or other organizational or charter documents.

(h) No Advice. Purchaser understands that nothing in this Agreement or any other materials presented to Purchaser in connection with the purchase and sale of the Investor Securities constitutes legal, tax or investment advice. Purchaser has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Investor Securities. Such Purchaser has reviewed with such Purchaser’s own tax advisors the United States and applicable foreign, federal, state, local, municipal and other tax consequences of an investment in and sale of the Investor Securities. Such Purchaser is relying solely on such advisors and not on any statements or representations of the Company or any of its representatives and understands that such Purchaser (and not the Company) shall be responsible for such Purchaser’s own tax liability that may arise as a result of an investment in the Investor Securities.

(i) No Litigation, Etc. There is no action, suit, proceeding, judgment, claim or investigation pending or, to the knowledge of the Purchaser, threatened against the Purchaser which could reasonably be expected in any manner to challenge or seek to prevent, enjoin, alter or materially delay any of the transactions contemplated by the Transaction Documents.

(j) Filings, Consents and Approvals. Such Purchaser is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by such Purchaser of the Transaction Documents, other than the filing by the Purchaser with the Commission of such reports under the Exchange Act as may be required in connection with this Agreement, the Transaction Documents and the transactions contemplated hereby and thereby, and any filings required by the securities or blue sky laws of the various states.

(k) Placement Agent. Each Purchaser agrees that neither the Placement Agent nor any of its respective directors, officers, affiliates, employees or agents shall be liable to the Purchaser for any action taken or omitted to be taken by it in connection therewith, except for bad faith, willful misconduct or gross negligence.

(l) Certain Fees. The Company shall have no obligation with respect to any fees incurred by any Purchaser or with respect to any claims made by or on behalf of other Persons for commissions, brokerage or finder’s fees that may be due to Persons from such Purchaser in connection with the transactions contemplated by this Agreement.

(m) Address. Each Purchaser hereby represents that the address of such Purchaser furnished by it at the end of this Subscription Agreement is the Purchaser’s principal residence if he or she is an individual or the address of its principal place of business address if it is a corporation or other entity.

(n) Confidentiality. Each Purchaser hereby agrees to and shall keep strictly confidential and will not disclose or divulge any confidential, proprietary or secret information which the Purchaser may obtain from the Company (the “Confidential Information”), including by way of example and not in limitation thereof, financial statements, reports and other materials submitted by the Company to the purchaser, (i) unless required to be disclosed by law or pursuant to any judgment, order, subpoena or decree of any court having competent jurisdiction, or unless such information is or becomes publicly known (other than as a result of this Section 3.2(m)), (ii) unless, to the extent applicable, to such Purchaser’s constituent limited partners; provided, however, that such Purchaser shall use its best efforts to ensure that such limited partner shall keep any Confidential Information disclosed confidential, or (iii) unless the Company gives its written consent to the Purchaser’s release of such information, except that no such written consent shall be required (and the Purchaser shall be free to release such information) if such information is to be provided to the Purchaser’s lawyer or accountant who are instructed to comply with this provision, and each Purchaser shall be responsible for making sure its lawyer and accountant so comply. For the avoidance of doubt, Confidential Information shall include the fact that Confidential Information has been made available hereunder, the fact that discussions and negotiations have taken place concerning a possible transaction involving the parties hereto and any of the terms, conditions or facts with respect thereto.

(o) Reliance on Advisors. Such Purchaser has reviewed with such Purchaser’s own tax advisors the United States and applicable foreign, federal, state, local, municipal and other tax consequences of an investment in the Buyer Common Stock, where applicable, and the Transactions. Such Seller is relying solely on such advisors and not on any statements or representations of Buyer or any of its representatives and understands that such Seller (and not Buyer) shall be responsible for such Seller’s own tax liability that may arise as a result of an investment in the Buyer Common Stock or as a result of the Transactions.

The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2 and Section 4.1.

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Investor Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Investor Securities other than pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, pursuant to Rule 144 (if appropriate documentation is provided satisfactory to legal counsel to the Company), in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor (and reasonably acceptable to the Company), the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Investor Securities under the Securities Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of a Purchaser under this Agreement and the Registration Rights Agreement.

(b) The Purchasers agree to the imprinting, so long as is required by this Section 4.1(b) or applicable law, of a legend on any of the Investor Securities in the following form:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF, THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT.

The Company acknowledges and agrees that a Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Investor Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and, if required under the terms of such arrangement, such Purchaser may transfer pledged or secured Investor Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be

required in connection with the grant of the pledge. Further, no notice shall be required of grant of the pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Transaction Securities may reasonably request in connection with a pledge or transfer of the Investor Securities, including the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder. Notwithstanding anything to the contrary, any such pledgee shall not be entitled to any rights under any of the Transaction Documents unless and until such pledgee executes a written agreement to be bound by Purchasers’ obligations under the Transaction Documents.

(c) Subject to compliance with all laws, rules and regulations including, but not limited to, the Securities Act and the Exchange Act, and the rules and regulations of any applicable Trading Market certificates evidencing the Shares and Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b)), (i) following any sale of the Shares or Warrant Shares pursuant to a registration statement (including the Registration Statement) covering the resale of such security, or (ii) following any sale of the Shares or Warrant Shares pursuant to Rule 144, or (iii) if such Shares or Warrant Shares are eligible for sale under Rule 144(k) and appropriate documentation is provided satisfactory to legal counsel to the Company, including, but not limited to and opinion of counsel reasonably satisfactory to the Company in form and substance reasonably satisfactory to the Company, or (iv) if such legend is not required under applicable regulation of the Securities Act (including judicial interpretations and pronouncements issued by the Staff of the Commission). The Company agrees that at such time as such legend is no longer required under and pursuant to this Section 4.1(c), it will, no later than three (3) Trading Days following the delivery by a Purchaser to the Company or the Company’s transfer agent of a certificate representing Shares and/or Warrant Shares, as the case may be, issued with a restrictive legend, deliver or cause to be delivered to such Purchaser (i) a certificate representing such securities that is free from all restrictive and other legends, or (ii) in lieu of delivering physical certificates representing the Shares and/or Warrant Shares, and provided that the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (or FAST) program, upon request of the Purchaser, the Company shall use its reasonable commercial efforts to cause its transfer agent to electronically transmit the Shares and/or Warrant Shares by crediting the account of the Purchaser’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (or DWAC) system. Except as required by applicable law, rules or regulations or the provisions of or rules and regulations governing any applicable Transaction Document, the Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.

(d) Each Purchaser severally and not jointly agrees that the removal of the restrictive legend from certificates representing the Shares and the Warrant Shares as set forth in this Section 4.1 is predicated upon the Company’s reliance that the Purchaser will sell any Investor Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom.

4.2 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of any of the Transaction Securities in a manner that

would require the registration under the Securities Act of the sale of the Investor Securities to the Purchasers or that would be integrated with the offer or sale of the Investor Securities for purposes of the rules and regulations of any Trading Market.

4.3 Securities Laws Disclosure; Publicity. The Company shall by 8:30 a.m., Eastern Daylight Time on the second Business Day following the Closing, issue a press release (which shall be followed by a Form 8-K filing within one (1) Business Day thereafter) or file a Current Report on Form 8-K, disclosing all material terms of the transactions contemplated hereby, to the extent permitted by applicable law. The Company and the Placement Agent shall consult with each other in issuing any press releases with respect to the transactions contemplated hereby, and neither the Company nor the Placement Agent shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Placement Agent, or without the prior consent of the Placement Agent (or Purchaser(s), if so requested), with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except (i) as required by federal securities law in connection with the Registration Statement contemplated by the Registration Rights Agreement and (ii) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure permitted under subclause (i) or (ii).

4.4 Shareholders Rights Plan. The Company has no shareholders rights plans or similar plans or arrangements presently in effect.

4.5 Use of Proceeds. The Company covenants and agrees that all of the net proceeds that it receives from the sale of the Shares and Warrants pursuant to this Agreement, although distributed, allocated and expended by the Company in its sole discretion, shall be used for general working capital and corporate purposes.

4.6 Form D and Blue Sky. The Company shall file a Form D with respect to the Transaction Securities as required under Regulation D under the Securities Act and, upon written request, provide a copy thereof to each Purchaser and the Placement Agent promptly after such filing. The Company shall, on or before the Closing, take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify any Transaction Securities for sale to the Purchasers and/or the Placement Agent pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of any such action so taken to the Purchasers on or prior to the Closing. The Company shall make all filings and reports relating to the offer and sale of the Transaction Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing.

4.7 Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue the Shares, the Warrant Shares and the Agent Shares.

4.8 Indemnification by the Purchasers. Notwithstanding the termination of this Agreement, each of the Purchasers severally and not jointly agrees to indemnify and hold harmless the Company and its officers, directors, agents, representatives, shareholders and employees and each of their respective Affiliates, from and against any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation, as incurred, that any such Person may suffer or incur which are caused by or arise out of (i) any material breach or default in the performance by it of any covenant, obligation or agreement made by it in this Agreement or in any of the Transaction Documents; (ii) any material misrepresentation or material breach of warranty or representation made by it in this Agreement or in any of the Transaction Documents; or (iii) the enforcement of this Agreement. Notwithstanding anything to the contrary provided herein or elsewhere, the liability of each Purchaser under this Section 4.8 shall be limited to the amount paid by the Purchaser pursuant hereto to purchase the Investor Securities, and the procedures and timing for indemnification by the Purchasers under this Section 4.8 shall follow the procedures and provisions of Sections 5.16(b) and (c), mutatis mutandis, with respect to indemnification by the Company of the Purchasers.

ARTICLE V.

MISCELLANEOUS

5.1 Fees and Expenses. Except as otherwise set forth in this Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.

5.2 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

5.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on (a) the next Business Day, if sent by U.S. nationally recognized overnight courier service, or (b) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications to the Company shall be as set forth below and for each Purchaser shall be as set forth on the signature pages attached hereto.

If to the Company:

Grant Ventures, Inc.

5792 South 900 East, Suite B

Salt Lake City, UT 84121

Attention:

Telephone: ( ) -

Facsimile: ( ) -

With a copy to:

Brown Raysman Millstein Felder & Steiner LLP

900 Third Avenue

New York, New York 10022

Attention: Steven S. Pretsfelder

Telephone: (212) 895-2625

Fax: (212) 895-2900

5.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and each Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No consideration shall be offered or paid to any person to amend or consent to a waiver or modification of any provision of the Transaction Documents unless the same consideration is also offered to all of the parties to the Transaction Documents or holders of the Shares or Warrants, as the case may be. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right.

5.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. Any reference herein to a Section or Schedule or Exhibit means a Section of or a Schedule or Exhibit to this Agreement, unless otherwise stated.

5.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of each Purchaser. Any Purchaser, however, may assign any or all of its Investor Securities and/or rights under this Agreement to any Person, provided such Purchaser complies with Section 4.1 and such transferee agrees in writing to be bound, with respect to the transferred Investor Securities and otherwise, by the provisions hereof that apply to the “Purchasers.”

5.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and, except as provided in Sections 4.10 and 5.16, is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

5.8 Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such

action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto.

5.9 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing and delivery of the Shares and Warrants and until no Purchaser owns any Shares, Warrants and/or Warrant Shares.

5.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof.

5.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.

5.12 Replacement of Investor Securities. If any certificate or instrument evidencing any Investor Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Investor Securities.

5.13 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

5.14 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof

are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall, to the extent permissible under applicable law, be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.

5.15 Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser represents that it has been represented by its own separate legal counsel in their review and negotiation of the Transaction Documents. The Company has elected to provide all Purchasers with the same terms and Transaction Documents for the convenience of the Company and not because it was required or requested to do so by the Purchasers.

5.16 Indemnification by the Company.

(a) From and after the Closing, the Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Purchaser, the officers, directors, agents and employees of each of them, each Person who controls any such Purchaser (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses relating to an Indemnified Party’s (as defined below) actions to enforce the provisions of this Section 5.16) (collectively, “Losses”), as incurred, that may be suffered or incurred which are caused by or arise out of (i) any material misrepresentation or material breach of any representation or warranty made by the Company in the Transaction Documents, or, (ii) any material breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents, or (iii) any cause of action, suit or claim brought or made against such Indemnified Party and arising out of or resulting from the execution, delivery, performance or enforcement of the Transaction Documents executed pursuant hereto by any of the Indemnified Parties. If the indemnification provided for in this Section 5.16 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses, then the Indemnifying Party (as defined below), in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the actions or omissions that resulted in such Losses as well as any other relevant equitable considerations. The Company shall notify the Purchasers promptly of the institution, threat or assertion of any proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

(b) Conduct of Indemnification Proceedings. If any proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Company (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, however, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have materially and adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such proceeding and to participate in, but not control, the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in a timely manner in any such proceeding; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel in writing that a conflict of interest actually would exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel for all Indemnified Parties in any matters related on a factual basis shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such proceeding affected without its written consent. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding.

(c) Timing of Payments. All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section 5.16 shall be paid to the Indemnified Party, as incurred, within fifteen (15) Trading Days of written notice thereof to the Indemnifying Party; provided, however, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties.

(Remainder of Page Intentionally Left Blank)

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

	GRANT VENTURES, INC.


	By:
	Name:
	Title:

PURCHASERS SIGNATURE PAGE


By:
Name:
Title:

Address

Facsimile Number

Tax Id #:

Subscription Amount:$

INDEX OF EXHIBITS AND SCHEDULES

EXHIBITS

Exhibit A	-	Form of Registration Rights Agreement

Exhibit B	-	Form of Warrant

Exhibit C	-	Accredited Investor Questionnaire

SCHEDULES

Schedule 1	-	List of Purchasers and Securities Received

Schedule 3.1(a)	-	Subsidiaries

Schedule 3.1(g)	-	Capitalization

Schedule 3.1(i)	-	Transactions with Affiliates and Employees

Schedule 3.1(x)	-	Registration Rights

EXHIBIT A

FORM OF REGISTRATION RIGHTS AGREEMENT

EXHIBIT B

FORM OF WARRANT

EXHIBIT C

ACCREDITED INVESTOR QUESTIONNAIRE

The Purchaser warrants and represents to the Company that it qualifies as an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Act by virtue of the fact that the Purchaser meets the following criteria at the time of the sale of the Shares and Warrants to the Purchaser (Purchaser to initial the applicable categories below):

I. ACCREDITED INVESTOR STATUS

A. Individual Investors: (Initial one or more of the following statements)

1. I certify that I am an accredited investor because I have had individual income (exclusive of any income earned by my spouse) of more than $200,000 in each of the two most recent calendar years and I reasonably expect to have an individual income in excess of $200,000 for the current year.

2. I certify that I am an accredited investor because I have had joint income with my spouse in excess of $300,000 in each of the two most recent calendar years and I reasonably expect to have joint income with my spouse in excess of $300,000 for the current year.

3. I certify that I am an accredited investor because I have an individual net worth, or my spouse and I have a joint net worth, in excess of $1,000,000.

B. Partnerships, Corporations, Trusts or Other Entities: (Initial one of the following statements)

1. The undersigned hereby certifies that it is an accredited investor because it is:

a. any corporation, partnership or Massachusetts or similar business trust, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

b. a trust with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he is capable of evaluating the merits and risks of an investment in the securities offered as described in Rule 506(b)(2)(ii) under the Act;

c. an employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974, whose investment decisions are made by a plan fiduciary, as defined in Section 3 (21) of such Act, which is either a bank, savings and loan association, an insurance company or registered investment adviser;

d. a self-directed employee benefit plan, with investment decisions made solely by persons that are accredited investors;

e. an employee benefit plan whose total assets exceed $5,000,000;

f. an organization described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;

g. a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;

h. any bank as defined in Section 3(a)(2) of the Act or any savings and loan association or other institution as defined in Section 3(a)(5)(A) of the Act whether acting in its individual or fiduciary capacity;

i. any broker dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934, as amended;

j. any insurance company as defined in Section 2(13) of the Act;

k. any investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act;

l. any Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or

2. The undersigned hereby certifies that it is an accredited investor because it is an entity in which each of the equity owners qualifies as an accredited investor under items A(1), (2) or (3) or item B(1) above.

		If the Purchaser is an INDIVIDUAL, or if purchased as JOINT TENANTS, as TENANTS IN COMMON, or as COMMUNITY PROPERTY:



Print Name(s)


Signature(s) of Purchaser(s)	Signature(s) of Purchaser(s)


Address

		If the Purchaser is a PARTNERSHIP, CORPORATION, TRUST, LIMITED LIABILITY PARTNERSHIP or LIMITED LIABILITY COMPANY:


Name of Partnership, Corporation, Trust, LLP or LLC

State of Organization

By:
	Name:
	Title:


Address

SCHEDULE 1

LIST OF PURCHASERS AND AMOUNTS

Name of Purchaser	Amount of Shares and Warrant Shares Purchased

1.	Shares	Warrant Shares

2.	Shares	Warrant Shares

3.	Shares	Warrant Shares

4.	Shares	Warrant Shares

5.	Shares	Warrant Shares

SCHEDULE 3.1(a)

SUBSIDIARIES

Impact Diagnostics, Inc., a Utah corporation

SCHEDULE 3.1(g)

CAPITALIZATION

		Shares
Common Stock, par value $0.01
Current Impact Shareholders		35,325,492
Current Grant Shareholders		6,000,000
Bridges & Pipes LLC		2,720,000
New Investors (ass. $2 million placement)		10,900,000
Total Common Stock		54,945,492

Convertible Notes
6% 1 year Note, $122,500 face value		1,328,939
6% 3 Year Note, $350,000 face value		417,667
		1,746,606

Options/Warrants
5 year warrant, Strike of $0.18 per share		545,000
New Investor Warrants, strike of $0.18		2,180,000
Management Options, Strike of $0.18		3,618,254
5 year warrants, Strike of $0.01 per share		2,695,000
		9,038,254

SCHEDULE 3.1(i)

TRANSACTIONS WITH AFFILIATES AND EMPLOYEES

None

SCHEDULE 3.1(x)

REGISTRATION RIGHTS

Citadel Holdings has piggyback registration rights with respect to 25,000 warrants it holds to purchase common stock of the Company and 417,667 warrants to purchase common stock of the Company to be issued to Citadel upon conversion of a $350,000 convertible promissory note issued by the Company to Citadel.

EX-4.2 8 a2143868zex-4_2.htm EXHIBIT 4.2

Exhibit 4.2

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this “Agreement”) is made and entered into as of , 2004, by and among Grant Ventures, Inc. (the “Company”), and the investors signatory hereto (each a “Purchaser” and collectively, the “Purchasers”).

This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof by and among the Company and the Purchasers (the “Purchase Agreement”).

The Company and the Purchasers hereby agree as follows:

1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the following meanings:

“Effectiveness Date” means, with respect to the Registration Statement required to be filed pursuant to Section 2(a), the earlier of (a) the 150^th calendar day from the Filing Date (or the 180^th day if reviewed by the Commission), and (b) the date on which the Commission declares the effectiveness of the Registration Statement.

“Effectiveness Period” shall have the meaning set forth in Section 2(a).

“Filing Date” means, with respect to the Registration Statement required to be filed hereunder, the date sixty (60) calendar days from the Closing Date.

“Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities (including any permitted assignee).

“Holders’ Representative” means Duncan Capital LLC, or any other person that has been appointed by the Holders of a majority of the Registrable Securities to act as representative of the Holders for purposes of this Agreement.

“Indemnified Party” shall have the meaning set forth in Section 5(c).

“Indemnifying Party” shall have the meaning set forth in Section 5(c).

“Losses” shall have the meaning set forth in Section 5(a).

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus

supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Registrable Securities” means the Shares, the Warrant Shares and any shares of Common Stock issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing or in connection with any provisions in the Warrants.

“Registration Statement” means the registration statements required to be filed hereunder, including (in each case) the Prospectus, amendments and supplements to the registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in the registration statement.

“Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar Rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar Rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“Securities Act” means the Securities Act of 1933, as amended.

“Trading Day” means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not quoted on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting price); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), and (ii) hereof, that Trading Day shall mean a Business Day.

“Warrants” shall mean the Common Stock purchase warrants issued to the Purchasers pursuant to the Purchase Agreement.

2. Registration.

(a) Mandatory Registration. No later than the Filing Date, the Company shall prepare and file with the Commission the Registration Statement covering the resale of all of the Registrable Securities which a Holder has requested to be included in such Registration Statement and for which such Holder has provided the Company with a completed Selling Securityholder Questionnaire, which offering shall be made on a continuous basis pursuant to Rule 415. The Registration Statement required hereunder shall be on Form SB-2 (or other applicable form). The Registration Statement required hereunder shall contain (except if otherwise directed by the Holders) the “Plan of Distribution” substantially in the form attached hereto as Annex A (which may be modified as required by the Securities Act and the rules and regulations thereunder and to respond to comments, if any, received by the Commission). The

Company shall use its commercially reasonable efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof and shall use its commercially reasonable efforts to keep the Registration Statement continuously effective under the Securities Act until the date when all Registrable Securities covered by the Registration Statement (a) have been sold pursuant to the Registration Statement or an exemption from the registration requirements of the Securities Act or (b) may be sold without any volume or other restrictions pursuant to Rule 144(k) (the “Effectiveness Period”).

(b) Filing Default Liquidation Damages. If a Registration Statement is not filed on or prior to the Filing Date, then the Company shall pay to each Holder an amount in cash until the earlier of the date a Registration Statement is filed and the Registrable Securities may be sold pursuant to Rule 144(k), as liquidated damages and not as a penalty, equal to (i) one (1%) percent of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for the first thirty (30) days (or a pro rata portion of one (1%) percent for any part thereof) following the Company’s failure to file, and (ii) an additional one (1%) percent of the aggregate purchase paid by such Holder thereunder for each thirty (30) day period subsequent thereto (or a pro rata portion of one (1%) percent for any part thereof), such payment(s) to be made in immediately available funds no later than five (5) days after the first date of each 30 day period (or any part thereof), as the case may be, during the Company’s failure to file.

(c) Effectiveness Default Liquidation Damages. In addition to any liquidated damages paid, accrued and/or to be paid pursuant to Section 2(b), if (1) a Registration Statement is not declared effective on or prior to 150 days from the Closing Date (or 180 days if reviewed by the Commission), or (2) if a Registration Statement has been declared effective and subsequent thereto is not effective for any period of time until the date no Holder owns any Registrable Securities or Warrants (an “Effectiveness Default”), then the Company shall pay to each Holder an amount in cash until the date a Registration Statement is declared effective (and permits the resale of the Registrable Securities covered thereby)(or if previously declared effective until the date the Registration Statement becomes effective (and otherwise permits the resale of the Registrable Securities covered thereby) again), as liquidated damages and not as a penalty, equal to (i) one (1%) percent of the aggregate purchase price paid by such Holder pursuant to the Purchase Agreement for the first thirty (30) days (or a pro rata portion of one (1%) percent for any part thereof), and (ii) an additional one (1%) percent of the aggregate purchase price paid by such Holder thereunder for each thirty (30) day period subsequent thereto (or a pro rata portion of one (1%) for any part thereof) until the earlier of (a) such date the Registration Statement is declared effective (or if previously declared effective until the date the Registration Statement becomes effective (and otherwise permits the resale of the Registrable Securities covered thereby) again), and (b) the Registrable Securities may be sold pursuant to Rule 144(k); provided, however, for purposes of this subsection (c), it shall not be considered an Effectiveness Default during any such period in which there is a Material Development Condition (as defined below) which is permitted pursuant to Section 6(o). Any such payment(s) shall be made in immediately available funds no later than five (5) days after the first day of each 30 day period of each such Effectiveness Default.

(d) Piggyback Registrations Rights.

(i) If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities (other than the

Registrable Securities of a Holder that failed to comply with its obligations under Section 2(d) or Section 3(j)), and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities (other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), then the Company shall send to each Holder a written notice of such determination and, if within ten (10) days after receipt by a Holder, the Company shall receive a request in writing from any such Holder, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that (A) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company determines for any reason not to proceed with such registration, the Company will be relieved of its obligation to register any Registrable Securities in connection with such registration, and (B) in case of a determination by the Company to delay registration of its securities, the Company will be permitted to delay the registration of Registrable Securities for the same period as the delay in registering such other securities, in any such case without any obligation or liability to any Holder. Any Holder who elects to include Registrable Securities in a registration statement pursuant to this Section 2(d) shall sell such Registrable Securities on the same terms and conditions as the equity securities of the Company or others (other than other Holders) are being sold pursuant to such registration statement. Notwithstanding the foregoing, nothing in this Section 2(d) shall permit the Company to file a registration statement in contravention of the restrictions in Section 6(b).

(ii) Notwithstanding anything in this Section 2(d) to the contrary, with respect to any registration described in this Section 2(d) that is an underwritten registration of the Company’s securities for the Company’s own account, if the managing underwriter advises the Company that the inclusion of some or all of the Registrable Securities requested to be included in such registration would interfere with the successful marketing (including pricing) of the equity securities of the Company to be registered by the Company, then the number of shares to be included in any such registration shall be included in the following order: (A) first, the shares to be registered by the Company; and (B) second, the Registrable Securities of the Holders requested to be included in such registration pursuant to Section 2(d)(i), on a pro-rata basis based on the Holders’ respective percentage ownership of the Company on a fully-diluted basis, and (C) third, Registrable Securities of all other holders who are entitled to include securities in such registration, on a pro-rata basis based on such holders’ respective percentage ownership of the Company on a fully-diluted basis.

(iii) Notwithstanding anything in this Section 2(d) to the contrary, with respect to any registration described in this Section 2(d) that is an underwritten registration of the Company’s securities for the account of other holders of such securities (“the “Demanding Holders”), if the managing underwriter advises the Company that the inclusion of some or all of the Registrable Securities requested to be

included in such registration pursuant to clause (i) of this Section 2(d) would interfere with the successful marketing (including pricing) of the equity securities of the Company to be registered by the Company, then the number of shares to be included in any such registration shall be included in the following order: (A) first, the securities of the Demanding Holders, (B) second, the Registrable Securities of the Holders requested to be included in such registration pursuant to Section 2(d)(i), on a pro-rata basis based on the Holders’ respective percentage ownership of the Company on a fully-diluted basis, (C) third, any shares to be registered by the Company for its own account, and (D) fourth, Registrable Securities of all other holders who are entitled to include securities in such registration, on a pro-rata basis based on such holders’ respective percentage ownership of the Company on a fully-diluted basis.

(e) Sufficient Number of Shares Registered.In the event the number of shares of Common Stock covered under a Registration Statement filed pursuant to Section 2(a) or Section 2(d) is insufficient to cover all of the Registrable Securities which such Registration Statement is required to cover, the Company shall amend the Registration Statement, or file a new Registration Statement (on the short form available therefor, if applicable), or both, so as to cover at least 100% of the Registrable Securities, in each case, as soon as practicable, but in any event not later than ten (10) Business Days after the necessity therefor arises. The Company shall use its commercially reasonable efforts to cause such amendment and/or new Registration Statement to become effective as soon as practicable following the filing thereof. For purposes of the foregoing provision, the number of shares of Common Stock covered under a Registration Statement shall be deemed “insufficient to cover all of the Registrable Securities” if the number of Registrable Securities issued or issuable upon exercise of the Warrants covered by such Registration Statement is greater than the number of shares of Common Stock available for resale under the Registration Statement to cover shares issued or issuable upon exercise of the Warrants.

(f) Participation in Underwritten Registrations. No Holder may participate in any underwritten registration with respect to the Registrable Securities unless such Holder completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents reasonably required under the terms of such underwriting agreements.

(g) Other Requirements. In connection with any Registration Statement under Section 2(a) or any registration statement under Section 2(d), Holders whose Registrable Securities are included therein shall provide such information and shall execute and deliver to the Company such documents, including, but not limited to, a selling securityholder questionnaire in customary form and substance reasonably satisfactory to the Company, as the Company may reasonably request in order to effect such registration pursuant to this Agreement and in accordance with applicable securities laws.

3. Registration Procedures. In connection with the Company’s registration obligations hereunder, the Company shall:

(a) Not less than three (3) Trading Days prior to the filing of the Registration Statement or any related Prospectus or any amendment or supplement thereto, (i) furnish to the Holders’ Representative copies of all such documents substantially in the form proposed to be

filed (including documents incorporated or deemed incorporated by reference to the extent requested by such Person) which documents will be subject to the review of the Holders’ Representative, and (ii) subject, if appropriate, to the execution of confidentiality agreements in form acceptable to the Company, cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel to conduct a reasonable investigation within the meaning of the Securities Act.

(b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to the Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Registration Statement continuously effective as to the applicable Registrable Securities for the Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; and (iii) respond as promptly as reasonably practicable to any comments received from the Commission with respect to the Registration Statement or any amendment thereto and, as promptly as reasonably practicable, upon request, provide the Holders’ Representative true and complete copies of all correspondence from and to the Commission relating to the Registration Statement (subject, if appropriate, to the execution of confidentiality agreements in form acceptable to the Company).

(c) Notify the Holders of Registrable Securities to be sold as promptly as reasonably possible (and, in the case of (i)(A) below, not less than three (3) Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing promptly following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of the Registration Statement and whenever the Commission comments in writing on the Registration Statement (the Company shall upon request provide true and complete copies thereof and all written responses thereto to each of the Holders, subject, if appropriate, to the execution of confidentiality agreements in form acceptable to the Company); and (C) with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to the Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or passage of time that makes the financial statements included in the Registration Statement ineligible for inclusion therein or any statement made in the Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to the Registration Statement, Prospectus or other documents so that, in the case of the Registration Statement or the Prospectus, as the case may be, it 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, in light of the circumstances under which they were made, not misleading.

(d) Use its commercially reasonable efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment.

(e) Promptly deliver to each Holder no later than two (2) business days after the Effectiveness Date, without charge, two (2) copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto (and, upon the request of the Holder such additional copies as such Persons may reasonably request in connection with resales by the Holder of Registrable Securities). The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto, except after the giving of any notice pursuant to Section 3(c).

(f) Prior to any resale of Registrable Securities by a Holder, use its commercially reasonable efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from the registration or qualification) of such Registrable Securities for the resale by the Holder under the securities or Blue Sky laws of such jurisdictions within the United States as any Holder reasonably requests in writing, to keep such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it is not then so qualified, subject the Company to any material tax in any such jurisdiction where it is not then so subject or file a general consent to service of process in any such jurisdiction.

(g) If requested by the Holders, cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statement, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request.

(h) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Registration Statement nor such Prospectus will contain 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, in light of the circumstances under which they were made, not misleading.

(i) Use its reasonable commercial efforts to comply in all material respects with all applicable rules and regulations of the Commission relating to the registration of the Registrable Securities pursuant to the Registration Statement or otherwise.

(j) The Company shall not be required to include in any Registration Statement the Registrable Securities of any Holder that does not complete a Selling Shareholder Questionnaire.

(k) The Company shall use its commercially reasonable efforts to arrange for at least two (2) market makers to register with the National Association of Securities Dealers, Inc. (“NASD”) as such with respect to such Registrable Securities. The Company shall pay all fees and expenses in connection with satisfying its obligation under this Section 3(k).

(l) The Company shall make all documents, files, books, records, officers, directors and employees of the Company reasonably available to the Holders’ Representative, one legal counsel to the Holders and one firm of accountants retained by the Holders (collectively, the “Inspectors”), and make such other accommodations as are reasonably necessary for the Inspectors, if any, to perform a due diligence review of the Company; provided, however, that all such information (“Confidential Information”) will be kept confidential and not utilized by the Inspectors except as contemplated herein and except as required by law or court order. The term Confidential Information also includes any information included in a draft Registration Statement or any related Prospectus or any amendment or supplement hereto provided to a Holder pursuant to Section 3(a); for the avoidance of doubt, however, as noted in Section 3(a) above, the Company shall not furnish to Holders, without their prior approval, any information that constitutes or might constitute material, non-public information. The term Confidential Information does not include information that (a) is already in possession of such other party (other than that which is subject to another confidentiality agreement or unless obtained from a third party where the receiving party knows that the third party was subject to a confidentiality agreement), (b) becomes generally available to the public, or (c) becomes available on a non-confidential basis from a source other than the Company unless obtained from a third party where the receiving party knows that the third party was subject to a confidentiality agreement. Each Holder agrees that it shall, upon learning that disclosure of such Confidential Information is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt notice to the Company and allow the Company, at its expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, the information deemed confidential.

(m) The Company shall hold in confidence and not make any disclosure of information concerning any Holder provided to the Company unless (a) such information is already in possession of the Company, (b) such information becomes available to the Company on a non-confidential basis from a person other than such Holder who is not known by the Company to be otherwise bound by a confidentiality or comparable agreement with such Holder (c) disclosure of such information is necessary to comply with federal or state securities laws, (d) the disclosure of such information is necessary to avoid or correct a misstatement or omission in any Registration Statement or Prospectus, (e) the release of such information is ordered pursuant to a subpoena or other final, non-appealable order from a court or governmental body of competent jurisdiction, (f) such information has been made generally available to the public other than by disclosure in violation of this Agreement or any other agreement to which the

Company is a party, or (g) such Holder consents to the form and content of any such disclosure (the Holders shall be deemed to consent to the inclusion of any information provided in the Selling Shareholder Questionnaire in the Registration Statement, any Prospectus related thereto, and any amendments or supplements thereto). The Company agrees that it shall, upon learning that disclosure of such information concerning any Holder is sought in or by a court or governmental body of competent jurisdiction or through other means, give prompt written notice to such Holder and allow such Holder, at the Holder’s expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective order for, such information.

(n) The Company covenants that it shall file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder so long as the Holder owns any Registrable Securities, but in no event longer than two (2) years; provided, however, the Company may delay any such filing but only pursuant to Rule 12b-25 under the Exchange Act, and the Company shall use commercially reasonable efforts to take such further action as any Holder of Registrable Securities may reasonably request (including without limitation, promptly obtaining any required legal opinions from Company counsel necessary to effect the sale of Registrable Securities under Rule 144 and paying the related fees and expenses of such counsel), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Holder of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements.

4. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to the Registration Statement, other than fees and expenses of counsel or any other advisor retained by the Holders and discounts, fees and commissions with respect to the sale of any Registrable Securities by the Holders. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with the Trading Market on which the Common Stock is then listed for trading, and (B) to effect compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing Prospectuses), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange or other trading market as required hereunder.

5. Indemnification

(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (including the cost (including without limitation, reasonable attorneys’ fees) and expenses relating to an Indemnified Party’s actions to enforce the provisions of this Section 5) (collectively, “Losses”), as incurred, to the extent arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue (or alleged untrue) statements or omissions (or alleged omissions) are based solely upon information regarding such Holder furnished (or in the case of an omission, not furnished) in writing to the Company by or on behalf of such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed by such Holder expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has reviewed Annex A hereto for this purpose), (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), or (3) the failure of the Holder to deliver a Prospectus as amended or supplemented prior to the confirmation of a sale. The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement.

(b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, to the extent arising out of or based upon: (x) such Holder’s failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statement or omission is contained in any information so furnished (or in the case of an omission, not furnished) in writing by or on behalf of such Holder to the Company specifically for inclusion in the Registration Statement or such Prospectus or (ii) to the extent that (1) such

untrue statements or omissions are based solely upon information regarding such Holder furnished (or in the case of an omission, not furnished) in writing to the Company by or on behalf of such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed by such Holder expressly for use in the Registration Statement (it being understood that the Holder has reviewed Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto, or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of the Advice contemplated in Section 6(d), or (3) the failure of the Holder to deliver a Prospectus prior to the confirmation of a sale. In no event shall the liability of any selling Holder hereunder be greater in amount than the gross proceeds received by the Holder with respect to the sale of its Registrable Securities.

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that such failure shall have materially prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in (but not control) the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have failed to assume the defense of such Proceeding in a timely manner and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel in writing that a conflict of interest would exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of one separate counsel for all Indemnified Parties in any matters related on a factual basis shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding affected without its written consent. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such

Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within fifteen (15) Trading Days of written notice thereof to the Indemnifying Party; provided, that the Indemnified Party shall promptly reimburse the Indemnifying Party for that portion of such fees and expenses applicable to such actions for which such Indemnified Party is not entitled to indemnification hereunder, determined based upon the relative faults of the parties.

(d) Contribution. If a claim for indemnification under Section 5(a) or Section 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

(e) The parties hereto agree that it would not be just and equitable if contribution pursuant to Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in Section 5(d). Notwithstanding the provisions of Section 5(d), no Holder shall be required to indemnify or contribute, in the aggregate, pursuant to this Article 5, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, except in the case of fraud by such Holder. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. No party guilty of fraudulent misrepresentation pursuant to Section 11(f) of the Securities Act shall be entitled to contribution from any other party.

6. Miscellaneous.

(a) Remedies. In the event of a breach by the Company or by a Holder of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby

further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate.

(b) No Piggyback on Registrations. Other than those securities (including securities issuable upon exercise of warrants) that may be issued to Holders and/or the Placement Agent and/or its designee(s), the securities set forth on Schedule 3.1(z) of the Purchase Agreement and such other securities as may be consented to in writing by the Placement Agent, neither the Company nor any of its security holders may include securities of the Company in a Registration Statement filed pursuant to Section 2(a) hereof. Other than pursuant to rights granted to the Placement Agent and/or to Holders in this Agreement, no Person has any right to cause the Company to effect a registration under the Securities Act of any securities of the Company.

(c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement.

(d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph.

(e) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of at least 75% of the then outstanding Registrable Securities (assuming the exercise of all Warrants, whether exercised or not), whereupon such amendment, modification, supplement or waiver shall be binding on all Holders; provided, however, that no consideration shall be offered or paid to any Holder to amend or consent to a waiver or modification of any provision of this Agreement unless the same consideration (on a pro-rata basis) is also offered to all of the Holders under this Agreement.

(f) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (ii) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be delivered and addressed as set forth in the Purchase Agreement

(g) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement.

(h) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof.

(i) Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the City, County and State of New York. By its execution hereof, the parties hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto.

(j) Cumulative Remedies. Subject to the first sentence of Section 6(a), the remedies provided herein are cumulative and not exclusive of any remedies provided by law.

(k) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

(l) Headings; Section References. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. References to Sections mean Sections of this Agreement unless otherwise stated.

(m) Independent Nature of Purchasers’ Obligations and Rights. The obligations of each Purchaser hereunder is several and not joint with the obligations of any other Purchaser hereunder, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser hereunder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary

for any other Purchaser to be joined as an additional party in any proceeding for such purpose. Each Purchaser represents that it has been represented by its own separate legal counsel in its review and negotiation of this Agreement. The Company has elected to provide all Purchasers with the same terms and documents for the convenience of the Company and not because it was required to do so by the Purchasers.

(n) Assignment of Registration Rights. The rights under this Agreement shall be automatically assignable by any Holder to any permitted transferee of all or any portion of Registrable Securities if: (a) such Holder agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company within a reasonable time after such assignment; (b) the Company is, within a reasonable time after such transfer or assignment, furnished with written notice of (i) the name and address of such transferee or assignee, and (ii) the securities with respect to which such registration rights are being transferred or assigned; and (c) at or before the time the Company receives the written notice contemplated by clause (b) of this sentence the transferee or assignee agrees in writing with the Company to be bound by all of the provisions contained herein.

(o) Deferral Period. With respect to any Registration Statement filed or to be filed pursuant to Section 2, if the Company determines that, in its good faith judgment, it would (because of the existence of, or in reasonable anticipation of, any acquisition or corporate reorganization or other transaction, financing activity, stock repurchase or other material development involving the Company or any subsidiary, or the unavailability for reasons beyond the Company’s control of any required financial statements or other material information, or any other event or condition material to the Company or any subsidiary) be materially disadvantageous to the Company to proceed with such Registration Statement or that the Company is required by applicable law, rules or regulations not to proceed with the Registration Statement (a “Material Development Condition”), then the Company shall, notwithstanding any other provisions of this Agreement, be entitled, upon the giving of a written notice that a Material Development Condition has occurred (a “Delay Notice”) from an officer of the Company to the Placement Agent, as the representative of the Purchasers, (i) to cause sales of Registrable Securities by the Purchasers pursuant to such Registration Statement to cease, (ii) to cause such Registration Statement to be withdrawn and the effectiveness of such Registration Statement suspended, or (iii) in the event no such Registration Statement has yet been filed or declared effective, to delay filing or effectiveness of any such Registration Statement until, in the good faith judgment of the Company, such Material Development Condition shall be disclosed or no longer exists (notice of which the Company shall promptly deliver to the Placement Agent, as the representative of the Purchasers). Notwithstanding the foregoing provisions of this Section 6(o), (1) in no event may such cessation or delay be for a period of more than sixty (60) consecutive days from giving of its Delay Notice to the Purchasers with respect to such Material Development Condition, as above provided, or more than one hundred twenty (120) days in any twelve (12) months; and (2) in the event a Registration Statement is filed and subsequently withdrawn by reason of any existing or anticipated Material Development Condition as provided above, the Company shall cause a new Registration Statement covering the Registrable Securities to be filed with the Commission as soon as reasonably practicable after such Material Development Condition ceases to exist or, if sooner, as practicable after the expiration of such sixty (60) day period.

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above.

	GRANT VENTURES, INC.


	By:
		Name:
		Title:

(PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)




	By:
	Name:
	Title:



	By:
	Name:
	Title:



	By:
	Name:
	Title:

ANNEX A

Plan of Distribution

The Selling Stockholders and any of their pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares:

• ordinary brokerage transactions and transactions in which the broker/dealer solicits purchasers;

• block trades in which the broker/dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

• purchases by a broker/dealer as principal and resale by the broker/dealer for its account;

• an exchange distribution in accordance with the rules of the applicable exchange;

• privately negotiated transactions;

• put or call options transactions;

• settlement of short sales;

• broker/dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share;

• a combination of any such methods of sale; and

• any other method permitted by applicable law.

The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker/dealers engaged by the Selling Stockholders may arrange for other brokers/dealers to participate in sales. Broker/dealers may receive commissions from the Selling Stockholders (or, if any broker/dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions to exceed what is customary in the types of transactions involved.

The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the donees, pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus, or under an amendment to this

prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of Selling Stockholders to include the donee, pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus.

The Selling Stockholders and any broker/dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker/dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions under the Securities Act. The Selling Stockholders have informed the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.

At the time a particular offering of securities is made, to the extent required, a prospectus supplement will be distributed which will set forth the number of securities being offered and the terms of the offering, including the purchase price or the public offering price, the name or names of any underwriters, dealers or agents, the purchase price paid by any underwriters for securities purchased from the Selling Stockholders, any discounts, commissions and other items constituting compensation from the selling security holders and any discounts, commissions or concessions allowed or reallowed or paid to dealers.

Pursuant to applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the securities offered under this prospectus may not simultaneously engage in market activities for the shares of common stock for a period of five business days prior to the commencement of such distribution. In addition, each Selling Stockholder and any other person who participates in a distribution of the securities will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and may affect the marketability of the securities and the ability of any person to engage in market activities for the shares of common stock.

The Company is required to pay all fees and expenses incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

EX-4.3 9 a2143868zex-4_3.htm EXHIBIT 4.3

Exhibit 4.3

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY SUCH SECURITIES.

GRANT VENTURES, INC.

WARRANT TO PURCHASE SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after , 2009)

PPW -

THIS COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, (the “Holder”), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after , 2004 (the “Exercise Date”) and on or prior to the close of business on , 2009 (the “Termination Date”), but not thereafter, to subscribe for and purchase from GRANT VENTURES, INC., a corporation (the “Company”), up to [ ] shares (the “Warrant Shares”), of common stock, par value $ per share, of the Company (the “Common Stock”). The initial purchase price of one (1) share of Common Stock under this Warrant shall be equal to $0.1835 (the “Exercise Price”). The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided elsewhere herein.

Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that certain Securities Purchase Agreement dated the date hereof between the Company and the Purchasers set forth on Schedule 1 thereto (the “Purchase Agreement”).

1. Title to Warrant. Prior to the Termination Date and subject to compliance with applicable laws and Section 7 of this Warrant, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed. The transferee shall sign an investment letter in form and substance reasonably satisfactory to the Company.

2. Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue and liens and charges incurred by the Holder).

3. Exercise of Warrant

(a) Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Exercise Date and on or before the Termination Date by the surrender of this Warrant and the Notice of Exercise Form annexed hereto duly executed, at the office of the Company (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company), and upon payment of the Exercise Price of the Warrant Shares (subject to Section 3(d) below), thereby purchased by wire transfer or cashier’s check drawn on a United States bank or by means of a cashless exercise pursuant and subject to Section 3(d) (if applicable), the Holder shall be entitled to receive a certificate for the number of Warrant Shares so purchased. Certificates for Warrant Shares purchased hereunder shall be delivered to the Holder within three (3) Trading Days after the date on which this Warrant shall have been exercised as aforesaid; provided, however, that (i) if the Company elects (and the Holder is able to receive electronic delivery in such manner), or (ii) if the Holder requests, and provided that the Company’s transfer agent is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (or FAST) program, the Company may or shall, as the case may be, cause its transfer agent to electronically transmit the Warrant Shares by crediting the account of the Purchaser’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (or DWAC) system.

This Warrant shall be deemed to have been exercised and such Warrant Shares shall be deemed to have been issued, and the Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been properly exercised by receipt by the Company of the Notice to Exercise and payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 5 have been paid. If such conditions by the Holder have been met, and the Company fails to deliver to the Holder the Warrant Shares pursuant to this Section 3(a) by the close of business on the third (3^rd ) Trading Day after the date of such conditions being met by the Holder, then the Holder will have the right to rescind such exercise.

(b) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.

(c) If, but only if, at the time of exercise of this Warrant (in whole or in part) at any time after the Exercise Date there is no effective Registration Statement which is then available registering the resale of the Warrant Shares by the Holder, this Warrant may also be exercised at such time by means of a “cashless exercise” in which the Holder shall be entitled to receive the number of Warrant Shares equal to the quotient obtained by dividing [(A-B) (X)] by (A), where:

(A) = the Closing Price on the Trading Day preceding the date of such election;

(B) = the Exercise Price of the Warrants, as adjusted; and

(X) = the number of Warrant Shares issuable upon exercise of the Warrants in accordance with the terms of this Warrant.

4. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

5. Charges, Taxes and Expenses. Issuance of the Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of

such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event the Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the payment of a sum sufficient for any transfer tax incidental thereto.

6. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.

7. Transfer, Division and Combination.

(a) Subject to compliance with any applicable securities laws and the conditions set forth in Section 1 and Section 7(e) hereof and to the provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights hereunder are transferable, in whole or in part, upon surrender of this Warrant at the principal office of the Company, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.

(b) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 7(a), as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(c) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 7.

(d) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(e) If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel reasonably satisfactory to the Company (which opinion shall be in form, substance and scope reasonably satisfactory to the Company) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

8. No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof. Upon the

surrender of this Warrant and the payment of the aggregate Exercise Price (or by means of a cashless exercise), the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

9. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

10. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of New York, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of New York.

11. Certain Adjustments to Exercise Price and Number of Warrant Shares.

(a) Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 11(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event.

the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) and, if an entity different from the successor or acquiring corporation, the entity whose common stock or Other Property the holders of the Common Stock are entitled to receive as a result of such transaction, shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 11(b). For purposes of this Section 11(b), “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 11(b) shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets.

12. Voluntary Adjustment by the Company. The Company may at any time during the term of this Warrant reduce the then current Exercise Price to any amount and for any period of time deemed appropriate by the Board of Directors of the Company.

13. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

14. Notice of Corporate Action. If at any time:

(a) the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

then, in any one or more of such cases, the Company shall give to Holder (i) at least 10 days’ prior

written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same is expected to take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which the holders of Common Stock shall be entitled to receive any such dividend, distribution or right, and the amount and character thereof, and (ii) the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the books of the Company and delivered in accordance with Section 16(d). Failure to give such notice, or any defect therein, shall not affect the validity of such action, so long as such failure does not materially prejudice the rights of the Holders.

15. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for (or facilitate electronic delivery of) the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take reasonable commercial action to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the principal Trading Market upon which the Common Stock may be listed.

(a) Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant, and (c) use commercially reasonable best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(b) Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.

16. Miscellaneous.

(a) Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a federal or state court located in the

City, County and State of New York. By its execution hereof, the Company, and by its acceptance of this Warrant, the Holder, hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the City, County and State of New York and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in New York City. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements.

(b) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant will have legends imprinted upon any stock certificates evidencing such Warrant Shares and the Company will notify its transfer agent of restrictions upon resale imposed by the applicable state and federal securities laws.

(c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date. If the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.

(d) Notices. Any notice, request or other document required or permitted to be given or delivered to the Holder by the Company shall be delivered in accordance with the notice provisions of the Purchase Agreement; provided, however, upon any permitted assignment of this Warrant, the assignee shall promptly provide the Company with its contact information.

(e) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant or purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

(f) Remedies. Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

(g) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(h) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(i) Severability. Wherever possible, each provision of this Warrant shall be

interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(j) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

17. Redemption of Warrants.

(a) Commencing on , 2004, on not less than ten (10) days’ written notice (the “Redemption Notice”), to the holder of this Warrant, this Warrant may be redeemed, at the option of the Company, in whole and not in part, at a redemption price of $.01 per Warrant (the “Redemption Price”), provided (i) the “Market Price” of a share of Common Stock shall equal at least two hundred percent (200%) of the Exercise Price for the twenty (20) consecutive Trading Days ending on the Trading Day immediately prior to the date of the Redemption Notice (the “Target Price”), subject to adjustments as set forth in Section 11 hereof, (ii) the Company then has sufficient authorized capital to permit issuance of the full number of Warrant Shares upon exercise of the Warrant, (iii) the Warrant Shares are listed or included for trading on a Trading Market and (iv) a registration statement covering the Warrant Shares filed under the Securities Act of 1933, as amended (the “Securities Act”) has been declared effective by the Securities and Exchange Commission and remains effective on the date fixed for redemption of this Warrant (the “Redemption Date”). For purposes of this Warrant, Market Price is defined as the closing bid price per share of Common Stock on the principal Trading Market on which the Common Stock is included for trading; provided, that if there is no trading in the Common Stock on a particular Trading Day on the relevant principal Trading Market, the Market Price for that day shall be the Market Price on the last preceding Trading Day on which there was trading in the Common Stock on the principal Trading Market.

(b) If the conditions set forth in Section 17 are met, and the Company desires to exercise its right to redeem this Warrant, it shall mail a Redemption Notice to the registered holder of this Warrant by first class mail, postage prepaid, not later than the fifth (5^th) day before the date fixed for redemption, as provided in Section 17(a) hereof.

(c) The Redemption Notice shall specify (i) the Redemption Price, (ii) the Redemption Date, (iii) the place where the Warrant certificates shall be delivered and the redemption price paid, and (iv) that the right to exercise this Warrant shall terminate at 5:00 p.m. (New York time) on the business day immediately preceding the Redemption Date. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity of the proceedings for such redemption except as to a holder (a) to whom notice was not mailed, or (b) whose notice was defective. An affidavit of the Secretary or an Assistant Secretary of the Company that the Redemption Notice has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

(d) Any right to exercise a Warrant shall terminate at 5:00 p.m. (New York time) on the business day immediately preceding the Redemption Date. On and after the Redemption Date, the holder of this Warrant shall have no further rights except to receive, upon surrender of this Warrant, the Redemption Price.

(e) From and after the Redemption Date, the Company shall, at the place specified in the Redemption Notice, upon presentation and surrender to the Company by or on behalf of the holder thereof the warrant certificates evidencing this Warrant being redeemed, deliver, or cause to be delivered to or upon the written order of such holder, a sum in cash equal to the Redemption Price of

this Warrant. From and after the Redemption Date, this Warrant shall expire and become void and all rights hereunder and under the warrant certificates, except the right to receive payment of the Redemption Price, shall cease.

(f) If the shares of Common Stock are subdivided or combined into a greater or smaller number of shares of Common Stock, the Target Price shall be proportionately adjusted by the ratio which the total number of shares of Common Stock outstanding immediately prior to such event bears to the total number of shares of Common Stock to be outstanding immediately after such event.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: , 2004

	GRANT VENTURES, INC.


	By:
		Name:
		Title:

NOTICE OF EXERCISE*

To: GRANT VENTURES, INC.

The undersigned hereby elects to purchase Warrant Shares of GRANT VENTURES, INC. pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any.

1. Payment shall take the form of (check applicable box):

o in lawful money of the United States; or

o the cancellation of such number of Warrant Shares as is necessary, in accordance with and pursuant to Section 2(c) (but only if, at the time of exercise of this Warrant at any time after the Exercise Date there is no effective Registration Statement registering the resale of the Warrant Shares by the Holder or the Holder is otherwise prohibited from reselling its Warrant Shares pursuant to an effective Registration Statement), to exercise this Warrant with respect to the number of Warrant Shares specified above purchasable pursuant to the cashless exercise procedures set forth in Section 2(c).

2. Please issue a certificate or certificates representing (or facilitate electronic delivery of) said Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Warrant Shares shall be delivered to the following:

3. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended, and reaffirms the representations and warranties set forth in Section 3.2 of the Purchase Agreement as if made on the date hereof.

	[PURCHASER]


	By:
		Name:
		Title:

* All capitalized terms not otherwise defined herein shall have the meanings set forth in or incorporated by reference in the Warrant.

FORM OF ASSIGNMENT*

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under the within the Warrant, with respect to the number of Warrant Shares of Common Stock set forth below:

Name of Assignee	Address	No. of Warrant Shares

and does hereby irrevocably constitute and appoint Attorney to make such transfer on the books of GRANT VENTURES, INC., maintained for the purpose, with full power of substitution in the premises.

Dated:


			(Signature)

			(Witness)

The undersigned Assignee of the Warrant hereby makes to GRANT VENTURES, INC., as of the date hereof, with respect to the Assignee, all of the representations and warranties made by the Holder in the Registration Rights Agreement and the Purchase Agreement, and the undersigned Assignee agrees to be bound by all the terms and conditions of the Purchase Agreement, the Warrant and the Registration Rights Agreement.

Dated:


			(Signature)

* All capitalized terms not otherwise defined herein shall have the meanings set forth in or incorporated by reference in the Warrant.

EX-10.1 10 a2143868zex-10_1.htm EXHIBIT 10.1

Exhibit 10.1

THIS CONVERTIBLE NOTE AND THE SHARES OF COMMON STOCK OF IMPACT DIAGNOSTICS, INC. INTO WHICH THIS CONVERTIBLE NOTE IS CONVERTIBLE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY STATE SECURITIES LAW, AND MAY NOT BE PLEDGED, SOLD, ASSIGNED OR TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAW OR (ii) MAKER RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF THIS CONVERTIBLE NOTE OR OF SUCH COMMON STOCK WHICH OPINION AND COUNSEL ARE SATISFACTORY TO MAKER, THAT THE CONVERTIBLE NOTE OR SHARES MAY BE PLEDGED, SOLD, ASSIGNED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAW.

IMPACT DIAGNOSTICS, INC.

6% CONVERTIBLE PROMISSORY NOTE

Due July 15, 2007

$350,000

As of July 23, 2004

FOR VALUE RECEIVED, Impact Diagnostics, Inc., a Utah corporation (“Maker”), with its principal offices at 5792 South 900 East, Suite B, Salt Lake City, Utah 84121, does hereby unconditionally promise to pay to the order of James H. Donell, Receiver, as receiver of Citadel Capital Management, Inc. (“Payee”), with principal offices at 12121 Wilshire Boulevard, Suite 200, Los Angeles, California 90025, the principal sum of THREE HUNDRED FIFTY THOUSAND AND 00/100 DOLLARS ($350,000) on July 15, 2007 (the “Maturity Date”) together with all accrued and unpaid interest. Interest shall accrue from the date hereof and shall be payable on the principal amount hereof at the rate of six percent (6%) per annum. The Company shall pay interest quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, commencing October 15, 2004.

This Convertible Note and the warrant issued by Maker on the date hereof to Payee to purchase 89,500 shares of Common Stock of Maker (the “Warrant”) are issued in exchange and settlement of all obligations of Maker under a promissory note in the original principal amount of $578,000 made on or about June 8, 2001 by Maker to Payee and said original note is now null and void and of no further effect and has been surrendered to Maker for cancellation and replacement and all debts and obligations under said original note are fully extinguished.

1. Interest. Interest will be computed on the basis of a 360-day year of twelve 30-day months.

2. Prepayment. Maker may prepay, at any time, all or any portion of this Convertible Note, together with all accrued and unpaid interest thereon, without premium or

penalty; provided that Maker shall have first given to Payee ten (10) days notice of such prepayment.

3. Conversion of Convertible Note.

3.1 By Payee.

(a) Payee shall have the right, at its option, at any time or from time to time after the date hereof prior to the Maturity Date, to convert the principal amount and any unpaid interest hereof, in whole or in part, into fully-paid and non-assessable shares of common stock, par value $0.001 per share, of Maker (the “Common Stock”). The number of shares of Common Stock issuable upon conversion of this Convertible Note shall be equal to the quotient of the principal amount of this Convertible Note (or the portion thereof), plus all accrued and unpaid interest, submitted for conversion, divided by the Conversion Ratio (as defined below), subject to adjustment as provided in Section 3.8. As used herein, the term “Conversion Ratio” shall mean $0.84, or, in the event an adjustment of such ratio has occurred pursuant to Section 3.8, then such ratio as last adjusted.

(b) Notwithstanding any other provision hereof, should Maker give notice of its intent to prepay this Convertible Note pursuant to Section 2 hereof, Payee shall be entitled to convert the principal amount hereof into shares of Common Stock, at any time before the close of business on the date that is one business day before the date fixed for such prepayment, in accordance with the terms of this Convertible Note.

(c) In order to exercise the conversion right set forth in this Section 3.1, Payee shall surrender this Convertible Note during regular business hours at the office of Maker stated above, accompanied by written notice to Maker that Payee elects to convert a stated portion of the unpaid principal amount hereof. Such notice shall also state the name(s) (with addresses) in which the certificate(s) for shares of Common Stock issuable upon such conversion shall be issued. This Convertible Note, upon surrender for conversion, shall, unless the shares issuable upon conversion are to be issued in the name of Payee, be accompanied by proper assignments for transfer. As promptly as practicable after the receipt of such notice and the surrender of this Convertible Note, but subject to the provisions of Section 3.4 hereof, Maker shall deliver or cause to be delivered at said office to Payee, or on Payee’s written order, a certificate or certificates for the number of fully paid and non-assessable shares of Common Stock issued upon conversion of this Convertible Note. Certificates evidencing the shares of Common Stock issued upon conversion of this Convertible Note shall bear a legend similar to the legend on the face of this Convertible Note. Such conversion shall be deemed to have been effected immediately prior to the close of business on the date on with such notice shall have been received by Maker and this Convertible Note shall have been surrendered (the “Date of Conversion”), and at such time, the rights of Payee shall cease with respect to the portion of principal converted, and the person(s) in whose name(s) any certificates for shares of Common Sock shall be issuable upon such conversion shall be deemed to have become the holder(s) of record of the shares represented thereby, unless the stock transfer books of Maker shall be closed on that date, in which event such person(s) shall be deemed to have become such holder(s) of record on the next succeeding day on which such stock transfer books are open. Simultaneously with the delivery of the shares of Common Stock as provided herein, Maker shall execute and

deliver to Payee a new convertible note in principal amount equal to the unconverted portion, if any, of this Convertible Note. Appropriate adjustment shall be made in such new Convertible Note to reflect the partial conversion of the principal amount hereof.

3.2 Conversion By Maker.

(a) Maker shall have the right at any time to require Payee to convert this Convertible Note, plus any accrued but unpaid interest hereon, into Common Stock at the applicable Conversion Ratio, provided that (i) the Common Stock has traded at or above $0.98 per share (the “Forced Conversion Price”) for 10 consecutive Trading Days, and (ii) a registration statement covering the Common Stock into which this Convertible Note is to be converted filed under the Act has been declared effective by the Securities and Exchange Commission (the “Commission”). For purposes of this Convertible Note, a Trading Day is defined as (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not quoted on a Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting price); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i) and (ii) hereof, then Trading Day shall mean a business day. For purposes of this Convertible Note, a Trading Market means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the OTC Bulletin Board, the American Stock Exchange, the New York Stock Exchange, the Nasdaq National Market or the Nasdaq SmallCap Market.

(b) If Maker has required Payee to convert this Convertible Note pursuant to Section 3.2(a), this Convertible Note shall automatically be deemed cancelled and of no further force and effect. Notwithstanding the preceding sentence, Payee shall surrender this Convertible Note during regular business hours at the office of Maker stated above. As promptly as practicable after the surrender of this Convertible Note, but subject to the provisions of Section 3.4 hereof, Maker shall deliver or cause to be delivered at said office to Payee, or on Payee’s written order, a certificate or certificates for the number of fully paid and non-assessable shares of Common Stock issued upon conversion of this Convertible Note pursuant to Section 3.2(a).

3.3 Adjustment for Accrued Interest; Dividends. At Maker’s option, upon conversion of this Convertible Note, Maker may either (a) adjust the number of shares of Common Stock into which this Convertible Note may be converted for interest accrued on this Convertible Note since the last preceding interest payment date (the “Accrued Interest”), or (b) pay the Accrued Interest to Payee in cash; provided, however, that in the event that Maker shall have failed to make any payment on interest under this Convertible Note when due, the aggregate amount of unpaid interest in arrears shall be added to the principal amount of this Convertible Note to be converted into Common Stock upon any conversion under this Section 3. Any dividends declared or issued or cash distributions made with respect to the Common Stock prior to conversion of this Convertible Note by Payee shall not be credited to Payee upon the conversion of this Convertible Note.

3.4 No Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of this Convertible Note. In the event that the principal amount to be converted stated in the notice shall result in the issuance of a fractional share of Common Stock, the amount to be converted shall be rounded to the nearest whole number of shares to prevent the issuance of such fractional share.

3.5 Certificates for Shares. The issuance of certificates for shares of Common Stock upon the conversion of this Convertible Note shall be made without charge to Payee for any documentary, stamp or similar issue in respect of the issuance of such certificates, and such certificates shall be issued in the name of, or in such names as may be directed by, Payee. Maker shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue or transfer and delivery of shares of Common Stock in a name other that that of Payee, and no such issue or transfer and delivery shall be made unless and until the person requesting such transfer has paid to Maker the amount of any such tax or has established to the satisfaction of Maker that such tax has been paid.

3.6 Representations and Warranties. By acceptance hereof, Payee acknowledges that Payee is aware that this Convertible Note and the shares of Common Stock issuable to Payee have not been registered under the Act. In this connection, Payee warrants and represents to Maker that Payee’s acquisition of this Convertible Note and, upon conversion of this Convertible Note, his acquisition of shares of Common Stock, are and will be acquired by Payee for investment and not with a view to or for sale in connection with any distribution thereof or with any intention of distributing or selling them, and he does not currently have reason to anticipate any change in circumstances or any particular occasion or event which would cause him to sell any of such securities.

3.7 Adjustments. The Conversion Ratio, Forced Conversion Price and the number of shares of Common Stock or amount of any other securities and property as hereinafter provided into which this Convertible Note is convertible shall be subject to adjustment from time to time effective upon each occurrence of any of the following events. In case by reason of the operation of this Section 3.7, this Convertible Note shall be convertible into any other shares of stock or other securities or property of Maker or of any successor of Maker, or any Parent of any of the foregoing, any reference herein to the conversion of this Convertible Note shall be deemed to refer to and include the conversion of this Convertible Note for such other shares of stock or other securities or property. Without limiting the foregoing, Maker agrees that upon completion of the proposed merger of Maker and a subsidiary of Grant Ventures, Inc. (“Grant”), this Convertible Note will be convertible into shares of Common Stock of Grant at the Conversion Price or Forced Conversion Price then in effect.

(a) If Maker shall declare or pay any dividend with respect to its Common Stock payable in shares of Common Stock, subdivide the outstanding shares of Common Stock into a greater number of shares of Common Stock, or reduce the number of shares of Common Stock outstanding (by stock split, reverse stock split, reclassification or otherwise than by repurchase of its Common Stock) (any of such events being hereinafter called a “Stock Split”), the Conversion Ratio and Forced Conversion Price shall be appropriately adjusted so as to entitled Payee to receive upon conversion of this Convertible Note, for the same

aggregate consideration provided herein, the same number of shares of Common Stock as Payee would have received as a result of such Stock Split had Payee converted this Convertible Note in full immediately prior to such Stock Split. Payee acknowledges that Maker has effected a 3.58:1 stock split effective July 6, 2004 and that the Conversion Ratio and Forced Conversion Price set forth herein have already been adjusted to take into account such stock split and no further adjustment otherwise required pursuant to this Section 3.7 for such stock split shall be required or effected.

(b) If Maker shall merge or consolidate with or into one or more entities and Maker is the sole surviving entity, or Maker shall adopt a plan of recapitalization or reorganization in which shares of Common Stock are exchanged for or changed into another class of stock or other security of Maker, Payee shall, for the same aggregate consideration provided herein, be entitled upon conversion of this Convertible Note to receive, in lieu of the number of shares of Common Stock into which this Convertible Note would otherwise be convertible, the number of shares of Common Stock or other securities to which Payee would have been entitled pursuant to the terms of the agreement or plan of merger, consolidation, recapitalization or reorganization had Payee converted this Convertible Note in full immediately prior to such merger, consolidation, recapitalization or reorganization.

(c) If Maker is merged or consolidated with or into one of more entities under circumstances in which Maker is not the sole surviving entity, or if Maker sells or otherwise disposes of substantially all of its assets, and in connection with any such merger, consolidation or sale the holders of shares of Common Stock receive stock or other securities convertible into equity of the surviving or acquiring entities, after the effective date of such merger, consolidation or sale, as the case may be, Payee shall, for the same aggregate consideration provided herein, be entitled upon conversion of this Convertible Note to receive, in lieu of shares of Common Stock into which this Convertible Note would otherwise be convertible, shares of such stock or other securities as Payee would have received pursuant to the terms of the merger, consolidation or sale had Payee converted this Convertible Note in full immediately prior to such merger, consolidation or sale. In the event of any merger, consolidation or sale as described in this Section 3.8(c), provision shall be made in connection therewith for the surviving or acquiring entities to assume all obligations and duties of Maker hereunder or to issue a substitute Convertible Note in lieu of this Convertible Note with all such changes and adjustments in the number or kind of shares of Common Stock or other securities or property thereafter subject to this Convertible Note or in the Conversion Ratio as shall be required in connection with this Section 3.7.

(d) If Maker shall declare or pay any dividend, or make any distribution, with respect to its Common Stock that is payable in preferred stock or other securities or rights to subscribe for or purchase any security of Maker other than Common Stock, or that is payable in debt securities of Maker convertible into shares of Common Stock, preferred stock or other equity securities of Maker, Payee shall, for the same aggregate consideration provided herein, be entitled to receive upon conversion of this Convertible Note in lieu of the shares of Common Stock into which this Convertible Note would otherwise be convertible, the same amount of shares of Common Stock, preferred stock and other securities or rights to

subscribe for or purchase any security as Payee would have received had Payee converted this Convertible Note in full immediately prior to any such dividend or distribution.

4. Reservation of Capital Stock. Maker shall (i) at all times reserve and keep available out of its authorized capital stock, solely for the purpose of issue upon conversion of this Convertible Note as provided in Section 3 hereof, such number of shares of Common Stock as shall then be issuable upon the conversion of the maximum amount of principal and interest convertible pursuant to this Convertible Note; and (ii) all the shares of Common Stock which shall be so issuable upon conversion of this Convertible Note shall be duly and validly issued and fully paid and non-assessable.

5. Piggyback Registration Rights.

(a) If Maker shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Act of any of its common stock (other than on Form S-4 or Form S-8 (each as promulgated under the Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), then Maker shall send to Payee a written notice of such determination and, if within ten (10) days after receipt by Payee, Maker shall receive a request in writing from Payee, Maker shall include in such registration statement all or any part of the Common Stock issued to Payee upon conversion of this Convertible Note that Payee requests to be registered; provided, however, that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, Maker determines for any reason not to proceed with such registration, Maker will be relieved of its obligation to register any Common Stock of Payee in connection with such registration, and (ii) in case of a determination by Maker to delay registration of its securities, Maker will be permitted to delay the registration of the Common Stock of Payee for the same period as the delay in registering such other securities, in any such case without any obligation or liability to Payee. If Payee elects to include Common Stock in a registration statement pursuant to this Section 5(a), Payee shall sell such Common Stock on the same terms and conditions upon which the equity securities of Maker or others are being sold pursuant to such registration statement.

(b) Notwithstanding anything in this Section 5 to the contrary, with respect to any registration described in this Section 5 that is an underwritten registration of Maker’s securities for Maker’s own account, if the managing underwriter advises Maker that the inclusion of some or all of the Common Stock of Payee requested to be included in such registration pursuant to Section 5(a) would interfere with the successful marketing (including pricing) of the equity securities of Maker to be registered by Maker, then the number of shares to be included in any such registration shall be included in the following order: (i) first, the shares to be registered by Maker; (ii) second, any securities of other holders who are entitled to include securities in such registration on a pro-rata basis based on such holders’ respective percentage ownership of Maker on a fully-diluted basis; and (iii) third, the Common Stock and Warrant Shares (as defined in the Warrant) of Payee requested to be included in such registration pursuant to Section 5(a) of

this Convertible Note and Section 15(a) of the Warrant, respectively, on a pro-rata basis based on Payee’s percentage ownership of the Company on a fully-diluted basis.

(c) Notwithstanding anything in this Section 5 to the contrary, with respect to any registration described in this Section 5 that is an underwritten registration of Maker’s securities for the account of other holders of such securities (the “Other Holders”), if the managing underwriter advises Maker that the inclusion of some or all of the Common Stock of Payee requested to be included in such registration pursuant to Section 5(a) would interfere with the successful marketing (including pricing) of the equity securities of Maker to be registered by Maker, then the number of shares to be included in any such registration shall be included in the following order: (A) first, the securities of the Other Holders; (B) second, any shares to be registered by Maker for its own account; (iii) third, the Common Stock and Warrant Shares of Payee requested to be included in such registration pursuant to Section 5(a) of this Convertible Note and Section 15(a) of the Warrant, respectively, on a pro-rata basis based on Payee’s percentage ownership of Maker on a fully-diluted basis, and (iv) fourth, securities of all other holders who are entitled to include securities in such registration, on a pro-rata basis based on such holders’ respective percentage ownership of Maker on a fully-diluted basis.

(d) All fees and expenses incident to any registration described in this Section 5 shall be borne by Maker, other than fees and expenses of counsel or any other advisor retained by Payee and discounts, fees and commissions (including, without limitation, any underwriters’ discounts, fees and commissions) with respect to the sale of any Common Stock or Warrant Shares by Payee.

6. Events of Default.

6.1 Failure to Pay. If Maker shall fail to pay any principal of, or interest on, this Convertible Note within thirty (30) days after Maker’s receipt of written notice of such failure, then Payee, by written notice to Maker, may declare this Convertible Note to be, and the same thereupon shall become, immediately due and payable without presentment, demand, protest or other notice or formality of any kind, all of which are expressly waived.

6.2 Bankruptcy. If any one of the following events shall occur and be continuing:

(a) Maker shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or

(b) an involuntary case or other proceeding shall be commenced against Maker seeking liquidation, reorganization or other relief with respect to it or its debts

under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of sixty (60) days; or an order for relief shall be entered against Maker under the federal bankruptcy laws as now or hereafter in effect;

then, in any such event, this Convertible Note immediately shall become due and payable without presentment, demand, protest or notice or formality of any kind, all of which hereby are expressly waived.

7. Miscellaneous.

7.1 Binding Effect. This Convertible Note shall be binding and inure to the benefit of Payee and Payee’s successors and assigns. This Convertible Note shall be binding upon Maker and its successors and assigns, whether by merger or otherwise.

7.2 Waiver; Amendment. No waiver of any provision of this Convertible Note shall in any event be effective unless the same shall be in writing and signed by the waiving party and then such waiver shall be effective only in the specific instance and for the specific purpose for which given. No course of dealing and no delay on the part of Payee in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice Payee’s rights, powers or remedies. This Convertible Note shall not be amended unless in writing signed by Payee and Maker.

7.3 Notices. All notices, requests, consents and demands shall be made in writing and shall be mailed, registered or certified mail, postage prepaid, to Maker at Maker’s address first above written, or to Payee at Payee’s address first above written, or to such other address as may be furnished in writing to the other party hereto. Notices hereunder shall be effective when received.

7.4 Transfer. Payee shall not transfer, sell or otherwise dispose of this Convertible Note without the prior written consent of Maker, which consent shall not be unreasonably withheld. Upon any permissibletransfer hereof, the transferor shall (i) endorse hereon the date to which interest shall have been paid hereon and the remaining unpaid principal balance hereof, and (ii) notify Maker in writing of the name and address of the transferee, and until Maker shall receive such notice, Maker may continue to treat the last previous holder of this Convertible Note, as shown by its records, as the owner hereof for all purposes.

7.5 Loss or Theft. Upon receipt by Maker of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Convertible Note and, in case of loss, theft or destruction, of an indemnity satisfactory to it and upon reimbursement thereto and, if mutilated, upon surrender and cancellation of this Convertible Note, Maker will make and deliver in lieu of this Convertible Note and new convertible note of like tenor.

7.6 Governing Law; Jurisdiction. This Convertible Note shall be governed by and construed in accordance with the internal laws of the State of California without regard to

the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Convertible Note shall be brought solely in a state court located in the State of California or a federal court located in the Central District of California. By its execution hereof, Maker, and by its acknowledgement of this Convertible Note, Payee, hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the Central District of California and the State of California, respectively, and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them, return receipt requested, with the same full force and effect as if personally served upon them in the State of California. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements.

IN WITNESS WHEREOF, Maker has duly caused this Note to be signed on its behalf, in its company name and by its duly authorized officer as of the date first set forth above.

			IMPACT DIAGNOSTICS, INC.


			By:
			Name:
			Title:


Acknowledged by:

JAMES H. DONELL, RECEIVER


By:
Name:
Title:

EX-10.2 11 a2143868zex-10_2.htm EXHIBIT 10.2

Exhibit 10.2

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “COMMISSION”) OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.

Impact Diagnostics, Inc.

WARRANT TO PURCHASE 89,500 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

(Void after July 23, 2009)

PPW -

THIS COMMON STOCK PURCHASE WARRANT CERTIFIES that, for value received, James H. Donell, Receiver (the “Holder”), as receiver of Citadel Capital Management, Inc., with principal offices at 12121 Wilshire Boulevard, Suite 200, Los Angeles, CA 90025, is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after July 23, 2004 (the “Exercise Date”) and on or prior to the close of business on July 23, 2009 (the “Termination Date”), but not thereafter, to subscribe for and purchase from Impact Diagnostics, Inc., a Utah corporation (the “Company”), with its principal offices at 5792 South 900 East, Suite B, Salt Lake City, Utah 84121, up to 89,500 shares (the “Warrant Shares”), of common stock, par value $0.001 per share, of the Company (the “Common Stock”). The initial purchase price of one (1) share of Common Stock under this Warrant shall be equal to $0.01 (the “Exercise Price”). The Exercise Price and the number of Warrant Shares for which the Warrant is exercisable shall be subject to adjustment as provided elsewhere herein.

1. Authorization of Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue and liens and charges incurred by the Holder).

2. Exercise of Warrant.

3. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price.

4. Charges, Taxes and Expenses. Issuance of the Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event the Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder; and the payment of a sum sufficient for any transfer tax incidental thereto.

5. Division and Combination.

(a) This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 6, as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new

Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

(b) The Company shall prepare, issue and deliver at its own expense (other than transfer taxes) the new Warrant or Warrants under this Section 5.

(c) The Company agrees to maintain, at its aforesaid office, books for the registration and the registration of transfer of the Warrants.

(d) If, at the time of the surrender of this Warrant in connection with any transfer of this Warrant, the transfer of this Warrant shall not be registered pursuant to an effective registration statement under the Securities Act and under applicable state securities or blue sky laws, the Company may require, as a condition of allowing such transfer (i) that the Holder or transferee of this Warrant, as the case may be, furnish to the Company a written opinion of counsel reasonably satisfactory to the Company (which opinion shall be in form, substance and scope reasonably satisfactory to the Company) to the effect that such transfer may be made without registration under the Securities Act and under applicable state securities or blue sky laws, (ii) that the holder or transferee execute and deliver to the Company an investment letter in form and substance acceptable to the Company and (iii) that the transferee be an “accredited investor” as defined in Rule 501(a) promulgated under the Securities Act.

6. Transfer. This Warrant and all rights hereunder may not be transferred without the prior written consent of the Company, which consent shall not be unreasonably withheld.

7. No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a stockholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment.

8. Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.

9. Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday, Sunday or a legal holiday in the State of California, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday in the State of California.

10. Certain Adjustments to Exercise Price and Number of Warrant Shares.

(a) Stock Splits, Etc. The number and kind of securities purchasable upon the exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time upon the happening of any of the following. In case the Company shall (i) pay a dividend in shares of Common Stock or make a distribution in shares of Common Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding shares of Common Stock into a greater number of shares, (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, or (iv) issue any shares of its capital stock in a reclassification of the Common Stock, then the number of Warrant Shares purchasable upon exercise of this Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled to receive the kind and number of Warrant Shares or other securities of the Company which it would have owned or have been entitled to receive had such Warrant been exercised in advance thereof. Upon each such adjustment of the kind and number of Warrant Shares or other securities of the Company which are purchasable hereunder pursuant to this Section 10(a), the Holder shall thereafter be entitled to purchase the number of Warrant Shares or other securities resulting from such adjustment at an Exercise Price per Warrant Share or other security obtained by multiplying the Exercise Price in effect immediately prior to such adjustment by the number of Warrant Shares purchasable pursuant hereto immediately prior to such adjustment and dividing by the number of Warrant Shares or other securities of the Company resulting from such adjustment. An adjustment made pursuant to this paragraph shall become effective immediately after the effective date of such event retroactive to the record date, if any, for such event. The Holder acknowledges that the Company has effected a 3.58:1 stock split effective July 6, 2004 and that the Exercise Price set forth herein has already been adjusted to take into account such stock split and no further adjustment otherwise required pursuant to this Section 10(a) for such stock split shall be required or effected.

(b) Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify its capital stock (other than as set forth in Section 10(a)), merge with or into or consolidate with another corporation or other entity (where the Company is not the surviving corporation or where there is a change in or distribution with respect to any class of common stock of the Company), or sell, transfer or otherwise dispose of all or substantially all its property, assets or business to another corporation or other entity and, pursuant to the terms of such reorganization, reclassification, merger, consolidation or disposition of assets, shares of common stock of the successor or acquiring corporation or other entity, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation or other entity (“Other Property”), are to be received by or distributed to the holders of common stock of the Company, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the number of shares of common stock of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and Other Property receivable upon or as a result of such reorganization, reclassification, merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of assets, the successor or acquiring corporation (if other than the Company) and, if an entity different from the successor or acquiring corporation, the entity whose common stock

or Other Property the holders of the Common Stock are entitled to receive as a result of such transaction, shall expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined in good faith by resolution of the Board of Directors of the Company) in order to provide for adjustments of Warrant Shares for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in this Section 10(b). For purposes of this Section 10(b), “common stock of the successor or acquiring corporation” shall include stock of such corporation of any class which is not preferred as to dividends or assets over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 10(b) shall similarly apply to successive reorganizations, reclassifications, mergers, consolidations or disposition of assets. Without limiting the foregoing, the Company agrees that upon completion of the proposed merger (the “Merger”) of the Company and a subsidiary of Grant Ventures, Inc. (“Grant”), this Warrant will be exerciseable in shares of Common Stock of Grant at the Exercise Price then in effect.

11. Notice of Adjustment. Whenever the number of Warrant Shares or number or kind of securities or other property purchasable upon the exercise of this Warrant or the Exercise Price is adjusted, as herein provided, the Company shall give notice thereof to the Holder, which notice shall state the number of Warrant Shares (and other securities or property) purchasable upon the exercise of this Warrant and the Exercise Price of such Warrant Shares (and other securities or property) after such adjustment, setting forth a brief statement of the facts requiring such adjustment and setting forth the computation by which such adjustment was made.

12. Notice of Corporate Action. If at any time:

(b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company (other than the Merger) with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation or,

then, in any one or more of such cases, the Company shall give to the Holder (i) at least 10 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, liquidation or winding up, and

(ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 10 days’ prior written notice of the date when the same is expected to take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which the holders of Common Stock shall be entitled to receive any such dividend, distribution or right, and the amount and character thereof, and (ii) the time, if any such time is to be fixed, as of which the holders of Common Stock shall be entitled to exchange their Warrant Shares for securities or other property deliverable upon such disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to the Holder at the last address of the Holder appearing on the books of the Company and delivered in accordance with Section 14(e). Failure to give such notice, or any defect therein, shall not affect the validity of such action, so long as such failure does not materially prejudice the rights of the Holders.

13. Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for (or facilitate electronic delivery of) the Warrant Shares upon the exercise of the purchase rights under this Warrant.

14. Miscellaneous.

(a) Governing Law; Jurisdiction. This Agreement shall be governed by and construed in accordance with the internal laws of the State of California without regard to the conflicts of laws principles thereof. The parties hereto hereby irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under this Agreement, shall be brought solely in a state court located in the State of California or a federal court located in the Central District of California. By its execution hereof, the Company, and by its acceptance of this Warrant, the Holder, hereby covenant and irrevocably submit to the in personam jurisdiction of the federal and state courts located in the Central District of California and the State of California, respectively, and agree that any process in any such action may be served upon any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the same full force and effect as if personally served upon them in the State of California. The parties hereto waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein shall be entitled to payment from the other party hereto of its reasonable counsel fees and disbursements.

(c) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or

otherwise prejudice the Holder’s rights, powers or remedies, notwithstanding all rights hereunder terminate on the Termination Date.

(d) Notices. All notices, requests, consents and demands shall be made in writing and shall be mailed, registered or certified mail, postage prepaid, to the Company at the Company’s address first above written, or to the Holder at the Holder’s address first above written, or to such other address as may be furnished in writing to the other party hereto. Notices hereunder shall be effective when received.

(e) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and permitted assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all permissible Holders from time to time of this Warrant and shall be enforceable by any such Holder or holder of Warrant Shares.

(f) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.

(g) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.

(h) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

15. Piggyback Registration.

(a) If the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its common stock (other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans), then the Company shall send to the Holder a written notice of such determination and, if within ten (10) days after receipt by a Holder, the Company shall receive a request in writing from the Holder, the Company shall include in such registration statement all or any part of the Warrant Shares the Holder requests to be registered; provided, however, that (i) if, at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company determines for any reason not to proceed with such registration, the Company will be relieved of its obligation to register any Warrant Shares in connection with such registration, and (ii) in case of a determination by the Company to delay registration of its securities, the Company will be permitted to delay the registration of the Warrant Shares for the same period as the delay in registering such other securities, in any such case without any obligation or liability to the Holder. If the Holder elects to include Warrant Shares in a registration statement pursuant to this Section 15(a), the Holder

shall sell such Warrant Shares on the same terms and conditions upon which the equity securities of the Company or others are being sold pursuant to such registration statement.

(b) Notwithstanding anything in this Section 15 to the contrary, with respect to any registration described in this Section 15 that is an underwritten registration of the Company’s securities for the Company’s own account, if the managing underwriter advises the Company that the inclusion of some or all of the Warrant Shares requested to be included in such registration pursuant to Section 15(a) would interfere with the successful marketing (including pricing) of the equity securities of the Company to be registered by the Company, then the number of shares to be included in any such registration shall be included in the following order: (i) first, the shares to be registered by the Company; (ii) second, any securities of other holders who are entitled to include securities in such registration on a pro-rata basis based on such holders’ respective percentage ownership of the Company on a fully-diluted basis; and (iii) third, the Warrant Shares of the Holder and the Common Stock of the Holder issued to the Holder upon conversion of that certain convertible note, dated as of the date hereof, between the Company and the Holder (the “Convertible Note”) requested to be included in such registration pursuant to Section 15(a) of this Warrant and Section 5(a) of the Convertible Note, respectively, on a pro-rata basis based on the Holder’s respective percentage ownership of the Company on a fully-diluted basis.

(c) Notwithstanding anything in this Section 15 to the contrary, with respect to any registration described in this Section 15 that is an underwritten registration of the Company’s securities for the account of other holders of such securities (the “Other Holders”), if the managing underwriter advises the Company that the inclusion of some or all of the Warrant Shares requested to be included in such registration pursuant to Section 15(a) would interfere with the successful marketing (including pricing) of the equity securities of the Company to be registered by the Company, then the number of shares to be included in any such registration shall be included in the following order: (i) first, the securities of the Other Holders; (ii) second, any shares to be registered by the Company for its own account; (iii) third, the Warrant Shares of the Holder and the Common Stock of the Holder issued to the Holder upon conversion of the Convertible Note requested to be included in such registration pursuant to Section 15(a) of this Warrant and Section 5(a) of the Convertible Note, respectively, on a pro-rata basis based on the Holder’s respective percentage ownership of the Company on a fully-diluted basis, and (iv) fourth, securities of all other holders who are entitled to include securities in such registration, on a pro-rata basis based on such holders’ respective percentage ownership of the Company on a fully-diluted basis.

(d) All fees and expenses incident to any registration described in this Section 15 shall be borne by the Company, other than fees and expenses of counsel or any other advisor retained by the Holder and discounts, fees and commissions (including, without limitation, any underwriters’ discounts, fees and commissions) with respect to the sale of any Common Stock or Warrant Shares by the Holder.

[Remainder of page intentionally left blank]

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized.

Dated: July , 2004

	Impact Diagnostics, Inc.


	By:
		Name:
		Title:

NOTICE OF EXERCISE

To: Impact Diagnostics, Inc.

The undersigned hereby elects to purchase Warrant Shares of Impact Diagnostics, Inc. pursuant to the terms of the attached Warrant, and tenders herewith payment of the exercise price in full, in lawful money of the United States, together with all applicable transfer taxes, if any.

1. Please issue a certificate or certificates representing (or facilitate electronic delivery of) said Warrant Shares in the name of the undersigned or in such other name as is specified below:

The Warrant Shares shall be delivered to the following:

2. The undersigned is an “accredited investor” as defined in Regulation D promulgated under the Securities Act of 1933, as amended.

	JAMES H. DONELL, RECEIVER


	By:
			Name:
			Title:

* All capitalized terms not otherwise defined herein shall have the meanings set forth in or incorporated by reference in the Warrant.

FORM OF ASSIGNMENT

Name of Assignee	Address	No. of Warrant Shares

and does hereby irrevocably constitute and appoint Attorney to make such transfer on the books of Impact Diagnostics, Inc., maintained for the purpose, with full power of substitution in the premises.

Dated:


			(Signature)


			(Witness)

The undersigned Assignee of the Warrant hereby agrees to be bound by all the terms and conditions of the Warrant.

Dated:


			(Signature)

* All capitalized terms not otherwise defined herein shall have the meanings set forth in or incorporated by reference in the Warrant.

EX-10.3 12 a2143868zex-10_3.htm EXHIBIT 10.3

Exhibit 10.3

Impact Diagnostics, Inc.

July 1, 2004

Duncan Capital LLC

830 Third Avenue

14th Floor

New York, NY 10022

Attn: David Skirloff

RE: MERGER AGREEMENT

Gentlemen:

Reference is made to the Merger Agreement dated the date of this letter (the “Merger Agreement”) among Impact Diagnostics, Inc. (“Impact”), Impact Acquisition Corp. (“Merger Sub”) and Grant Ventures, Inc. (“Grant Ventures”). Pursuant to the Merger Agreement, among other things (i) Acquisition Corp will be merged with and into Impact and Impact will become a wholly-owned subsidiary of Grant Ventures and (ii) each stockholder of Impact will be entitled to receive one (1) share of common stock of Grant Ventures (“Grant Ventures Common Stock”) in exchange for each share of common stock of Impact (“Impact Common Stock”) which it owned immediately prior to the time of the Merger. Concurrently with the closing of the transactions contemplated by the Merger Agreement, Grant Venture will also complete the sale of Grant Venture Common Stock and warrants to purchase Grant Venture Common Stock in a private placement exempt from the registration under the Securities Act of 1933, as amended (the “Private Placement”).

In connection with the completion of the Merger and Private Placement, Grant Ventures will issue to you a warrant to purchase 2,670,000 shares of Grant Ventures Common Stock and a warrant to purchase 545,000 shares of Grant Ventures Common Stock (collectively, the “Warrants”).

The certificate of incorporation of Grant Ventures currently authorizes Grant Ventures to issue 50 million shares of Grant Venture Common Stock. After taking into account the current outstanding shares of Grant Ventures Common Stock, Grant Ventures would be required to issue more than its authorized 50 million shares of common stock in order to complete the Merger and Private Placement. Grant Ventures plans to solicit the approval of its stockholders to increase the amount of authorized shares of common stock to at least 65 million shares (as adjusted for stock splits and other recapitalization events) (“Authorized Stock Increase”), but it will not be able to do so until after the closing of the Merger. Accordingly, it will be necessary to delay until after receipt of stockholder approval of the Authorized Stock Issuance the issuance to

certain Impact stockholders of certain of the Grant Venture Common Stock which they otherwise would be entitled to receive as a result of the Merger.

In order to enable Grant Ventures to complete the Merger and the Private Placement, and for other good and valuable consideration the receipt of which you hereby acknowledge, you hereby agree and consent that, notwithstanding anything to the contrary contained in the Merger Agreement or in the Warrants, you will be entitled to exercise the Warrants for only 1,000,000 shares of Grant Ventures Common Stock and you will not be entitled to exercise the Warrants for the remaining 2,215,000 shares of Grant Ventures Common Stock until such time as the certificate of incorporation of Grant Ventures has been amended to authorize Grant Ventures to issue at least 65 million shares of Grant Venture Common Stock.

Following completion of the Merger, this Agreement will be for the benefit of both Impact and Grant Ventures and may be enforced by either of them.

This Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed therein (without giving effect to principles of choice of law).

Please acknowledge your agreement to the foregoing by executing this letter in the designated space below.

				Very truly yours,
				Impact Diagnostics, Inc.


				By:

ACCEPTED AND APPROVED:

DUNCAN CAPITAL LLC

By:
Name: David Skirloff
Title: Managing Director

EX-10.4 13 a2143868zex-10_4.htm EXHIBIT 10.4

Exhibit 10.4

Impact Diagnostics, Inc.

July 1, 2004

Michael Ahlin

5792 South 900 East

Suite B

Salt Lake City, UT 84121

RE: MERGER AGREEMENT

Dear Michael:

The certificate of incorporation of Grant Ventures currently authorizes Grant Ventures to issue 50 million shares of Grant Venture Common Stock. After taking into account the current outstanding shares of Grant Ventures Common Stock, Grant Ventures would be required to issue more than its authorized 50 million shares of common stock in order to complete the Merger and Private Placement. Grant Ventures plans to solicit the approval of its stockholders to increase the amount of authorized shares of common stock to at least 60 million shares (as adjusted for stock splits and other recapitalization events) (“Authorized Stock Increase”), but it will not be able to do so until after the closing of the Merger. Accordingly, it will be necessary to delay until after receipt of stockholder approval of the Authorized Stock Issuance the issuance to certain Impact stockholders of certain of the Grant Venture Common Stock which they otherwise would be entitled to receive as a result of the Merger.

Agreement, you will not be entitled to receive from Grant Ventures, and Grant Ventures will not be obligated to issue to you, 3,387,900 of the 5,387,900 shares of Grant Ventures Common Stock that you otherwise would be entitled to receive as a result of the Merger until such time as the certificate of incorporation of Grant Ventures has been amended to authorize Grant Ventures to issue at least 60 million shares of Grant Venture Common Stock.

Following completion of the Merger, this Agreement will be for the benefit of both Impact and Grant Ventures and may be enforced by either of them.

This Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed therein (without giving effect to principles of choice of law).

Please acknowledge your agreement to the foregoing by executing this letter in the designated space below.

		Very truly yours,
		Impact Diagnostics, Inc.


		By:

ACCEPTED AND APPROVED:


Name:	Michael Ahlin
Title:

EX-10.5 14 a2143868zex-10_5.htm EXHIBIT 10.5

Exhibit 10.5

Impact Diagnostics, Inc.

July 1, 2004

Mark Rosenfeld

5792 South 900 East

Suite B

Salt Lake City, UT 84121

RE: MERGER AGREEMENT

Dear Mark:

Agreement, you will not be entitled to receive from Grant Ventures, and Grant Ventures will not be obligated to issue to you, 4,077,050 of the 6,077,050 shares of Grant Ventures Common Stock that you otherwise would be entitled to receive as a result of the Merger until such time as the certificate of incorporation of Grant Ventures has been amended to authorize Grant Ventures to issue at least 65 million shares of Grant Venture Common Stock.

Following completion of the Merger, this Agreement will be for the benefit of both Impact and Grant Ventures and may be enforced by either of them.

This Agreement shall be governed by the laws of the State of New York applicable to contracts entered into and to be performed therein (without giving effect to principles of choice of law).

Please acknowledge your agreement to the foregoing by executing this letter in the designated space below.

		Very truly yours,
		Impact Diagnostics, Inc.


		By:

ACCEPTED AND APPROVED:


Name:	Mark Rosenfeld
Title:

EX-10.6 15 a2143868zex-10_6.htm EXHIBIT 10.6

Exhibit 10.6

2004 STOCK INCENTIVE PLAN

GRANT VENTURES, INC.

1. Purposes of the Plan. This stock incentive plan (the “Plan”) is intended to provide an incentive to employees (including directors and officers who are employees), consultants and non-employee directors of Grant Ventures, Inc. (the “Company”), a Nevada corporation, or any Parent or Subsidiaries (as such terms are defined in Paragraph 17), and to offer an additional inducement in obtaining the services of such individuals. The Plan provides for the grant of “incentive stock options” (“ISOs”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), stock options which do not qualify as ISOs (“NQSOs”), and shares of stock of the Company that may be subject to contingencies or restrictions (“Restricted Stock”; collectively, with an ISO or NQSO, each an “Award”). The Company makes no representation or warranty, express or implied, as to the qualification of any option as an “incentive stock option” or any other treatment of an Award under the Code.

2. Stock Subject to the Plan. Subject to the provisions of Paragraph 10, the aggregate number of shares of the Company’s common stock, par value $.001 per share (“Common Stock”), for which Awards may be granted under the Plan shall not exceed 25,000,000 shares. Such shares of Common Stock may, in the discretion of the Board of Directors of the Company (the “Board of Directors”), consist either in whole or in part of authorized but unissued shares of Common Stock or shares of Common Stock held in the treasury of the Company. Subject to the termination provisions of Paragraph 11, any shares of Common Stock subject to an Award which for any reason expires or is forfeited, canceled, or terminated unexercised or which ceases for any reason to be exercisable, shall again become available for the granting of Awards under the Plan. Subject to the termination provisions of Paragraph 11, unvested shares issued under the Plan and subsequently repurchased by the Company, pursuant to the Company’s repurchase rights under the Plan shall be added back to the number of shares of Common Stock reserved for issuance under the Plan and shall accordingly be available for reissuance through one or more subsequent Award grants. The Company shall at all times during the term of the Plan reserve and keep available such number of shares of Common Stock as will be sufficient to satisfy the requirements of the Plan. As further set forth in Section 9 hereof, all Awards shall be granted by one or more written instruments (the “Contract”) which shall set forth all terms and conditions of the Award.

3. Administration of the Plan. The Plan will be administered by the Board of Directors, or by a committee (the “Committee”) consisting of two or more directors appointed by the Board of Directors. Those administering the Plan shall be referred to herein as the “Administrators.” Notwithstanding the foregoing, if the Company is or becomes a corporation issuing any class of common equity securities required to be registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to the extent necessary to preserve any deduction under Section 162(m) of the Code or to comply with Rule 16b-3 promulgated under the Exchange Act, or any successor rule (“Rule 16b-3”), any Committee

appointed by the Board of Directors to administer the Plan shall be comprised of two or more directors each of whom shall be a “non-employee director,” within the meaning of Rule 16b-3, and an “outside director,” within the meaning of Treasury Regulation Section 1.162-27(e)(3), and the delegation of powers to the Committee shall be consistent with applicable laws and regulations (including, without limitation, applicable state law and Rule 16b-3). Unless otherwise provided in the By-Laws of the Company, by resolution of the Board of Directors or applicable law, a majority of the members of the Committee shall constitute a quorum, and the acts of a majority of the members present at any meeting at which a quorum is present, and any acts approved in writing by all members without a meeting, shall be the acts of the Committee.

The Administrators shall have authority, subject to the express provisions of the Plan, to construe the respective Contracts and the Plan; to prescribe, amend and rescind rules and regulations relating to the Plan; to determine the terms and provisions of the respective Contracts, which need not be identical; and to make all other determinations in the judgment of the Administrators necessary or desirable for the administration of the Plan. The Administrators may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Contract in the manner and to the extent it shall deem expedient to carry the Plan into effect and it shall be the sole and final judge of such expediency. No director or person acting pursuant to authority delegated by the Board shall be liable for any action or determination under the Plan made in good faith.

4. Eligibility. The Administrators may from time to time, consistent with the purposes of the Plan, grant Awards to (a) employees (including officers and directors who are employees) of the Company, any Parent or any of its Subsidiaries, (b) consultants to the Company, any Parent or any of its Subsidiaries, and/or (c) to such directors of the Company who, at the time of grant, are not common law employees of the Company or of any of its Subsidiaries, as the Administrators may determine in their sole discretion (each, an “Award Holder”). Such Awards granted shall cover such number of shares of Common Stock as the Administrators may determine in their sole discretion; provided, however, that if on the date of grant of an Award, any class of common stock of the Company (including without limitation the Common Stock) is required to be registered under Section 12 of the Exchange Act, the maximum number of shares subject to an Award that may be granted to any Award Holder during any calendar year under the Plan shall be 2,500,000 shares (the “Section 162(m) Maximum”); provided, further, however, that the aggregate market value (determined at the time the option is granted) of the shares of Common Stock for which any eligible employee may be granted ISOs under the Plan or any other plan of the Company, or of a Parent or a Subsidiary of the Company, which are exercisable for the first time by such employee during any calendar year shall not exceed $100,000. The $100,000 ISO limitation amount shall be applied by taking ISOs into account in the order in which they were granted. Any option (or portion thereof) granted in excess of such ISO limitation amount shall be treated as a NQSO to the extent of such excess.

5. Options.

(a) Grant. The Administrators may from time to time, in their sole discretion, consistent with the purposes of the Plan, grant options to one or more Award Holders.

(b) Exercise Price. The exercise price of the shares of Common Stock under each option shall be determined by the Administrators in their sole discretion; provided, however, that the exercise price of an ISO, or of any Award intended to satisfy the performance-based compensation exemption to the deduction limitation under Section 162(m) of the Code, shall not be less than the fair market value of the Common Stock subject to such option on the date of grant; and provided, further, however, that if, at the time an ISO is granted, the Award Holder owns (or is deemed to own under Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, of any of its Subsidiaries or of a Parent, the exercise price of such ISO shall not be less than one hundred ten percent (110%) of the fair market value of the Common Stock subject to such ISO on the date of grant.

(c) Term. Each option granted pursuant to the Plan shall be for such term as is established by the Administrators, in their sole discretion, at or before the time such option is granted; provided, however, that the term of each option granted pursuant to the Plan shall be for a period not exceeding ten (10) years from the date of grant thereof, and provided further, that if, at the time an ISO is granted, the Award Holder owns (or is deemed to own under Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company, of any of its Subsidiaries or of a Parent, the term of the ISO shall be for a period not exceeding five (5) years from the date of grant. Options shall be subject to earlier termination as hereinafter provided.

(d) Termination of Relationship. (i) Except as may otherwise be expressly provided in the applicable Contract or the Award Holder’s written employment or consulting or termination contract, any Award Holder, whose employment or consulting or advisory relationship with the Company, any Parent or any of its Subsidiaries, has terminated for any reason other than the death or Disability of the Award Holder, may exercise any option granted to the Award Holder as an employee or consultant, to the extent exercisable on the date of such termination, at any time within three (3) months after the date of termination, but not thereafter and in no event after the date the option would otherwise have expired; provided, however, that if such relationship is terminated for Cause (as defined in Paragraph 17), such option shall terminate immediately.

(ii) For the purposes of the Plan, an employment or consulting relationship shall be deemed to exist between an individual and the Company if, at the time of the determination, the individual was an employee of the Company, its Parent, any of its Subsidiaries or any of its consultants for purposes of Section 422(a) of the Code. As a result, an individual on military leave, sick leave or other bona fide leave of absence shall continue to be considered an employee or consultant for purposes of the Plan during such leave if the period of the leave does not exceed ninety (90) days, or, if longer, so long as the individual’s right to re-employment with the Company, any of its Subsidiaries or a Parent or consultant is guaranteed either by statute or by contract. If the period of leave exceeds ninety (90) days and the individual’s right to re-employment is not guaranteed by statute or by contract, the employment or consulting relationship shall be deemed to have terminated on the ninety-first (91^st) day of such leave.

(iii) Except as may otherwise be expressly provided in the applicable Contract, an Award Holder whose directorship with the Company has terminated for any reason other than the Award Holder’s death or Disability, may exercise the options granted to the Award Holder as a director who was not an employee of or consultant to the Company or any of its Subsidiaries, to the extent exercisable on the date of such termination, at any time within three (3) months after the date of termination, but not thereafter and in no event after the date the option would otherwise have expired; provided, however, that if the Award Holder’s directorship is terminated for Cause, such option shall terminate immediately.

(iv) Except as may otherwise be expressly provided in the applicable Contract, options granted under this Plan to a director, officer, employee, consultant or advisor shall not be affected by any change in the status of the Award Holder so long as such Award Holder continues to be a director of the Company, or an officer or employee of, or a consultant or advisor to, the Company or any of its Subsidiaries or a Parent (regardless of having changed from one to the other or having been transferred from one entity to another).

(v) Nothing in the Plan or in any option granted under the Plan shall confer on any person any right to continue in the employ of or as a consultant or advisor of the Company, its Parent or any of its Subsidiaries, or as a director of the Company, or interfere in any way with any right of the Company, any Parent or any of its Subsidiaries to terminate such relationship at any time for any reason whatsoever without liability to the Company, any Parent or any of its Subsidiaries.

(e) Death or Disability of an Award Holder. (i) Except as may otherwise be expressly provided in the applicable Contract or the Award Holder’s written employment or consulting or termination contract, if an Award Holder dies (A) while the Award Holder is employed by, or a consultant to, the Company, any Parent or any of its Subsidiaries, (B) within three (3) months after the termination of the Award Holder’s employment or consulting relationship with the Company, any Parent and its Subsidiaries (unless such termination was for Cause) or (C) within one (1) year following the termination of such employment or consulting relationship by reason of the Award Holder’s Disability, the options granted to the Award Holder as an employee of, or consultant to, the Company or any Parent or any of its Subsidiaries, may be exercised, to the extent exercisable on the date of the Award Holder’s death, by the Award Holder’s Legal Representative (as such term is defined in Paragraph 17), at any time within one (1) year after death, but not thereafter and in no event after the date the option would otherwise have expired. Except as may otherwise be expressly provided in the applicable Contract or the Award Holder’s written employment or consulting or termination contract, any Award Holder whose employment or consulting relationship with the Company, any Parent and its Subsidiaries has terminated by reason of the Award Holder’s Disability may exercise such options, to the extent exercisable upon the effective date of such termination, at any time within one (1) year after such date, but not thereafter and in no event after the date the option would otherwise have expired.

(ii) Except as may otherwise be expressly provided in the applicable Contract, if an Award Holder dies (A) while the Award Holder is a director of the Company, (B) within three (3) months after the termination of the Award Holder’s directorship

with the Company (unless such termination was for Cause) or (C) within one (1) year after the termination of the Award Holder’s directorship by reason of the Award Holder’s Disability, the options granted to the Award Holder as a director who was not an employee of or consultant to the Company or any Parent or any of its Subsidiaries, may be exercised, to the extent exercisable on the date of the Award Holder’s death, by the Award Holder’s Legal Representative at any time within one (1) year after death, but not thereafter and in no event after the date the option would otherwise have expired. Except as may otherwise be expressly provided in the applicable Contract, an Award Holder whose directorship with the Company has terminated by reason of Disability, may exercise such options, to the extent exercisable on the effective date of such termination, at any time within one (1) year after such date, but not thereafter and in no event after the date the option would otherwise have expired.

(f) Repurchase Rights. The Administrators shall have the discretion to grant options which are exercisable for shares of Common Stock subject to certain repurchase rights of the Company. The terms upon which such repurchase right shall be exercisable (including the period and procedure for exercise and the appropriate vesting schedule for the purchased shares) shall be established by the Administrators and set forth in the Contract evidencing such repurchase Award.

6. Restricted Stock. The Administrators, in their sole discretion, may from time to time, consistent with the purposes of the Plan, grant shares of Common Stock to persons eligible for such grant pursuant to Paragraph 4. The grant may be for no consideration or may require the Award Holder to pay such price per share therefor, if any, as the Administrators may determine, in their sole discretion. Such shares may be subject to such contingencies and restrictions as the Administrators may determine, as set forth in the Contract, including the right to repurchase such shares upon specified events determined by the Administrators as set forth in the Contract, or events of forfeiture as determined by the Administrators as set forth in the Contract. Such rights of repurchase or forfeiture may be based on such factors as determined by the Administrators, including but not limited to factors relating to the tenure of the employment or consulting relationship between the Award Holder and the Company, performance criteria related to the Award Holder or the Company, and whether the relationship between the Award Holder and the Company has terminated with or without Cause or with or without the Company’s consent. Upon the issuance of the stock certificate for a Restricted Stock Award, or in the case of uncertificated shares, the entry on the books of the Company’s transfer agent representing such shares, notwithstanding any contingencies or restrictions to which the shares are subject, the Award Holder shall be considered to be the record owner of the shares, and subject to the contingencies and restrictions set forth in the Award Agreement, shall have all rights of a shareholder of record with respect to such shares, including the right to vote and to receive distributions. The shares shall vest in the Award Holder when all of the vesting restrictions and contingencies lapse, including the lapse of any rights of repurchase or forfeiture as provided in the Contract. Until such time, the Administrators may require that such shares be held by the Company, together with a stock power duly endorsed in blank by the Award Holder.

7. Rules of Operation.

(a) Fair Market Value. The fair market value of a share of Common Stock on any day shall be (i) if the principal market for the Common Stock is a national securities exchange, the closing prices per share of the Common Stock on such day as reported by such exchange or on a consolidated tape reflecting transactions on such exchange, (ii) if the principal market for the Common Stock is not a national securities exchange and the Common Stock is quoted on the Nasdaq Stock Market (“Nasdaq”), and (A) if actual sales price information is available with respect to the Common Stock, the closing sales prices per share of the Common Stock on such day on Nasdaq, or (B) if such information is not available, the closing bid and the asked prices per share for the Common Stock on such day on Nasdaq, or (iii) if the principal market for the Common Stock is not a national securities exchange and the Common Stock is not quoted on Nasdaq, the closing bid and asked prices per share for the Common Stock on such day as reported on the OTC Bulletin Board Service or by National Quotation Bureau, Incorporated or a comparable service; provided, however, that if clauses (i), (ii) and (iii) of this Paragraph 7(a) are all inapplicable because the Company’s Common Stock is not publicly traded, or if no trades have been made or no quotes are available for such day, the fair market value of a share of Common Stock shall be determined by the Administrators by any method consistent with any applicable regulations adopted by the Treasury Department relating to stock options.

(b) Notice and Exercise. An Award (or any installment thereof), to the extent then exercisable, shall be exercised by giving written notice to the Company at its principal office stating which Award is being exercised, specifying the number of shares of Common Stock as to which such Award is being exercised and accompanied by payment in full of the aggregate exercise price therefor (or the amount due on exercise if the applicable Contract permits installment payments) (i) in cash and/or by certified check, (ii) with the authorization of the Administrators, with previously acquired shares of Common Stock having an aggregate fair market value, on the date of exercise, equal to the aggregate exercise price of all Awards being exercised, (iii) with the authorization of the Administrators, by delivering a recourse, interest bearing promissory note payable in one or more installments and secured by the shares of Common Stock for which the Award is exercised, or (iv) by any other means which the Administrators determine are consistent with the purposes of the Plan and with applicable laws and regulations. The Company shall not be required to issue any shares of Common Stock pursuant to the exercise of any Award until all required payments with respect thereto, including payments for any required withholding amounts, have been made.

To the extent permitted by applicable laws and regulations, the Administrators may, in their sole discretion, permit payment of the exercise price of an Award by delivery by the Award Holder of a properly executed notice, together with a copy of the Award Holder’s irrevocable instructions to a broker acceptable to the Administrators to deliver promptly to the Company the amount of sale or loan proceeds sufficient to pay such exercise price. In connection therewith, the Company may enter into agreements for coordinated procedures with one or more brokerage firms.

(c) Fractional Shares. In no case may a fraction of a share of Common Stock be purchased or issued under the Plan.

(d) Stockholder Rights. An Award Holder shall not have the rights of a stockholder with respect to such shares of Common Stock to be received upon the exercise or grant of an Award until the date of issuance of a stock certificate to the Award Holder for such shares or, in the case of uncertificated shares, until the date an entry is made on the books of the Company’s transfer agent representing such shares; provided, however, that until such stock certificate is issued or until such book entry is made, any Award Holder using previously acquired shares of Common Stock in payment of an option exercise price shall continue to have the rights of a stockholder with respect to such previously acquired shares.

8. Compliance with Securities Laws.

(a) Registration. It is a condition to the receipt or exercise of any Award that either (i) a Registration Statement under the Securities Act of 1933, as amended (the “Securities Act”), with respect to the shares of Common Stock to be issued upon such grant or exercise shall be effective and current at the time of such grant or exercise, or (ii) there is an exemption from registration under the Securities Act for the issuance of the shares of Common Stock upon such grant or exercise. Nothing herein shall be construed as requiring the Company to register shares subject to any Award under the Securities Act or to keep any Registration Statement effective or current.

(b) Representations and Warranties. The Administrators may require, in their sole discretion, as a condition to the grant or exercise of an Award, that the Award Holder execute and deliver to the Company the Award Holder’s representations and warranties, in form, substance and scope satisfactory to the Administrators, which the Administrators determine is necessary or convenient to facilitate the perfection of an exemption from the registration requirements of the Securities Act, applicable state securities laws or other legal requirements, including without limitation, that (i) the shares of Common Stock to be issued upon the receipt or exercise of an Award are being acquired by the Award Holder for the Award Holder’s own account, for investment only and not with a view to the resale or distribution thereof, and (ii) any subsequent resale or distribution of shares of Common Stock by such Award Holder will be made only pursuant to (A) a Registration Statement under the Securities Act which is effective and current with respect to the shares of Common Stock being sold, or (B) a specific exemption from the registration requirements of the Securities Act, but in claiming such exemption, the Award Holder, prior to any offer of sale or sale of such shares of Common Stock, shall provide the Company with a favorable written opinion of counsel satisfactory to the Company, in form, substance and scope satisfactory to the Company, as to the applicability of such exemption to the proposed sale or distribution.

(c) Listing of Shares. In addition, if at any time the Administrators shall determine that the listing or qualification of the shares of Common Stock subject to any Award on any securities exchange, Nasdaq or under any applicable law, or that the consent or approval of any governmental agency or regulatory body, is necessary or desirable as a condition to, or in connection with, the granting of an Award or the issuance of shares of Common Stock

upon exercise of an Award, such Award may not be granted or exercised in whole or in part, as the case may be, unless such listing, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Administrators.

9. Award Contracts. Each Award shall be evidenced by an appropriate Contract, which shall be duly executed by the Company and the Award Holder. Such Contract shall contain such terms, provisions and conditions not inconsistent herewith as may be determined by the Administrators in their sole discretion. The terms of each Award and Contract need not be identical.

10. Adjustments upon Changes in Common Stock.

(a) Adjustments. Notwithstanding any other provision of the Plan, in the event of any change in the outstanding Common Stock by reason of a stock dividend, recapitalization, merger in which the Company is the surviving corporation, consolidation, spin-off, split-up, combination or exchange of shares or the like which results in a change in the number or kind of shares of Common Stock which are outstanding immediately prior to such event, the aggregate number and kind of shares subject to the Plan, the aggregate number and kind of shares subject to each outstanding Award, the exercise price of each Award, and the maximum number of shares subject to each Award that may be granted to any employee in any calendar year, and the Section 162(m) Maximum, shall be appropriately adjusted by the Board of Directors, whose determination shall be conclusive and binding on all parties. Such adjustment may provide for the elimination of fractional shares that might otherwise be subject to options without payment therefor. Notwithstanding the foregoing, no adjustment shall be made pursuant to this Paragraph 10 if such adjustment (i) would cause the Plan to fail to comply with Section 422 of the Code or with Rule 16b-3 of the Exchange Act (if applicable to such Award), and (ii) would be considered as the adoption of a new plan requiring stockholder approval. The conversion of one or more outstanding shares of the Company’s Preferred Stock, if any, into Common Stock shall not in and of itself require any adjustment under this Paragraph 10.

(b) Acceleration of Vesting. Except as may otherwise be expressly provided in an applicable Contract, in the event of a Corporate Transaction (as defined in Paragraph 17) (i) the shares subject to each Restricted Stock Award outstanding under the Plan shall vest in full immediately prior to the effective date of the Corporate Transaction and (ii) any options shall vest in full at such date so that each such Award shall, immediately prior to the effective date of the Corporate Transaction, become fully exercisable for all of the shares of Common Stock at the time subject to that Award and may be exercised for any or all of those shares as fully-vested shares of Common Stock and such options shall otherwise terminate as of the effective date of the Corporate Transaction. However, unless the Administrators determine otherwise, the shares subject to an outstanding Award shall not vest on such an accelerated basis if and to the extent that: (A) such Award is assumed by the successor corporation (or parent thereof) in the Corporate Transaction and the Company’s repurchase rights, if any, are concurrently assigned to such successor corporation (or parent thereof) or if the Corporate Transaction is of the type specified in Paragraph 17(c)(i)(C) the Company expressly agrees to allow the option to continue or (B) such Award is to be replaced with a cash incentive program of the successor corporation which preserves the spread existing on the unvested Award shares at

the time of the Corporate Transaction and provides for subsequent payout in accordance with the same vesting schedule applicable to those unvested Award shares, or (C) the acceleration of such Award is subject to other limitations imposed by the Administrators at the time of the Award grant. Unless the Administrators determine otherwise, all outstanding repurchase rights under an Award or Stock Purchase Agreement shall also terminate automatically, and the shares of Common Stock subject to those terminated rights shall immediately vest in full, in the event of a Corporate Transaction, except to the extent that (x) those repurchase rights are assigned to the successor corporation (or Parent thereof) in connection with such transaction or, if the Corporate Transaction is of the type specified in Paragraph 17(c)(i)(C) the Company expressly agrees to provide for the continuation of such repurchase rights or (y) such accelerated vesting is precluded by other limitations imposed by the Administrators at the time the repurchase right is issued.

(c) Termination of Repurchase Rights. The Administrators shall have the discretionary authority, exercisable at the time the unvested Award shares are issued or any time while the Company’s repurchase rights with respect to those shares remain outstanding, to provide that those rights shall automatically terminate on an accelerated basis, and the shares subject to those terminated rights shall immediately vest, in the event that the Award Holder’s employment should subsequently be terminated by the Company without Cause within a designated period (not to exceed eighteen (18) months) following the effective date of any Corporate Transaction in which those repurchase rights are assigned to the successor corporation (or parent thereof).

11. Amendments and Termination of the Plan. The Plan was adopted by the Board of Directors on August 2, 2004. No Award may be granted under the Plan after August 2, 2014. The Board of Directors, without further approval of the Company’s stockholders, may at any time suspend or terminate the Plan, in whole or in part, or amend it from time to time in such respects as it may deem advisable, including without limitation, in order that ISOs granted hereunder meet the requirements for “incentive stock options” under the Code, or to comply with the provisions of Rule 16b-3 or Section 162(m) of the Code or any change in applicable laws or regulations, ruling or interpretation of any governmental agency or regulatory body; provided, however, that no amendment shall be effective, without the requisite prior or subsequent stockholder approval, which would (a) except as contemplated in Paragraph 10, increase the maximum number of shares of Common Stock for which any Awards may be granted under the Plan or change the Section 162 Maximum, (b) change the eligibility requirements for individuals entitled to receive Awards hereunder, or (c) make any change for which applicable law or any governmental agency or regulatory body requires stockholder approval. No termination, suspension or amendment of the Plan shall adversely affect the rights of an Award Holder under any Award granted under the Plan without such Award Holder’s consent. The power of the Administrators to construe and administer any Award granted under the Plan prior to the termination or suspension of the Plan shall continue after such termination or during such suspension.

12. Non-Transferability. Except as may otherwise be expressly provided in the applicable Contract, no option granted under the Plan shall be transferable other than by will

or the laws of descent and distribution, and Awards may be exercised, during the lifetime of the Award Holder, only by the Award Holder or the Award Holder’s Legal Representatives. Except as may otherwise be expressly provided in the applicable Contract, a Restricted Stock Award, to the extent not vested, shall not be transferable otherwise than by will or the laws or descent and distribution. Except to the extent provided above, Awards may not be assigned, transferred, pledged, hypothecated or disposed of in any way (whether by operation of law or otherwise) and shall not be subject to execution, attachment or similar process, and any such attempted assignment, transfer, pledge, hypothecation or disposition shall be null and void ab initio and of no force or effect.

13. Withholding Taxes. The Company, or its Parent or Subsidiary, as applicable, may withhold (a) cash or (b) with the consent of the Administrators (in the Contract or otherwise), shares of Common Stock to be issued under an Award or a combination of cash and shares, having an aggregate fair market value equal to the amount which the Administrators determine is necessary to satisfy the obligation of the Company, a Subsidiary or Parent to withhold federal, state and local income taxes or other amounts incurred by reason of the grant, vesting, exercise or disposition of an option or the disposition of the underlying shares of Common Stock. Alternatively, the Company may require the Award Holder to pay to the Company such amount, in cash, promptly upon demand.

14. Legends; Payment of Expenses; Share Escrow. The Company may endorse such legend or legends upon the certificates for shares of Common Stock issued upon the grant or exercise of an Award and may issue such “stop transfer” instructions to its transfer agent in respect of such shares as it determines, in its sole discretion, to be necessary or appropriate to (a) prevent a violation of, or to perfect an exemption from, the registration requirements of the Securities Act, applicable state securities laws or other legal requirements, (b) implement the provisions of the Plan or any agreement between the Company and the Award Holder with respect to such shares of Common Stock, or (c) permit the Company to determine the occurrence of a “disqualifying disposition,” as described in Section 421(b) of the Code, of the shares of Common Stock transferred upon the exercise of an ISO granted under the Plan. The Company shall pay all issuance taxes with respect to the issuance of shares of Common Stock upon grant or exercise of an Award, as well as all fees and expenses incurred by the Company in connection with such issuance. Shares of Restricted Common Stock issued upon exercise of an Award may, in the Administrator’s discretion, be held in escrow by the Company until the Award Holder’s interest in such shares vests.

15. Use of Proceeds. The cash proceeds to be received upon the grant or exercise of an Award shall be added to the general funds of the Company and used for such corporate purposes as the Board of Directors may determine, in its sole discretion.

16. Substitutions and Assumptions of Awards of Certain Constituent Corporations. Anything in this Plan to the contrary notwithstanding, the Board of Directors may, without further approval by the stockholders, substitute new Awards for prior Awards of a Constituent Corporation (as such term is defined in Paragraph 17) or assume the prior options or restricted stock of such Constituent Corporation.

17. Definitions.

(a) “Cause,” in connection with the termination of an Award Holder, shall mean (i) “cause,” as such term (or any similar term, such as “with cause”) is defined in any employment, consulting or other applicable agreement for services between the Company and such Award Holder, or (ii) in the absence of such an agreement, “cause” as such term is defined in the Contract executed by the Company and such Award Holder, or (iii) in the absence of both of the foregoing or if not defined in such agreements, (A) conviction of such Award Holder for any felony or the entering by him of a please of guilty or nolo contendere with respect thereto, (B) willful and repeated failures in any material respect of such Award Holder to perform any of the Award Holder’s reasonable duties and responsibilities assigned to him and the failure of the Award Holder to cure such failures hereunder within thirty (30) days after written notice thereof from the Company, (C) the commission of any act or failure to act by such Award Holder that involves moral turpitude, dishonesty, theft, destruction of property, fraud, embezzlement or unethical business conduct, or that is otherwise injurious to the Company, any of its Subsidiaries or any Parent or any other affiliate of the Company (or its or their respective employees), whether financially or otherwise, (D) any material violation by such Award Holder of the requirements of such Contract, any other contract or agreement between the Company and such Award Holder or this Plan (as in effect from time to time), (E) a breach by the Award Holder of any confidentiality or nondisclosure agreement or any other similar agreement or arrangement; in each case, with respect to subsections (A) through (E), as determined by the Board of Directors.

(b) “Constituent Corporation” shall mean any corporation which engages with the Company, its Parent or any Subsidiary in a transaction to which Section 424(a) of the Code applies (or would apply if the option assumed or substituted were an ISO), or any Parent or any Subsidiary of such corporation.

(c) “Corporate Transaction” shall mean

(i) any of the following transactions effected with a Person not an Affiliate of the Company prior to the transaction:

(A) a merger, consolidation or combination of the Company with or into another issuer; (B) the exchange or sale of all or a portion of the outstanding shares of the Company for securities of another issuer, or other consideration provided by such issuer or by another party to such transaction; or (C) the issuance of equity securities of the Company or securities convertible into equity securities, in exchange for securities of another issuer or other consideration provided by such issuer or by another party to such transaction; and in the case of either (A), (B) or (C) the Company’s shareholders prior to the transaction, do not possess, immediately after such transaction, more than fifty percent (50%) (not including the holdings of the other issuer or affiliate thereof, if such Person was a shareholder of the Company prior to the transaction) of the voting power of any one or more of the following: (X) the Company; (Y) such other issuer; or (Z) such other constituent party to the transaction; or

(ii) a sale of all or substantially all of the Company’s assets to a third party not an Affiliate of the Company immediately prior to such transaction.

(d) “Disability” shall mean a permanent and total disability within the meaning of Section 22(e)(3) of the Code.

(e) “Legal Representative” shall mean the executor, administrator or other person who at the time is entitled by law to exercise the rights of a deceased or incapacitated Award Holder with respect to an Award granted under the Plan.

(f) “Parent” shall mean a “parent corporation” within the meaning of Section 424(e) of the Code.

(g) “Subsidiary” shall mean a “subsidiary corporation” within the meaning of Section 424(f) of the Code.

18. Governing Law. The Plan, any Awards granted hereunder, the Contracts and all related matters shall be governed by, and construed in accordance with, the laws of the State of Nevada, other than those laws which would defer to the substantive law of the other jurisdiction.

Neither the Plan nor any Contract shall be construed or interpreted with any presumption against the Company by reason of the Company causing the Plan or Contract to be drafted. Whenever from the context it appears appropriate, any term stated in either the singular or plural shall include the singular and plural, and any term stated in the masculine, feminine or neuter gender shall include the masculine, feminine and neuter.

19. Partial Invalidity. The invalidity, illegality or unenforceability of any provision in the Plan, any Award or Contract shall not affect the validity, legality or enforceability of any other provision, all of which shall be valid, legal and enforceable to the fullest extent permitted by applicable law.

20. Stockholder Approval. The Plan shall be subject to approval of the Company’s stockholders. No options granted hereunder may be exercised prior to such approval, provided, however, that the date of grant of any option shall be determined as if the Plan had not been subject to such approval. Notwithstanding the foregoing, if the Plan is not approved by a vote of the stockholders of the Company on or before July 30, 2005, the Plan and any Awards granted hereunder shall terminate.

EX-10.7 16 a2143868zex-10_7.htm EXHIBIT 10.7

Exhibit 10.7

INCENTIVE STOCK OPTION AGREEMENT

THIS INCENTIVE STOCK OPTION AGREEMENT (the “Agreement”) entered into as of July 6, 2004 between IMPACT DIAGNOSTICS, INC., a Utah corporation (the “Company”), and Stan Yakatan (“Optionee”).

RECITALS

A. In accordance with the allotment made by the Board of Directors of the Company or the Committee of the Board of Directors designated to administer the Plan (the “Administrators”) and subject to the terms and conditions of the 2004 Stock Incentive Plan of the Company (the “Plan”) the Company has agreed to grant to the Optionee an option to purchase shares of Common Stock of the Company, par value $.001 per share (the “Common Stock”) upon the terms and conditions set forth herein. This option is intended to constitute an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), although the Company makes no representation or warranty as to such qualification.

NOW, THEREFORE, it is hereby agreed as follows:

1. The Company hereby grants to the Optionee an option to purchase 2,868,254 shares of Common Stock par value $0.001 per share (the “Common Stock”) at an exercise price of $0.18 per Share.

2. (a) The term of this option shall be ten (10) years from the date hereof, subject to earlier termination as provided herein.

(b) The option may be exercised, in whole or in increments, in accordance with the following schedule, provided, however, if the Optionee meets the performance targets established by mutual agreement of the Optionee and the Board of Directors (“Performance Plan”), the vesting schedule shall be accelerated as provided in the Performance Plan:

	On or After	This Option Shall be Exercisable as to

(i)	Date of Grant	20	%
(ii)	July 6, 2005	40	%
(iii)	July 6, 2006	40	%

(c) The right to purchase shares of Common Stock under this option shall be cumulative, so that if the full number of shares purchasable in a period shall not be purchased, the balance may be purchased at any time or from time to time thereafter, but not after the expiration of the option. Notwithstanding the foregoing, in no event may a fraction of a share of Common Stock be purchased under this option.

3. This option shall be exercised by giving written notice to the Company at its then principal office, Attention: President, stating that the Optionee is exercising the option hereunder, specifying the number of shares being purchased and accompanied by payment in full of the aggregate purchase price therefor in cash or by certified check or in such other manner as the Administrators determine are consistent with the purposes of the Plan and with applicable laws or regulations, including, but not limited to, a cashless exercise.

4. The Company may withhold cash and/or shares of Common Stock to be issued to the Optionee in the amount that the Company determines is necessary to satisfy its obligation to withhold taxes or other amounts incurred by reason of the grants exercised or disposition of this option or the disposition of the underlying shares of Common Stock. Alternatively, the Company may require the Optionee to pay the Company such amount and the Optionee agrees to pay such amount to the Company in cash, promptly upon demand.

5. Notwithstanding the foregoing, this option shall not be exercisable by the Optionee unless (a) a Registration Statement under the Securities Act of 1933, as amended (the “Securities Act”) with respect to the shares of Common Stock to be received upon the exercise of this option shall be effective and current at the time of exercise or (b) there is an exemption from registration under the Securities Act for the issuance of the shares of Common Stock upon such exercise. The Optionee hereby represents and warrants to the Company that, unless such a Registration Statement is effective and current at the time of exercise of this option, the shares of Common Stock to be issued upon the exercise of this option will be acquired by the Optionee for his own account, for investment only and not with a view to the resale or distribution thereof. In any event, the Optionee shall notify the Company of any proposed resale of the shares of Common Stock issued to it upon exercise of this option. Any subsequent resale or distribution of shares of Common Stock by the Optionee shall be made only pursuant to (x) a Registration Statement under the Securities Act which is effective and current with respect to the sale of shares of Common Stock being sold or (y) a specific exemption from the registration requirements of the Securities Act, but in claiming such exemption, the Optionee shall, prior to any offer of sale or sale of such shares of Common Stock, provide the Company (unless waived by the Company) with a favorable written opinion of counsel, in form and substance satisfactory to the Company, as to the applicability of such exemption to the proposed sale or distribution. Such representations and warranties shall also be deemed to be made by the Optionee upon each exercise of this option. Nothing herein shall be construed as requiring the Company to register the shares subject to this option under the Securities Act.

6. The Company may affix appropriate legends upon the certificates for shares of Common Stock issued upon exercise of this option and may issue such “stop transfer” instructions to its transfer agent in respect of such shares as it determines, in its discretion, to be necessary or appropriate to (a) prevent a violation of, or to perfect an exemption from, the registration requirements of the Securities Act, (b) implement the provisions of this Agreement or any other agreement between the Company and the Optionee with respect to such shares of Common Stock, or (c) permit the Company to determine the occurrence of a “disqualifying disposition,” as described in Section 421(b) of the Code, of the shares of Common Stock transferred upon the exercise of this option.

7. Nothing herein shall confer upon the Optionee any right to continue in the employ of the Company or interfere in any way with any right of the Company to terminate such employment.

8. The Optionee represents and agrees that it will comply with all applicable laws relating to the grant and exercise of this option and the disposition of the shares of Common Stock acquired upon exercise of the option, including without limitation, federal and state securities and “blue sky” laws.

9. This Agreement shall be binding upon and inure to the benefit of any successor or assign of the Company and the Optionee and to any heir, distribute or Legal Representative entitled to the Optionee’s rights hereunder.

10. This option is not transferable by the Optionee otherwise by will or the laws of the descent and distribution and may be exercised, during the lifetime of the Optionee, only by the Optionee or the Optionee’s legal representative.

11. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Utah, without regard to the conflicts of law rules thereof.

12. The invalidity or illegality of any provision herein shall not affect the validity of any other provision.

13. This Agreement constitutes the entire agreement between the Company and Optionee relating to the subject matter hereof and supersedes all prior agreements or understandings relating thereto.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth above.

	IMPACT DIAGNOSTICS, INC.


	By:
		President



		Stan Yakatan

EX-10.8 17 a2143868zex-10_8.htm EXHIBIT 10.8

Exhibit 10.8

INCENTIVE STOCK OPTION AGREEMENT

THIS INCENTIVE STOCK OPTION AGREEMENT (the “Agreement”) entered into as of July 6, 2004 between IMPACT DIAGNOSTICS, INC., a Utah corporation (the “Company”), and John Wilson (“Optionee”).

RECITALS

NOW, THEREFORE, it is hereby agreed as follows:

1. The Company hereby grants to the Optionee an option to purchase 750,000 shares of Common Stock par value $0.001 per share (the “Common Stock”) at an exercise price of $0.18 per Share.

2. (a) The term of this option shall be ten (10) years from the date hereof, subject to earlier termination as provided herein.

(b) The option may be exercised, in whole or in increments, in accordance with the following schedule:

	On or After	This Option Shall be Exercisable as to

(i)	July 6, 2005	50	%
(ii)	July 6, 2006	50	%

7. Nothing herein shall confer upon the Optionee any right to continue in the employ of the Company or interfere in any way with any right of the Company to terminate such employment.

11. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Utah, without regard to the conflicts of law rules thereof.

12. The invalidity or illegality of any provision herein shall not affect the validity of any other provision.

13. This Agreement constitutes the entire agreement between the Company and Optionee relating to the subject matter hereof and supersedes all prior agreements or understandings relating thereto.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date set forth above.

	IMPACT DIAGNOSTICS, INC.


	By:
		President



		John Wilson

EX-10.9 18 a2143868zex-10_9.htm EXHIBIT 10.9

Exhibit 10.9

ORIGINAL

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Employment Agreement”) is made this 1^st day of January, 2004 by and between Michael L. Ahlin (the “Employee”) and Impact Diagnostics, Inc., a Utah corporation (the “Company”).

1. Employment and Service on the Board of Directors.

Company hereby agrees to employ the Employee as the Company’s Chairman of the Board, and/or; Chief Executive Officer, and/or; President, and/or; Chief Operating Officer, to perform such specific duties and have such responsibilities as the board of directors of the Company (the “Board of Directors”) may from time to time establish. The Employee hereby accepts employment by the Company as Chairman of the Board, and/or; Chief Executive Officer, and/or; President, and/or; Chief Operating Officer, subject to the terms and conditions hereof, and agrees to devote the majority of his business time and attention to his duties hereunder, to the best of his abilities. Except as otherwise provided by paragraph 4(b) of this Employment Agreement, while the Employee is employed by the Company, the Company shall nominate the Employee to be elected as a member of the Board of Directors.

2. Term of Employment; Certain Definitions.

(a) The term of the Employee’s employment pursuant to this Employment Agreement shall commence as of the Closing Date and shall terminate upon the earlier of (i) termination pursuant to paragraph 6 hereof or (ii) the third anniversary of the Closing Date; provided that the term of this Employment Agreement shall be automatically renewed for successive three (3) year periods until either the Employee or the Company gives the other notice of nonrenewal at least ninety (90) days prior to the expiration of the relevant term of employment.

(b) “Post-Employment Period” means the period commencing on the date of the Employee’s termination of employment and ending on the earlier of the first anniversary of such termination of employment or the expiration of the term of this Employment Agreement.

(c) “Prior Year Bonus” means the amount of any bonus earned by the Employee with respect to services rendered during the prior fiscal year of the Company, regardless of when such bonus is paid.

3. Compensation, Benefits and Expenses.

(a) During the term of the Employee’s employment pursuant to this Employment Agreement, the Employee shall be paid a base annual salary of $144,000 (the “Base Pay”). Payment will be made on the regularly scheduled pay dates of the Company, subject to all appropriate withholdings or other deductions required by law or by the Company’s established policies applicable to all the employees of the Company. The Board of Directors may increase the Employee’s Base Pay at the Company’s sole discretion, but shall not reduce the Base Pay below the rate established by this Employment Agreement (including any increases in the rate of Base Pay

approved by the Board of Directors after the Effective Time), without the Employee’s written consent.

(b) In addition to any other compensation payable to the Employee pursuant to this Employment Agreement, during the term of the Employee’s employment pursuant to this Employment Agreement, the Employee may be paid an annual bonus as determined by and within the sole discretion of board of directors of the Company.

(c) In addition to compensation payable to the Employee as described above, the Employee shall be entitled to participate in all the employee benefit plans or programs of the Company as are available to management employees of the Company generally and such other benefit plans or programs as may be specified by the Board of Directors, including any stock options that may be granted by the board of directors of the Company (“Employee Benefits”), during the term of the Employment Agreement.

(d) On a timely basis, the Company shall reimburse the Employee for such reasonable out-of-pocket expenses as the Employee may incur for and on behalf of the furtherance of the Company’s business in accordance with the Company’s expense reimbursement policy.

(e) Employee to be allowed full use of office facilities, equipment, overhead, phones, computers, administrative assistance, etc. for various needs aside from company work.

4. Covenants of the Employee.

(a) The Employee agrees with the Company that, while employed by the Company, the Employee shall not directly or indirectly, whether as a proprietor, partner, joint venturer, Company, agent, employee, consultant, officer or beneficial or record owner of more than one percent of the stock of any corporation or association of any nature, engage in any business which is competitive to the business conducted by the Company, the Company or any of the Company’s subsidiaries or affiliates (the Company, such subsidiaries and affiliates being collectively referred to as the “Companies”) in any geographic area which the Companies have engaged or will engage during such period (including, without limitation, any area in which any customer of the Companies may be located).

(b) The Employee agrees with the Company that at no time will the Employee directly or indirectly divulge to any person, entity or other organization or appropriate for the Employee’s own use or for the use of others any trade secrets or information deemed to be confidential by the Companies (“Confidential Information”) relating to the assets, intellectural property, liabilities, employees, goodwill, business or affairs of the Companies, including, without limitation, any information concerning past, present or prospective customers, manufacturing processes, research and development information or data; testing or marketing data, or other confidential information used by, or useful to, the Companies and known (whether or not known with the knowledge and permission of the Companies and whether or not at any time prior to the Closing Date developed, devised, or otherwise created in whole or in part by the efforts of the Employee) to the Employee by reason of his employment by, shareholdings in or other association

with the Companies, except as required by the Employee for the purpose of the business of the Companies. The Employee will hold on to all copies and extracts of any written confidential information acquired or developed by him during his employment for the sole benefit of the Companies and their successors and assigns. Except as necessary to perform the Employee’s duties hereunder, the Employee further agrees that he will not remove or take from the Companies’ premises (or if previously removed or taken, he will, at the Company’s request, promptly return) any written confidential information or any copies or extracts thereof. The Employee shall promptly make all disclosures, execute all instruments and papers and perform all acts reasonably necessary to vest and confirm in the Companies, fully and completely, all rights created or contemplated by this paragraph 4(b).

(c) In the event the Employee breaches this Employment Agreement (including, without limitation, by terminating his employment without Good Reason (as hereinafter defined)) or if the Employee’s employment is terminated without Cause (as hereinafter defined), the Employee separately agrees, being fully aware that the performance of this Employment Agreement is important to preserve the present value of the property and business of the Companies, that for a period of twelve (12) calendar months following such termination (the “Restricted Period”), that the Employee shall not directly or indirectly engage in any business, whether as proprietor, partner, joint venturer, Company, agent, employee, consultant, officer or beneficial or record owner of more than one percent of the stock of any corporation or association of any nature which is competitive to the business conducted by the Companies in the geographical service area in which the Companies have engaged or will engage during such period (including, without limitation, any area in which any such customer of the Companies may be located).

(d) As a separate and independent covenant, the Employee agrees with the Company that, for so long as the Employee is employed by the Company and for the Restricted Period, he will not in any way, directly or indirectly, for the purpose of conducting or engaging in any competitive business with the Companies, call upon, solicit, advise or otherwise do, or attempt to do, business with any person who is, or was, during the then most recent 12-month period, a customer of any of the Companies or solicit, induce, hire, attempt to hire, interfere with or attempt to interfere with any person who is, or was during the then most recent 12-month period, an employee, officer, representative or agent of the Companies.

(e) The Employee agrees that the breach by him of any of the foregoing covenants is likely to result in immediate and irreparable harm, directly or indirectly, to the Companies. The Employee, therefore, consents and agrees that if the Employee violates any of such covenants, the Companies shall be entitled, among and in addition to any other rights or remedies available under this Employment Agreement or at law or in equity, to temporary and permanent injunctive relief to, without bond or other security, prevent the Employee from committing or continuing a breach of such covenants. Such injunctive relief in any court shall be available to the Companies in lieu of, or prior to or pending determination in, any arbitration proceeding.

extent that any portion of this paragraph 4 shall be adjudicated to be unenforceable, such portion shall be deemed amended to delete therefrom or to reform the portion thus adjudicated to be invalid or unenforceable, such deletion or reformation to apply only with respect to the operation of such portion in the particular jurisdiction in which such adjudication is made.

(g) Subject to paragraph 5(e), any controversy or claim arising out of or relating to this Employment Agreement that cannot be mutually resolved by the parties hereto shall first be submitted to non-binding mediation in Salt Lake County, Utah in accordance with the rules then in effect of the American Arbitration Association; provided that the term of mediation shall be limited to three consecutive days. Each party shall be responsible for their own attorney fees and fees and costs incurred attributable to such mediation and each party shall share all expenses of the mediator. If the parties cannot mutually resolve the controversies or claims arising out of or relating to this Employment Agreement after mediation, except with respect to the equitable relief contemplated under paragraph 4(e), such controversies or claims arising out of or relating to this Employment Agreement shall be settled by arbitration in Salt Lake County, Utah in accordance with the rules then in effect of the American Arbitration Association, and judgment upon the award rendered may be entered in any court having jurisdiction thereon. The prevailing party in any such arbitration will be reimbursed by the other party hereto for its reasonable attorney fees and fees and costs incurred attributable to such arbitration.

5. Termination.

(a) The Company shall have the right to terminate the Employee’s employment at any time and for any reason. If the Employee is terminated for Cause, neither the Company or the Company will have any obligation to pay the Employee any Base Pay or other compensation, or to provide any Employee Benefits subsequent to the date of the Employee’s termination of employment (except as required by applicable law), including, without limitation, Severance Benefits as defined in paragraph 5(c) hereof. Termination for “Cause” shall mean termination of employment for any of the following reasons:

(i) the Employee entering a plea of no-contest with respect to or being convicted by a court of competent and final jurisdiction of any crime, whether or not involving the Company, that constitutes a felony in the jurisdiction involved;

(ii) (A) the Employee committing any act of fraud, misappropriation, embezzlement, unethical business conduct or other act of dishonesty against the Company, the Company or the Company’s subsidiaries, or (B) the Employee breaching a duty of loyalty owed to the Company, or any of the Companies, or, as a result of his gross negligence, breaching a duty of are owed to the Company, or any of the Companies;

Cause pursuant to this subparagraph (iii) unless the Company first gives the Employee notice of its intention to terminate and of the grounds for such termination, and the Employee has not, within 20 days following receipt of such notice, cured such Cause, provided that the Employee shall not be entitled to cure such Cause pursuant to the immediately preceding clause of this subparagraph (iii) if the breach, failure or refusal giving rise to such Cause was willfully or intentionally committed by the Company; or

(iv) any other misconduct by the Employee that is materially injurious to the financial condition or business reputation of the Company, the Company or the Companies.

(b) Unless otherwise terminated earlier pursuant to the terms of this Employment Agreement, the Employee’s employment under this Employment Agreement will terminate upon the Employee’s death and may be terminated by the Company or the Employee upon giving not less than thirty days written notice to the other in the event that the Employee, because of physical or mental disability or incapacity, is unable to perform (or, in the opinion of the physician or physicians selected pursuant to the proecedures set forth below, is reasonably expected to be unable to perform) the Employee’s duties hereunder for an aggregate of one hundred eighty working days during any twelve-month period (“Disabled”). All questions arising with respect to whether the Employee is Disabled shall be determined by a reputable physician mutually selected by the Company and the Employee at the time such question arise. If the Company and the Employee cannot agree upon the physician within a period of seven days after such question arises, then the Company and the Employee shall each select a physician who shall each make a determination as to whether the Employee is Disabled. Is such physicians disagree as to whether the Employee is Disabled, such physicians shall be asked to agree on the selection of another physician to makes such determination. The determination of the physician or physicians selected pursuant to the above provisions of this paragraph 5(b) as to such matters shall be final and binding upon the parties hereto.

c) The Employee may terminate his employment for Good Reason. For purposes of this paragraph 6, “Good Reason” shall mean the following:

(i) the Company failing to pay any portion of the Employee’s material compensation due and payable in connection with the Employee’s employment; provided, however, that the Employee may not

terminate his employment for Good Reason pursuant to this subparagraph (i) unless the Employee first gives the Company written notice of his intention to terminate and of the grounds for such termination, and (ii) the Company has not, within 20 days of receipt of such notice, cured such Good Reason; or

(ii) the Company discharging the Employee without Cause; or

(iii) the merger of the Company with, or the sale of the outstanding voting securities of the Company in which the stockholders of the Company immediately prior to such transaction do not immediately after such transaction own directly or indirectly more than 50% of the combined voting power of the Company in substantially the same proportions as their ownership immediately prior to such transaction of the voting securities of the Company, or the sale of substantially all of the assets of the Company to, and person, corporation, or other business entity that is not affiliated with or controlled by the Company.

The Company shall provide the Employee with Severance Benefits upon (i) the termination by the Employee of his employment for Good Reason or (ii) the termination of the Employee’s employment by the Company without Cause. “Severance Benefits” means (i) prompt payment of any unpaid Base Pay earned through the date of the Employee’s termination; (ii) a payment equal to thirty six months of the Base Pay; and (iii) providing the Employee and his eligible dependents with medical benefits during the Post-Employment Period (to the extent such dependents participated in the Company’s medical plans immediately prior to the Post-Employment Period), or such longer time to the extent required by law, upon the same terms and conditions applicable to similarly situated employees who are employed by the Company.

6. Assignment and Succession.

(a) The services to be rendered and obligations to be performed by the Employee under this Employment Agreement are special and unique, and all such services and obligations and all of the Employee’s rights under this Employment Agreement are personal to the Employee and shall not be assignable or transferable. In the event of the Employee’s death, however, the Employee’s personal representative shall be entitled to receive any and all payments then due under this Employment Agreement.

(b) This Employment Agreement shall inure to the benefit of and be binding upon and enforceable by the Company and the Employee and their respective successors, permitted

assigns, heirs, legal representatives, executors, and administrators. If the Company shall be merged into or consolidated with another entity, the provisions of the Employment Agreement shall be binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to expressly assume and agree to perform this Employment Agreement in the same manner that the Company would be required to perform it if no such succession had taken place. The provisions of this paragraph 6(b) shall continue to apply to each subsequent Company of the Employee hereunder in the event of any subsequent merger, consolidation, or transfer of assets of such subsequent Company.

7. Notices.

All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by overnight courier or telegram or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this paragraph 7):

if to the Company or the Company:

Impact Diagnostics, Inc.

5792 South 900 East, Suite B

Salt Lake City, UT 84121

Attention: CFO

if to the Employee:

Mark J. Rosenfeld

1075 Skyler Drive

Draper, Utah 84020

with a copy to:

James C. Lewis, Esq.

10 West 100 South #615

Salt Lake City, UT 84101

8. Waiver of Breach.

(a) The waiver by the Company or the Employee of a breach of any provision of this Employment Agreement shall not operate or be construed as a waiver by such parry of any subsequent breach.

(b) The parties hereto recognize that the laws and public policies of various jurisdictions may differ as to the validity and enforceability of covenants similar to those set forth herein. It is the intention of the parties that the provisions hereof be enforced to the fullest extent permissible under the laws and policies of each jurisdiction in which enforcement may be sought, and that the unenforceability (or the modification to conform to such laws or policies) of any provisions hereof shall not render unenforceable, or impair, the remainder of the provisions hereof. Accordingly, if at the time of enforcement of any provision hereof, a court of competent jurisdiction holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographic area reasonable under such circumstances will be substituted for the stated period, scope or geographical area and that such court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and geographical area permitted by law.

9. Amendment.

This Employment Agreement may be amended only by a written instrument signed by all parties hereto.

10. Governing Law; Jurisdiction and Service of Process.

This Employment Agreement shall be governed by the laws of the State of Utah applicable to contracts executed in and to be performed in that State.

11. Partial Invalidity.

The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

12. Entire Agreement.

All prior negotiations and agreements between the parties hereto with respect to the matters contained herein are superseded by this Employment Agreement, and there are no representations, warranties, understandings or agreements other than those expressly set forth herein.

13. Other Severance Benefits.

The Employee hereby agrees that in consideration for the payments to be received under this Employment Agreement, the Employee waives any and all rights to any payments or benefits under any other severance plans or any similar arrangements of the Company, the Company or any of the Company’s subsidiaries.

14. Withholding.

The payment of any amount pursuant to this Employment Agreement shall be subject to applicable withholding and payroll taxes, and such other deductions as may be required under the Company’s or the Company’s employee benefit plans, if any.

15. Accrual.

All unpaid or underpaid wages, benefits, etc. shall accrue and be payable to the employee upon sufficient funding of the Company, upon termination with or without cause or upon resignation.

IN WITNESS WHEREOF, the Employee and the Company have entered into this Employment Agreement as of the date set forth above.

	EMPLOYEE

	/s/ Michael L. Ahlin
	Michael L. Ahlin


	COMPANY:
	IMPACT DIAGNOSTICS, INC.


	By:	/s/ Michael L. Ahlin
		Name: Michael L. Ahlin
		Title: Chairman of the Board

	By:	/s/ Mitchell T. Godfrey, [ILLEGIBLE]
		Name: Mitchell T. Godfrey
		Title: Treasurer
OPTIONS

Impact Diagnostics, Inc.

July 1, 2004

Michael L. Ahlin

5792 South 900 East, Suite B

Salt Lake City, UT 84121

Re: Amendment of Employment Agreement

Dear Michael:

Pursuant to Paragraph 9 of the January 1, 2004 Employment Agreement between you and Impact Diagnostics, Inc. (“IDI”) (the “Employment Agreement), and for good and sufficient consideration, the receipt of which is hereby acknowledged, the Employment Agreement is hereby amended as follows:

1. IDI agrees to continue to employ you in a full-time capacity, at your current compensation rate and with the same benefits, until such time as you and the Board of Directors agree otherwise. Your employment will be at-will. This means that either you or IDI may terminate your employment at any time, for any reason or no reason.

2. All other provisions of the Employment Agreement, and any provisions contrary to the terms of this letter of Amendment, are hereby revoked and are considered null and void.

3. Your employment by IDI, and this Amendment to the Employment Agreement, shall be governed by the laws of the State of Utah.

4. This Amendment to the Employment Agreement contains the entire agreement between the parties and completely supersedes any prior written or oral agreements or representations concerning the subject matter hereof. Any oral representation, modification or other writing concerning this Amendment or the Employment Agreement shall be of no force or effect. This Amendment may be modified only by a writing signed by the parties hereto.

5. This Amendment is effective as of the date of your execution of this letter. By signing this letter you agree to the terms set forth above, and acknowledge that: a) you have read and agreed to the terms of this letter voluntarily; b) you have had the opportunity to consult with

the attorney of your choice regarding its terms; and c) no promise or inducement has been made to you other than the terms set forth herein.

		Sincerely,

		Stan Yakatan
		Chief Executive Officer

Agreed to:


Michael L. Ahlin


dated

EX-10.10 19 a2143868zex-10_10.htm EXHIBIT 10.10

Exhibit 10.10

ORIGINAL

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Employment Agreement”) is made this 1^st day of January, 2004 by and between Mark J. Rosenfeld (the “Employee”) and Impact Diagnostics, Inc., a Utah corporation (the “Company”).

1. Employment and Service on the Board of Directors.

Company hereby agrees to employ the Employee as the Company’s Vice President, to perform such specific duties and have such responsibilities as the board of directors of the Company (the “Board of Directors”) may from time to time establish. The Employee hereby accepts employment by the Company as Vice President, subject to the terms and conditions hereof, and agrees to devote the majority of his business time and attention to his duties hereunder, to the best of his abilities. Except as otherwise provided by paragraph 4(b) of this Employment Agreement, while the Employee is employed by the Company, the Company shall nominate the Employee to be elected as a member of the Board of Directors.

2. Term of Employment; Certain Definitions.

(c) “Prior Year Bonus” means the amount of any bonus earned by the Employee with respect to services rendered during the prior fiscal year of the Company, regardless of when such bonus is paid.

3. Compensation, Benefits and Expenses.

(a) During the term of the Employee’s employment pursuant to this Employment Agreement, the Employee shall be paid a base annual salary of $144,000 (the “Base Pay”, based on 80% of full-time employment effort). Payment will be made on the regularly scheduled pay dates of the Company, subject to all appropriate withholdings or other deductions required by law or by the Company’s established policies applicable to all the employees of the Company. The Board of Directors may increase the Employee’s Base Pay at the Company’s sole discretion, but shall not reduce the Base Pay below the rate established by this Employment Agreement (including any increases in the rate of Base Pay approved by the Board of Directors after the Effective Time), without the Employee’s written consent.

(e) Employee to be allowed full use of office facilities, equipment, overhead, phones, computers, administrative assistance, etc. for various needs aside from company work.

4. Covenants of the Employee.

information acquired or developed by him during his employment for the sole benefit of the Companies and their successors and assigns. Except as necessary to perform the Employee’s duties hereunder, the Employee further agrees that he will not remove or take from the Companies’ premises (or if previously removed or taken, he will, at the Company’s request, promptly return) any written confidential information or any copies or extracts thereof. The Employee shall promptly make all disclosures, execute all instruments and papers and perform all acts reasonably necessary to vest and confirm in the Companies, fully and completely, all rights created or contemplated by this paragraph 4(b).

(f) It is the desire, intent and agreement of the parties that the restrictions placed on the Employee by this paragraph 4 be enforced to the fullest extent permissible under the law and public policy applied by any jurisdiction in which enforcement is sought. Accordingly, if and to the extent that any portion of this paragraph 4 shall be adjudicated to be unenforceable, such portion shall be deemed amended to delete therefrom or to reform the portion thus adjudicated to be invalid

or unenforceable, such deletion or reformation to apply only with respect to the operation of such portion in the particular jurisdiction in which such adjudication is made.

5. Termination.

(iii) the Employee breaching any of his obligations under the Employment Agreement or failing or refusing to perform any of his duties as required of him as an employee of the Company, provided, however, that the Company may not terminate the Employee’s employment for Cause pursuant to this subparagraph (iii) unless the Company first gives the Employee notice of its intention to terminate and of the

grounds for such termination, and the Employee has not, within 20 days following receipt of such notice, cured such Cause, provided that the Employee shall not be entitled to cure such Cause pursuant to the immediately preceding clause of this subparagraph (iii) if the breach, failure or refusal giving rise to such Cause was willfully or intentionally committed by the Company; or

(iv) any other misconduct by the Employee that is materially injurious to the financial condition or business reputation of the Company, the Company or the Companies.

c) The Employee may terminate his employment for Good Reason. For purposes of this paragraph 6, “Good Reason” shall mean the following:

(i) the Company failing to pay any portion of the Employee’s material compensation due and payable in connection with the Employee’s employment ; provided, however, that the Employee may not terminate his employment for Good Reason pursuant to this subparagraph (i) unless the Employee first

gives the Company written notice of his intention to terminate and of the grounds for such termination, and (ii) the Company has not, within 20 days of receipt of such notice, cured such Good Reason; or

(ii) the Company discharging the Employee without Cause; or

6. Assignment and Succession.

(b) This Employment Agreement shall inure to the benefit of and be binding upon and enforceable by the Company and the Employee and their respective successors, permitted assigns, heirs, legal representatives, executors, and administrators. If the Company shall be merged into or consolidated with another entity, the provisions of the Employment Agreement shall be

binding upon and inure to the benefit of the entity surviving such merger or resulting from such consolidation. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to expressly assume and agree to perform this Employment Agreement in the same manner that the Company would be required to perform it if no such succession had taken place. The provisions of this paragraph 6(b) shall continue to apply to each subsequent Company of the Employee hereunder in the event of any subsequent merger, consolidation, or transfer of assets of such subsequent Company.

7. Notices.

if to the Company or the Company:

Impact Diagnostics, Inc.

5792 South 900 East, Suite B

Salt Lake City, UT 84121

Attention: CFO

if to the Employee:

Mark J. Rosenfeld

1075 Skyler Drive

Draper, Utah 84020

with a copy to:

James C. Lewis, Esq.

l0 West 100 South #615

Salt Lake City, UT 84101

8. Waiver of Breach.

(a) The waiver by the Company or the Employee of a breach of any provision of this Employment Agreement shall not operate or be construed as a waiver by such party of any subsequent breach.

permissible under the laws and policies of each jurisdiction in which enforcement may be sought, and that the unenforceability (or the modification to conform to such laws or policies) of any provisions hereof shall not render unenforceable, or impair, the remainder of the provisions hereof. Accordingly, if at the time of enforcement of any provision hereof, a court of competent jurisdiction holds that the restrictions stated herein are unreasonable under circumstances then existing, the parties hereto agree that the maximum period, scope or geographic area reasonable under such circumstances will be substituted for the stated period, scope or geographical area and that such court shall be allowed to revise the restrictions contained herein to cover the maximum period, scope and geographical area permitted by law.

9. Amendment.

This Employment Agreement may be amended only by a written instrument signed by all parties hereto.

10. Governing Law; Jurisdiction and Service of Process.

This Employment Agreement shall be governed by the laws of the State of Utah applicable to contracts executed in and to be performed in that State.

11. Partial Invalidity.

The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

12. Entire Agreement.

13. Other Severance Benefits.

14. Withholding.

15. Accrual.

All unpaid or underpaid wages, benefits, etc. shall accrue and be payable to the employee upon sufficient funding of the Company, upon termination with or without cause or upon resignation.

IN WITNESS WHEREOF, the Employee and the Company have entered into this Employment Agreement as of the date set forth above.

	EMPLOYEE


	/s/ Mark J. Rosenfeld
	Mark J. Rosenfeld, Ph.D.


	COMPANY:
	IMPACT DIAGNOSTICS, INC.


	By:	/s/ Michael L. Ahlin
		Name: Michael L. Ahlin
		Title: Chairman of the Board

	By:	/s/ Mitchell T. Godfrey
		Name: Mitchell T. Godfrey
		Title: Treasurer
OPTIONS

Impact Diagnostics, Inc.

July 1, 2004

Mark Rosenfeld

5792 South 900 East, Suite B

Salt Lake City, UT 84121

Re: Amendment of Employment Agreement

Dear Mark:

2. All other provisions of the Employment Agreement, and any provisions contrary to the terms of this letter of Amendment, are hereby revoked and are considered null and void.

3. Your employment by IDI, and this Amendment to the Employment Agreement, shall be governed by the laws of the State of Utah.

the attorney of your choice regarding its terms; and c) no promise or inducement has been made to you other than the terms set forth herein.

		Sincerely,

		Stan Yakatan
		Chief Executive Officer

Agreed to:


Mark Rosenfeld


dated

EX-16.1 20 a2143868zex-16_1.htm EXHIBIT 16.1

EXHIBIT 16.1

Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street N.W.
Washington DC

Gentlemen:

We have read Item 4.01 included in the Form 8-K/A dated August 30, 2004 of Grant Ventures, Inc. (Commission file no. 000-50133) filed with the Securities and Exchange Commission and are in agreement with the statement contained therein. We are not in a position to agree or disagree with the disclosures regarding Tanner + Co.

/s/ HJ & Associates, LLC
HJ & Associates, LLC
Salt Lake City, Utah
August 30, 2004

EX-21.1 21 a2143868zex-21_1.htm EXHIBIT 21.1

Exhibit 21.1

Subsidiaries of Grant Ventures, Inc.

		Name under which Subsidiary does
Subsidiary	State of Incorporation	Business

Impact Diagnostics, Inc.	Utah	Impact Diagnostics, Inc.

EX-23.1 22 a2143868zex-23_1.htm EXHIBIT 23.1

Exhibit 23.1

[LETTERHEAD OF TANNER & CO.]

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation in this registration statement on Form SB-2 our report dated April 15, 2004, for the fiscal years ended December 31, 2003 and 2002, and to all references to our Firm included in this registration statement on Form SB-2.

/s/ Tanner & Co.

Salt Lake City, Utah

September 28, 2004

EX-23.2 23 a2143868zex-23_2.htm EXHIBIT 23.2

Exhibit 23.2

	September 28, 2004


Grant Ventures, Inc.
5511 Capital Center Drive, Suite 224
Raleigh, North Carolina 27606

Ladies and Gentlemen:

We refer to the Registration Statement on Form S-B2 (the “Registration Statement”) to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Act”), on behalf of Grant Ventures, Inc., a Nevada corporation (the “Company”).

We hereby consent to the use of our name on the front cover of the Registration Statement and to the references to this firm under the caption “Legal Matters” in the Registration Statement. In giving these consents, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act.

	Very truly yours,


	/s/ Brown Raysman
	Millstein Felder & Steiner LLP

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